Gig workers now over 1/3 of “insured unemployed.” Gut-wrenching 1.6 million people got laid off in a week, others got their jobs back.
By Wolf Richter for WOLF STREET.
To determine if the collapse of the US labor market hit bottom, the combined number of people still receiving unemployment benefits under state programs and under federal programs – such as gig workers receiving benefits under the Pandemic Unemployment Assistance program – need to stop growing. And for the first time since this fiasco started, this appears to be happening, according to data released today by the Department of Labor.
The total number of people who are still receiving unemployment benefits and who have not yet found jobs or gotten their old jobs back – the “insured unemployed” – under all state and federal programs fell by nearly 1 million to a still gut-wrenching 29.97 million (not seasonally adjusted):
This decline in the total number of “insured unemployed” was a result of a drop in the state programs over the past few weeks and a surge in federal programs, especially under the federal Pandemic Unemployment Assistance (PUA) program for gig workers.
States are catching up processing claims by gig workers.
In the week ended May 30, an additional 623,073 gig workers filed initial claims under the federal PUA program (not seasonally adjusted).
The total number of gig workers still receiving unemployment benefits under PUA, and who’d filed during or before the week ended May 16, surged to 10.7 million. In other words, gig workers are now over one-third of the 30 million total insured unemployed.
The stacked chart below shows this continued surge of the number of insured unemployed under federal programs (red) and the declining number of insured employed under state programs. In total, nearly 30 million people are now on unemployment insurance rolls – but that’s down a by nearly 1 million from last week:
New claims under state programs surge at a gut-wrenching pace but some people are getting their jobs back
About 1.6 million workers filed initial unemployment claims under state programs (not seasonally adjusted) in the week ended May 30, a clear sign that layoffs continue at a gut-wrenching and previously unimaginable pace, nearly three times the magnitude of the weekly records during the unemployment crises in 1982 and 2009. But it was way down from the 6-million range of initial claims during the weeks in early April:
The number of people who applied for unemployment insurance under state programs during or before the week ended May 23 and still have not found a job ticked up by 244,000 to 19.3 million (not seasonally adjusted). Yet, this 19.3 million was down from 22.8 million three weeks ago – meaning that even as millions of additional people were laid off during those weeks, more people were hired back or found new jobs. This chart shows these continuing claims under state programs through the week ended May 23:
The 28 states with the most “initial claims.”
The table below lists the states with the largest number of initial claims filed in the week ended May 30 under state programs. They do not include claims under federal programs, such as PUA claims:
|Top 28 States, Initial Claims in the week ended May 30
On this basis of people receiving unemployment insurance, the “insured unemployment rate” in the US for the week ended May 23 ticked up to 13.2% (not seasonally adjusted), from a revised 12.9% the week before.
For historical perspective, the record in the pre-pandemic era was 7.9% (not seasonally adjusted) in May 1975.
But the increase this week in the “insured unemployment rate” was small, and last week, the rate had dropped sharply from the peak two weeks ago. So in terms of this metric, it too looks like the collapse of the US labor market is no longer getting worse but has bottomed out, as layoffs continue at a gut-wrenching pace but other people are getting hired back.
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Markets rallied to celebrate!!!
Half of the laid off people will not get their job back for a while.
The half who did get their jobs back, aren’t in the clear either. Alot probably most of the places who closed down temporarily, might be opening back up, but, with alot of restrictions and less business. We’ll see how many of them can keep open long enough, to survive, to when CCP19 is truly in the back mirror.
The retail blood bath continues, until, we narrow them down to the Champions. That, and most cities have alot more restaurants than they probably need. Not sure, if the work from home trend, “if it continues” will help or hurt restaurants after CCP19. Could go either way.
This is where the owner operators have a massive competitive advantage over the chains of industrial food outlets. They can manage and run their business without the corporation above them extracting money . Their lack of purchasing muscle of ingredients can be made up for by these layers of management above them feeding off them.
When times are bad these little food outlets spring up everywhere all over the world. The regulatory authorities have neither the money or the manpower to shut them down. I have had many a happy all day breakfast at these funny little places while in London.
