Thursday, July 10, 2014

Claims keep falling

Year to date, the biggest change on the margin in the labor force has not been the modest increase in new jobs, which I think has been overly-hyped, but the huge decline in the number of people receiving unemployment insurance.

On a seasonally-adjusted basis, initial claims for unemployment have dropped by 12% since the end of last year, from 352K to 312K. This series has been declining for over 5 years, and is nearing very low levels relative to the size of the workforce. It (the probability that one is laid off in any given week) doesn't get much better than this.

In addition to there being fewer people filing unemployment insurance claims, the number of those receiving unemployment insurance has plunged, thanks mainly to the expiration of the "emergency" claims program. Since the end of last year, the number of people receiving benefits (actual, not seasonally adjusted) is down by 2.25 million, an unprecedented drop of almost 50% in just over six months. This has undoubtedly changed the dynamics of the labor market for the better, since lots of people have suddenly found a new incentive to find and accept jobs.

These are very healthy developments.


Benjamin Cole said...

Good...I like to see unemployment benefits expire. Not because I am hard-hearted but because it just motivate people to take a job.

We still have a runaway problem in our SSDI and VA "disability" programs, with an astonishing nearly 12 million potential workers drawing benefits under those two programs.

You have 8 million on SSDI, and 3.5 million vets (who were NOT injured in battle).

There are cottage industries of lawyers advisers, coaches and enablers to "help" people collect these benefits.

The SSDI is deeply annoying, but a lot of those people are older and essentially collecting early retirement (on your unemployment compensation dime).

The vets situation is appalling, as a lot of those people are young, and still collecting disability and who knows for how many decades (vets collect out of income and capital taxes you paid).

Imagine a nation that sideline 12 million potential employees and pays them to do nothing.

These numbers dwarf the unemployment compensation picture, btw.

Hans said...

Ben Jamin, we are now over 11 million on SSDI and climbing.

Are unemployment rates declining because people are exhausting are benefits?

Benjamin Cole said...

Unmployment rates are falling as there is some job creatin but also a lot of people becoming "disabled" and leaving the labor force.