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More Jobs, But Where Are the Workers? Week Ahead

Employers are having a hard time filling open positions, even as initial claims for unemployment benefits have been on the decline.

And even though the extra pandemic benefits are starting to get phased out, that’s not a guarantee that those on the sidelines will start pounding the pavement in search of a job.

First-time jobless claims in the U.S. fell for the sixth straight week, and for the week ended June 5 were under 400,000 for the second consecutive week. For the week ended June 5, the Labor Department said the number of Americans filing for initial unemployment benefits fell by 9,000 to 376,000. That figure dipped to a new pandemic-era low, representing the lowest level since March 2020.

All eyes will be on the weekly report over the next few weeks to see when new filings might reach the pre-pandemic average of over 200,000 per week. That could be an indicator of where the U.S. might be in its economic recovery as it exits the Covid pandemic.

Separately, the number of people who are still collecting benefits via continuing claims for the week ended May 29 also declined to a seasonally adjusted 3.5 million.

UBS economist Andrew Dubinsky said the decline in new claims also reflected a slower pace of improvement.

Dubinsky noted that the current week reflects the last weekly payment of pandemic benefits in four states—Arkansas, Iowa, Missouri and Mississippi—which could be contributing to fewer filings. The drop in new claims is faster in states ending programs early, and the “improvement might reflect incentives or improving layoff trends in those states,” Dubinsky said.

There are now 25 states that said they will end federal pandemic benefits early, 21 ending all programs and four states ending only the $300 per week supplement, with the majority of impacted claims ending around June 26.

Sarah House, an economist at Wells Fargo Securities, said earlier this week that job openings “blew past last month’s all-time high to reach a new record of 9.3 million at the end of April. The increase follows more businesses than ever saying they have at least one job that is hard to fill and widespread anecdotes of labor shortages.”

The biggest increases in openings were in the restaurant sector, which has struggled to compete against higher-pay industries and health concerns over close-contact work. But she also noted that the number of workers voluntarily leaving their job jumped in April to a record 3.95 million. “The rising share of quits speaks to growing confidence in other opportunities,” the economist said.

There’s been criticism that the extra pandemic benefits have fueled the lack of workers because they collect more from benefits by staying home than what they would have received at a paying job.

But just because pandemic benefits are expiring doesn’t necessarily mean that those who have been collecting now will start to hunt for a full-time job. “There’s a confluence of factors that impact a worker’s decision to return, or not return to work. It appears that general unemployment benefits are likely no more of a factor than other impediments, including childcare, transportation and health concerns, to workplace re-entry,” said Morgan Stanley economist Sarah A. Wolfe.

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