I know from speaking with some people who got their jobs back, they aren’t working their full-time hours pre-WuCorona-CCP19. Thier company’s have shorter operating hours. Where I live, many bank branches are closed temporarily and only have ATMs available. Some that are closed, will be closed permanently as per the banks. Some branches that I went to, advised that business is way down.
We’ll see what happens over the next while.
What would happen if Powell spent 2 Trillion on infrastructure work and pissed away the rest like he has done. How would that affect the economy? Would it have a broader based positive impact? I know Powell is just a Puppet and a front man so I’m not blaming him alone for pissing away so much money. By taking the job and getting paid good money, he has earned the right to be ridiculed and scorned.
Infrastructure projects are a given in my opinion. They will definitely help. I can only speak from experience from someone who lives in the Bay Area, but we can’t seem to do those projects well, from the overpriced Bay Bridge to the Salesforce Transit Center, which developed cracks after opening, expect to see out of control cost.
I expect a second wave, but I ain’t talkin’ bout the CCP19 (lol). There will be a second wave of layoffs once the business cycle finally finishes its sine wave to the downside.
I work in an area that relies on European visitors–let’s just call it Area 52. This summer BY FAR is the SLOWEST I’ve ever seen. Don’t be surprised if Disneyland in the OC stops nightly fireworks shows.
June 30th is the last day companies with under five hundred employees need to keep them on to get PPP loan forgiveness. September 30th for employers of over 500 people. There’s going to be some mass layoffs happening. The $600 a month added to unemployment benefits ends on August 1st.
Just once… well…I wanted to see what it is like to post first..
Heh.. Hehhh… hehh..
Now – Are we considering the “Knock on Effects” of Lockdown, Fear Driven Economy and Protests/Riots??? – I think.. we may be surprised at the number of Middle Managers, and Senior Execs that discover they are Redundant.. and work from home.. becomes – hey… if they can work from home.. what about offshoring for 1/3 of the cost?? Tasty!! – One innovation friendly business I work took a look at all the workers who could be more productive at home (13%) You would think that is great news.. but.. Not so Much…Someone said.. hey.. if they can be 13% more productive at home.. what is to stop us from looking further afield??? They Proceeded to outsource 50 people that used to work in offices in Toronto.. to the Philippines…
It took a bit of “Tuning” but the Quality is now as good or better!!
One small company.. 50 jobs…. Now the workers are 13% more productive AND 1/3 of the cost….
Oh well, next time :)
How many white collar none jobs are going to get burnt – Corporate ‘Wellbeing Officers’, Colleges and Universities with bloated ‘Senior Management Teams’… Secretaries (if anyone still has one that isn’t called Outlook), the list goes on…
The problem is that the volume of job losses might be slowing down, but the new layoffs are reaching up the wage/benefits food chain. Just announced recently in PDX are more staff and doctor layoffs in one of the big local health care providers, layoffs in the city park department, layoffs in two colleges, and layoffs in the headquarters of a big online vacation rental operation. These happen slower because these organizations have bigger buffers than a restaurants, but they tend to be longer lasting and have a bigger effect on the economy. This is the kind that starts chewing a hole in the real estate market and not just apartments.
Bloomberg had an article from the other day talking about the next wave of layoffs impacting people higher up.
It will happen. Google is slowing down hiring for the rest of the year, and I’ve heard rumors that Facebook is doing the same. This thing is impacting too many industries. And not everyone will pay out severance like AirBnb did.
Great one! Here is the link:
Regarding PUA claims, Bloomberg released an article today indicating that 18 states didn’t report any so they didn’t show up on this most recent report. That doesn’t mean there aren’t any though.
Quite a few states, including Florida, haven’t gotten their act together on the PUA, and they haven’t figured out how to process them. That’s why they’ll continue to rise going forward.
Wolf, can you do an article just on this? I have so many questions!!!
* which states?
* do they seem to eventually figure it out? would they pay PUA retroactively?
* does this mean that independent contractors aren’t getting any $ at all or just losing the extra $600 /month?
* “That’s why they’ll continue to rise going forward.” what does this mean?
Good Questions LFQ!
