Unemployment claim averages are now even higher than the week of Nov. 13 2021, according to the Bureau of Labor Statistics most recent data. That’s around 264,000 claims, compared to 260,000.
Back in November 2021, there were more than 37,000 COVID-19 hospitalizations per week, per the U.S. Centers for Disease Control and Prevention. Now there are under 7,000. So, what’s behind this latest spike in unemployment?
Earlier this month, Audacy reported that experts were expecting unemployment claims to rise. In fact, financial website WalletHub reported that claims had reached October 2021 levels by the end of May.
“Some large organizations over-hire when times are good, which makes it not that hard to shed talent when they want to cut cost,” said Rochelle Parks-Yancy, a professor of management at Texas Southern University’s Jesse H. Jones School of Business. “Those TikToks about ‘A Day in the Life in Tech’ essentially showed employees doing everything but working, which provided anecdotal evidence of over-hiring.”
According to Forbes’ layoff tracker, Uber cut 35% of its recruiting staff this month (about 200 people), Oracle continued layoffs that began last summer and Nikola Corporation cut staff, as did Tyson Foods, Grubhub, Spotify, Haven Technologies and ZipRecruiter. The Wall Street Journal also reported that Ford plans to cut workers soon.
This week the Bureau of Labor Statistics said that the number of claims for the week of June 10 had to be adjusted to include 2,000 more, bringing the total number to 264,000. That number stayed steady during the week of June 10. A four-week moving average came in at 255,750 – an increase of 8,500 from the previous week’s revised average.
Even though unemployment has been on the rise since at least May, Federal Reserve Bank Chair Jerome Powell said this week that “labor demand still substantially exceeds the supply of available workers.”
“The unemployment rate moved up but remained low in May, at 3.7%,” he said. “There are some signs that supply and demand in the labor market are coming into better balance. The labor force participation rate has moved up in recent months, particularly for individuals aged 25 to 54. Nominal wage growth has shown some signs of easing, and job vacancies have declined so far this year.”
After a series of 10 interest rate hikes – which make it harder for individuals and businesses to borrow money – to bring down inflation, the bank decided not to raise them again this month. However, Powell expects more hikes before the end of the year.
“The economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation,” he said. “The extent of these effects remains uncertain.”
In a report issued Wednesday, WalletHub also noted that the labor force participation rate is at one of the lowest points in decades. It included a list of the states that are struggling the most to hire:
· Alaska
· Colorado
· Georgia
· New Mexico
· Montana
· Louisiana
· Wyoming
· Delaware
· West Virginia
· Maryland
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