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US unemployment claims at their lowest in decades, why?

  • By Al Mayadeen
  • Source: Agencies
  • 11 Dec 2021 23:40
2 Min Read

That statistic includes a seasonal adjustment, without which adjustment, the claims would move in the opposite direction. They rose by about 64,000 from the prior week, a 29% increase.

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  • A help wanted sign is taped to the front of a shop
    A help wanted sign is taped to the front of a shop

Claims for unemployment benefits have dropped to their lowest levels in decades in the US, according to official numbers, as reported by CNBC. However, it seems these numbers are being skewed by labor distortions brought about by the pandemic era.

In the week ending on December 4, for example, there were 184,000 initial claims, according to the US Department of Labor, which is 43,000 less than the week before, and the lowest number since September 6, 1969.

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The data, however, accounts for a seasonal adjustment that takes into account the various times of the year, with layoffs, for example, rising in some sectors in the colder months. Without this adjustment, unemployment claims actually rose by 64,000 last week, meaning by 29%, to a total of 281,000. This is the true, unadjusted number of those that have applied for unemployment benefits.

Why does this happen?

The Department of Labor expected a jump in post-Thanksgiving applications for unemployment, anticipating 42,000 more claims. Though these adjustments are standard practice, COVID-19 is complicating the dynamic, with the rise in cases sidelining workers.

“It’s not obvious why the seasonal adjustment has struggled in the last few weeks, but weekly [seasonal adjustment] is difficult even in normal times,” said Daniel Zhao, a senior economist at career site Glassdoor.

This is why the claims of  "historically low levels" of unemployment should not be taken at face value. Yes, the US labor market seems to be improving, but not to the extent being portrayed in statements. 

  • Unemployment
  • Biden administration
  • economy

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