As Wolf noted, FL guv mint once again is doing their reactionary best to stop or at least slow down ANY UEI, including from what I read locally many many folks who have not received a dime although fully qualified since at least March, sometimes Jan…
I was going to apply for the PUA from the feds, and spend spend spend it ASAP, but have not gotten any info that FL has even begun to process many applications, so am waiting to see if at all possible. Fed rep refers me to state who refers me to fed rep,,, go figure, eh
OTOH, bro in NC getting both state and PUA and really appreciating being laid off until state and local guvs figure out if he can go back to work safely with a couple of serious underlying possible co-morbidities.
This, and money printing, explains why the stock market has been rising. Once a business opens, it will not be closing down again even if there is a second wave of virus. People will be required to wear masks and distance, but the businesses will remain open. Comps, like unemployment claims, will begin looking better.
The monetary band aide will work for a while until the next debt crisis hits.
Problem is that the prices have to increase quite a bit to even break even as past models were already at maximum capacity to make a small profit.
Can’t seeing it work at all. Plus the additional fines for new regulations and insurances price increases as well.
May be that is going to be substantial headache for many looking forward.
Laying off Doctors. Hmm. How many of them will be late 30’s through 50’s with high monthly operating costs (Housing, children, their own student debt, car finance)
Even dentists are going bankrupt. It used to be said ‘Study medicine (because it is interesting) but marry a dentist because they will be rich’. How times change.
Perhaps all those highly leveraged status symbols ( sorry, should say ‘Assets’) are looking so attractive anymore…
The divorce rate for White Collar Workers and those in ‘Professions’ is going to rocket.
I was able to get an appointment with a dermatologist within two days (2 weeks ago). Temperature was checked before entering the building. Face mask required. Florida COVID cases have been slowly rising since reopening in early May. At Home Depot today some employees wore face masks, some did not.
If unemployment gets better, would that lower the fed asset buying which make stock goes down? There will not be 2nd relief program as municipalities are out of money.
No, it’s ignorant retail investors and the v recovery hype. Money printing???? Nope.
As we move into the 3rd quarter in mid June and company balance sheets don’t back that up, the market will correct and most likely crash 2. The structure of the economy is in recession, covered by over killed shutdowns, those are pretty much ending county wide by June 15th. The long squeeze will be brutal.
Is this V recovery a persistent short squeeze? What will happen when earnings reports are really dismal. Will the market explode higher?
According to Drunkenmiller the Fed bought a trillion in treasuries off the open market, in anticipation of the Treasury increasing new issuance, they will have to segue way into buying new paper, and either drop the trillion in liquidity they have hold temporarily in order to expand available cash in this round of QE, or they will have to open the purse another trillion or so. When the old liquidity wears off market benefits will wear off as well. Could be a reason you are seeing the bond funds pulling back and the dollar slipping. Increasing yields should attract the international money flow, and offset the damage, but what is Treasury going to do selling new paper at higher yields?? Congress can’t pay for this at zero yield debt. All this begets inflation. https://bullsnbears.com/2020/06/02/inflation-stock-markets-worst-nemesis-on-the-horizon/ What would cause inflation? Energy? Housing? Earnings are not going to bring this market down, or employment, or riots. Inflation is offset by pricing power, which is achieved in backwards fashion by the Feds direct monetization of companies with less revenue than expenses. More cheap credit is just as good as raising prices. When rates turn higher, however, the supply of credit tightens. Higher rates beget higher inflation.
Yep, that’s the way it goes… Making ‘merica (WS) great! … the gap between poor and ultra rich is widening at a rapid pace and it’s scary. Wall Street is just rubbing it to everyone’s face … the young woman I mentor who earned great degrees from top schools was hired a year ago as a contractor and my jaw dropped when she disclosed her income ($150k). I’m worried for her and her generation and future ones.
Hey bm,,, please let us know if your jaw dropped because the $150K is so low or so high.
Depending on where she is, that might just be a minimum living wage, eh?
Folks on here have some possibility of living where a small apartment in a ”decent” hood might cost $50-60K/year in pretax income from what I read.
Yes the market will explode higher because, because,.. look at Tesla.
The market always goes up BTFD. Realestate always goes up too.
I don’t understand why my previous comment was altered… I might have touched and deleted a section by mistake.it should be ….
