The sudden increase in COVID-19 Omicron cases has caused businesses to impose impromptu lockdowns. And as a result, more and more Americans have applied for unemployment benefits to substantiate their time away from work. The number of claims rose by 7,000 to a total of 207,000 last week, according to the Labor Department’s statement.
For the majority of last month, the number of claims stayed pretty consistent at 200,000. This is remarkably low considering we saw a record-high of 6.15 million back in April 2020. Even the new number from this past week is historically low and is well under the pre-pandemic average of 250,000.
However, now that we are seeing 168,409 daily cases of COVID-19, Daniel Silver, an economist at JPMorgan in New York, hypothesized that we may continue to see an increase in unemployment claims.
“It is possible that the recent spread of COVID has put that earlier downward trend on hold,” said Silver. “That said, it is an encouraging sign for the labor market that claims have not meaningfully jumped in response so far.”
Meanwhile, unadjusted claims rose substantially from 57,599 to 315,469 last week. This is partly due to the new number of cases in New York. Other states that saw an increase in filings included Pennsylvania, Washington, Michigan and Connecticut.
Unemployment Remains to Be Biggest Issue in Supply Chains
As a result of the ever-increasing cases of COVID-19, schools have had to resume online learning rather than in-person instruction. This forces parents to have to prioritize their childcare duties over their own job, making them eligible for unemployment benefits.
At the same time, entire businesses have had to temporarily close or scale back their hours in order to protect the health of both employees and customers. The Omicron variant has also taken a substantial toll on the airline industry. In late 2021, thousands of commercial flights had to be canceled due to concerns about spreading the virus.
All of this adds up to a fairly tough economic situation. As a result, businesses “struggle with inflation, supply chain disruptions, capacity constraints, logistical challenges and shortages of labor and materials,” according to the Institute for Supply Management (ISM).
The ISM also stated that there are “not enough potential employees in the pipeline,” and “employees (were) leaving for other opportunities at higher wages.”
Many establishments are now offering sign-on bonuses and higher pay for entry-level positions to combat this. But still, there is an absence of workers. Just in November, 4.5 million Americans quit their jobs. Now, the workforce has roughly 2.5 million fewer people than before the pandemic. No doubt, we’re now seeing the results of the massive departure.
“A big problem for the labor market right now is too few workers,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania.