As COVID-19 Omicron cases rise with rapid frequency, the number of unemployment claims in the U.S has skyrocketed as well.
According to The New York Post, data released on Thursday revealed a shocking number of jobless claims filed for the week ending on Saturday, Jan. 15. In total, 286,000 workers filed unemployment claims that week. And this is an increase of over 50,000 from the week before.
It’s a huge rise over the course of all of January, really. The new year started at roughly 207,000 claims, per the Labor Department. In December, claims hovered at a remarkably low 200,000. Now, we’re looking at a rise in unemployment claims that we haven’t seen since October 2021.
Dow Jones even estimated that jobless claims would decline last week, to 225,000. Instead, we’re looking at nearly 2 million Americans filing for unemployment.
Part of the reason for the rise in claims is likely due to the surge in Omicron cases. According to CBS, Nancy Vanden Houten, lead U.S. economist with Oxford Economics, discussed the correlation in a recent report.
“The rise in claims reflects both an increase in layoffs due to the surge in Covid cases as well as an added boost from large seasonal adjustment factors,” Vanden Houten said.
On Sunday, Jan. 16, CNN reported 808,000 new cases. Luckily, the number of cases had declined over the last three days by 8%. So, maybe next week’s unemployment claim numbers will reflect that as businesses open up and more workers return to their jobs.
But The New York Post predicts that the rise in unemployment claims will drop off for another reason.
Competitive Labor Market Affects Rise and Fall of Unemployment Claims in the U.S.
Per the Post, a highly competitive labor market has “prompted solid wage growth,” with hourly wages rising as much as 4.7 percent in December 2021 compared to December 2020. But the increased wage growth has been matched with a huge inflation surge, topping 7% recently. Both of these affect the number of people filing for unemployment claims, as the cost of everyday goods rises.
“Broadly, the job market is still seen as tight while supply chain disruptions remain a major concern and irritant in this high inflation environment,” Bankrate senior economic analyst Mark Hamrick said. “Just a few weeks from now, we’ll learn whether the recent slowdown in hiring persists even as the nation’s unemployment rate has edged closer to the pre-pandemic low of 3.5 percent.”
Despite the number of unemployment claims, the U.S. saw a pandemic low of 3.9 percent in December 2021. It remains to be seen how much that number will rise over the month of January as we see more and more workers filing jobless claims.