Yep, that’s the way it goes… Making ‘merica (WS) great! … the gap between poor and ultra rich is widening at a rapid pace and it’s scary. Wall Street is just rubbing it to everyone’s face … the young woman I mentor who earned great degrees from top schools was hired a year ago as a contractor and my jaw dropped when she disclosed her income (< $70k) in bay area with student loans exceeding $150k. I’m worried for her and her generation and future ones.
“and my jaw dropped when she disclosed her income (< $70k) in bay area."
A lot of businesses refuse to list a salary range for job postings these days. You'd think they didn't want to use pay as a way to entice applicants (kombucha on tap yo), or maybe most people are just generally only so marginally useful. I don't know. A year or two ago when I was spending a lot more time just looking at what jobs were out there to see if anything was a good change for me, I was surprised how many of them wanted masters degrees in their minimum qualifications, and then when I tried my best to find out what the pay was like, it was always about $60k or so.
Almost all the seemingly professional job postings looked about $50k-$60k. If it looked like they would pay $70k it was usually with what were some pretty rigidly high demands over qualifications and high responsibility levels. Not as bad in Denver, but you can't afford what you thought you would be able to when getting those degrees and building a career like you were told to.
The government stats about wage growth make no sense to me given what I've seen unless it's entirely due to the average getting pulled up by min wage and the sharks at the top of the income chain. Which makes it all the more dumb to get student loans, but what other hope do people have to be middle class?
I am not sure I would call the bottom anytime soon. We may have just scene the first wave of ‘attackers.’ We have unprecedented violence in many of the major cities – businesses destroyed and looted, people not able or willing to rebuild in violent times.
I am not sure where we are with so called ‘Covid’ as social distancing does not seem to be in vogue any more. But the first wave of the ‘violence’ is just now hitting. I am not sure if it will go to the burbs or not, but don’t think that this is going to spawn a lot of hiring beyond boarding up businesses and replacing windows. I think all Wolf Street readers have witnessed a major shift away from urban areas for many reasons, some of them starting even before so called ‘Covid’.
I was surprised to see that people were somewhat elated that ‘only’ 1.8 million or so filed for unemployment this past week. WTF. We have massive normalcy bias if we are not shocked by even 500,000 new claims. Yes, I am hoping this all gets packed away in the attic like the 60’s (I lived through those times), but I am not making any bets for now except continued Chaos! Not bullish for a thriving economy.
We’ve been eating at local restaurants lately just to help out the establishments and their employees with generous tips. Sorta, kinda a return to normalcy.
It’s an interesting concept – charity patrons. maybe it will help the business get through this rough patch. or maybe it’s better to just rip the band aid off quickly? Ever been on a “charity date” just to be nice?
No but I’ve been at the receiving end of one. Let’s just say I cannot convey in words exactly how awkward and humiliating the whole thing felt.
Your kindness is appreciated. Hopefully they will start serving the rich on the menu.
500000 is the number to watch. In the post boomer era, I would consider this equivalent of 600000 during the financial crisis.
Labor is a commodity. Like other commodities, the price of labor is affected by supply & demand. There seems to be a lot of surplus labor supply out there right. What will this do to wages?
Just as in coffee beans, labor will continue to be ground into electro-perk no matter where prices go. They’ll just put less of the whole into smaller cans with facier blend names.
Nothing until the Working Class owns and controls the means of production.
Were Florida and Georgia to have the same population as California their initial claims in the chart above would be approx. 400K & 600K. Thus making CA look not so bad.
Am I missing something – I’ve been known to? Those numbers seem staggering.
Florida was slow to get their processing moving. It’s catch-up not any new disaster there.
“Am I missing something”
No, you got it.
It was stock buy-back fueling the markets last decade. Now it’s going to be corporate layoffs that are going to put the Dow over 30K?
Nope, Dow 18000 coming. More decliners than gainers. It will be a pretty quick crash as well, then a slow painful rise.
The reason crashes are so devastating is that very few people possess the vision to see when normal is no longer normal.
That is why so many people never achieve any real degree of financial success, they lack the ability to see change happening.
