Jobless claims at 870,000 as fraud and backlogs cloud data

WASHINGTON —  The number of people seeking U.S. unemployment aid rose slightly last week to 870,000, a historically high figure that shows that the viral pandemic is still squeezing restaurants, airlines, hotels and many other businesses six months after it first erupted.

The figure coincides with evidence that some newly laid-off Americans are facing delays in receiving unemployment benefits as state agencies intensify efforts to combat fraudulent applications and clear their pipelines of a backlog of jobless claims.

California has said it will stop processing new applications for two weeks as it seeks to reduce backlogs and prevent fraudulent claims. Pennsylvania has found that as many as 10,000 inmates are improperly receiving aid.

The Labor Department said Thursday that the number of people who are continuing to receive unemployment benefits declined to 12.6 million. The steady decline in that figure over the last several months reflects that some of the unemployed are being rehired. Yet it also indicates that others have exhausted their regular jobless aid, which lasts six months in most states.

In addition to those receiving aid on state programs, about 105,000 others were added to an extended jobless benefit program that provides 13 additional weeks of aid. This program, established in the economic relief package that Congress passed this year, is now paying benefits to 1.6 million people.

Applications for jobless aid soared in the spring after the viral outbreak suddenly shut down businesses across the country, slashed tens of millions of jobs and triggered a deep recession. Since then, as states have slowly reopened their economies, about half the jobs that were initially lost have been recovered.

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California job growth is sluggish — and experts say it may get worse

California gained 101,900 jobs in August, mostly due to the temporary hiring of federal census takers.

Sept. 18, 2020

Yet job growth has been slowing. In most sectors of the economy, employers appear reluctant to hire new workers in the face of deep uncertainty about the course of the virus.

The growing concerns about fraudulent applications for unemployment benefits have focused mainly on a new program, Pandemic Unemployment Assistance. This program made self-employed people, gig workers and contractors eligible for jobless aid for the first time.

Though roughly 14 million people are classified as receiving aid under that program, economists increasingly regard that figure as unreliable and probably inflated by both fraudulent applications and inaccurate counts. The number of people receiving benefits under the PUA program is probably overstated by several million, economists say.

Thursday’s report from the government comes against the backdrop of an economy that has been recovering fitfully from a catastrophic recession. Some economic barometers — such as housing, retail purchases and auto sales — have managed to produce solid gains. But with unemployment elevated at 8.4% and a key federal jobless benefit having expired, the economy’s gains are believed to be slowing.

Most economists say it will be hard for the job market or the economy to sustain any recovery unless Congress enacts another rescue aid package for struggling individuals, businesses and states. Ultimately, an effective vaccine will probably be needed for the economy to fully regain its health.

In the meantime, California and other states are trying to manage their beleaguered jobless benefits programs.

Sharon Hilliard, director of California’s Employment Development Department, said her agency would stop accepting applications for aid for two weeks while it adopts reforms recommended by a state task force. The department will try to clear a backlog of nearly 600,000 first-time applications and review about 1 million people who have received unemployment benefits but whose cases have come under scrutiny.

These people include gig workers and contractors who have more difficulty verifying their income than do traditional employees whose tax forms are on file with the state.