New claims for unemployment fell last week, the government reported Thursday, but the elevated levels are fueling worries about prolonged damage inflicted on the labor market by the pandemic and the slow rollout of vaccines.
A total of 873,966 workers filed first-time claims for state unemployment benefits for the week that ended Jan. 23, the Labor Department said, while an additional 426,856 new claims were filed under a federal pandemic jobless program that covers freelancers, part-time workers, and others normally ineligible for state jobless benefits. Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 847,000.
In Massachusetts, nearly 20,100 individuals filed new claims for unemployment benefits last week, down about 4,700 from the week prior. Another roughly 5,500 filed claims under the Pandemic Unemployment Assistance program, which provides aid for gig workers and those not eligible for traditional benefits, a decrease of 860 from the week prior. Roughly 18,000 more individuals in Massachusetts filed new claims under extended benefits programs, which provide aid to those who exhausted regular benefits and are still out of work.
The national figures for newly filed claims are below the staggering levels of last spring, when the coronavirus started its march across the map, but they continue to dwarf previous records.
The impact of the virus on the service sector, particularly leisure and hospitality, is causing the heaviest toll.
“We need the service sector to come back for the economy more broadly to come back,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
Although The Conference Board reported Tuesday that consumer confidence edged up in January, views of the labor market’s current health dropped. The percentage of respondents saying jobs are “plentiful” declined and the share saying that “jobs are hard to get” rose.
“Everything goes back to the health crisis,” Farooqi said, “Once you get most of the population vaccinated, that’s a completely different picture.”
The number of people applying for extended state benefits — which only kick in after jobless workers have exhausted their regular allotment of unemployment insurance — also rose above 1.5 million for the week that ended Jan. 9, up about 100,000 from the week before.
“The longer people are unemployed, the harder it is to get back into the workforce,” said Kathy Bostjancic, chief US financial economist at Oxford Economics. “The longer this continues, the more there is a heightened risk of medium-term scarring.”
The $900 billion pandemic relief bill signed into law last month has provided a bridge of support, but provisions specifically extending relief to jobless workers are scheduled to expire in mid-March.
President Biden has proposed a $1.9 trillion emergency relief package that includes a $400 weekly unemployment insurance supplement, although Republicans and a handful of Democratic lawmakers have balked at the cost of the overall proposal.