For those who do, recessions can be their favorite periods, everything is on sale, and no crowds to contend with…
Don’t forget that if you believed in fundamentals and a free market, and fought the fed in the GFC and sat out, you lost out real big. Many sane and reasonable people did and they don’t want to repeat the ‘mistake’ again this time around. Some have thrown in the towel and are getting in at what could possibly be the worst possible time. Others are debating. If you unloaded post-crash, most of that stuff has recovered and hit all-time highs, and you feel like kicking yourself now. The ‘forward-looking’ market soldiers on. I can’t blame the passive retail crowd for taking the bait in these conditions. Not everyone has the time to research things to the level the financial types and people on this board do. If you’re putting in your heard-earned dollars, I guess you should but it just doesn’t happen that way for many.
Anyone who read this article could have predicted today’s stock market reaction to the employment report. Look at the blue bars, ignore the red.
1) NY is #5 with 83K. Next week NY will have a jump.
2) Within few months, CA will bend on its knees and become the second worse state, after NY State. Salt water states will compete with each other, which one is more boarded and have acid in the streets.
3) Locked down students poured out and flooded the streets looting social distancing.
4) Dr. Faust prophecy will send the unemployment higher.
5) Mayor DeBilio will open NYC next Mon. and millions of riders will pack the subway.
6) A Bearish Divergence between Six Ave traffic and NDX 100 new all time high.
I hate the company Public Storage. I have a few collectables (2500+ lb computer) in a storage unit that I haven’t moved to where I live yet. They sent me the rent is increasing card again, which means I will drive down there and downsize the unit and they will lose money.
However. Maybe it’s just because of Covid, but looking at their website the place seems almost slammed full. Not many units left at all? Huge demand from college students moving back home? People loosing houses? But the area is one of the markets where rents are going up according to the post on here the other day.
My min wage roomie just moved here from Vegas, where she left things in storage. She took her last few dollars and rented a truck to go back and empty out that storage and put the stuff in a place nearby. Storage rates are higher in CA, so is RE. How much is she paying to keep all that stuff? More than it is worth is the rhetorical answer. Even prices at Goodwill are going up, probably because people pay to store things rather than donate them. One thing I notice, is the poorer the person the more their things matter to them. I see homeless people with fleets of shopping carts. Thoreau would be amazed.
Give your roomie a break AB!
For some folks at some times in their lives, ”things” are where it’s at because that is all there is.
For others, etc., getting rid of things is just one more opportunity to cultivate non attachment.
Been both places at various times in the last 60 years or so since starting to thing about such things, including ALL things owned fitting into a back pack, the bed of a pick up truck, and selling $20K of things in 3 ”moving sales”,,, then ”leaving” another $20K+ as a gift to the buyer of the farmstead.
So back in March there was a cartoon done by Marco Ricolli of Fed Chair Jerome Powell pulling his hair out over this latest financial crisis. (It’s a great cartoon, March 15th entry contains it). As markets have miraculously recovered in record time that image didn’t see much “airtime”. A cartoon of Powell relaxed in an easy chair smoking his pipe semms much more appropriate and would have gotten Marco Ricolli much more visiblity. (Jeromey could also be sporting a t-shirt with “We Got This” emblazened upon it).
So guessing gig workers and their employers didn’t pay into any kind of unemployment insurance system so we’re getting a look at the cost of that decision as well?
I hear your point and in principle I agree, .
But it’s about the numbers, the numbers, whether it is the US or the UK or wherever.
If there are enough voters or simply enough voices to influence opinion polls, social ‘influencers’, political ‘Influencers’, the effective media (as opposed to the ‘Mainstream’ media) that are shouting their pain….
…well, by mass action, their narrative will dominate. Rationality be damned.
Sorry, but there it is.
Just to clarify, I’ve run my own company in the past, with no handouts asked for or wanted.
Handouts ? What do you call trillions of dollars in public infrastructure like roads, utilities, police and fire departments ? Failure to acknowledge the costs borne by the public to support “ your “ business shows a staggering level of delusion and hypocrisy.
Employers are faced with many taxes when they have employees. Unemployment Insurance is paid solely by the employer in California. It is 3.4% of an employees wages up to $7000 for new employers. Currently there is a 15% emergency surcharge. Rates range between 1.5% to over 6%. Who would have guessed?
Employers are also responsible for other costs, including Workers Compensation and ETT.
Gig workers can be independent contractors, receiving none of the protections and or benefits of a full time regularly employed person. And as mentioned, regular UI benefits.
Utah is weeks behind in processing their PUI claims.
1) NDX100 made a new all time high on bad news day. An upthrust.
2) For five days, between May 21 and May 28, NDX close was almost shoulders to shoulders, in some king of accumulation, before moving up. IF u take a line chart its almost flat, slanting up.
3) Yesterday NDX bar was the smallest bar since Feb 19, the day of the plunge.
4) Yesterday QQQ, NDX100 ETF, made a new all time high. Market makers don’t care about bad news day, denying NDX.
5) Mazda sold more trucks in May y/y. Mazda total sales y/y fell only by 1%.
6) CX 30, a new small SUV, is up from 0 to 3,583.
7) MX 5 Miata is up 37%.
8) 7 passengers family SUV CX 9 is up 21%.
9) Mazda bras are out fast.
I don’t know, but I’d be wary of calling an upthrust…. and calling Mazda workers fast with their Bra’s…
ME may have made a typo with the ”bra” comment, OR, he may have been referring to the devices that cover the lower part of the front of cars; bra is the name of those devices in USA…
Always lots of fun fun fun for the feeble minded to play with the various possibilities of ”Engelspeak” eh
Unemployment does not show companies where the company does not give an employee hours (hourly) but keeps them on the books. This tactic is used so they don’t have to say that they laid people off and they don’t have to face lawsuits. My wife works for one company that gave her the option of returning for one shift (4 hours) when she use to work 4 shifts (20 hours) or stay at home to not work but remain on the books. Since she has health issues and we are fortunate with my job, she stayed home. This does not allow her to collect unemployment and the extra $600. This is a public company with over 20,000 employees.
That is true, but in a lot of states you can still claim that lost income. So that should still show up.
Yeah, I was going to say. In a number of states you can still get unemployment benefits for reduced hours. Your employer won’t mention it to you and maybe doesn’t care. Theoretically it would still increase the insurance rate they have to pay the state so they may actually hope that you don’t file for benefits if they slash your hours.
In Germany this is called worksharing. Companies cut back hours but keep people on payroll with the government covering like 65% of the wages up to fulltime. Works well in times of depressed demand.
It’s quite shocking that with all the opening up going on, that there wasn’t a bigger bounce “off the bottom”, if this is actually the bottom. On a different note, I have heard from friends in the workforce that some companies, especially small guys and startups, are furloughing or putting their employees on unemployment, even though they are still doing work for them. These employees are trying to ensure their employer survives by still providing work, but not applying the cost of that work through their regular wages. I suspect there are some consulting/part time types and gig workers are doing this, especially if their options are the main part of their compensation, and if they still want a job in a few months. Lets call them Government Paid Interim Interns?
There are also a lot of people that are not eligible for unemployment.
Amazon, goes through a lot of employees especially at the Delivery Driver position. The problem is that if an employee gets frustrated and quits, technically they are not edible for unemployment. If denied unemployment you can appeal the decision but there is likely a backlog. Applying for unemployment benefits does guarantee you will receive benefits.
“edible for employment”, how did Soylent Green get into UI benefits?
Take the pill Winston
The unintended — but desirable — consequence of including gig workers is getting a rule of thumb for how many people traditional UE statistics left out.
Correct MF, and that, of course is so that there can be more careful accounting of how much taxes are owed by the ‘gig’ folks going forward.
While that is going to help find out some of the market formerly known as ”black” market, it will only be a start toward making a fair and level playing field for all folks wanting to make a company where their very hard and long hours of work will be profitable, AKA ”personal capitalism” THE very reason most people want to come to USA in the first place.
After years of taking every single deduction that was legal, my CPA told me to start declaring more net income and pay taxes on it so that my SS would be at least somewhat adequate, so I did, and it is.
Never bet against America!
I personally for “one” never do, never did.
But at this stage of the game what is it we are betting on?
And what/ who is there possibly to bet against?