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Although the Delta variant of the virus has adversely affected the job market, US unemployment claims have dropped to the low point of the new coronavirus pandemic.
The number of Americans applying for unemployment benefits last week continued to show a downward trend, which further shows that the recovery of the US labor market is still on track, and the Delta variable will not trigger new layoffs.
The US Department of Labor said on Thursday that the number of initial jobless claims (representing the number of layoffs) dropped to 310,000 last week. This is the low point of the new coronavirus pandemic, only about 100,000 lower than the pre-pandemic level.
This is good news for the U.S. job market, which is facing the adverse effects of the spread of Delta variants—especially in virus-sensitive companies that involve face-to-face customer interactions such as restaurants, hotels, and air travel.
On Wednesday, the Federal Reserve stated that economic activity in the United States had “slowed” in July and August. But this slowdown is also happening in the context of record vacancies in the United States.
Approximately 10.9 million people begged in July, a record high.
While this is good news for unemployed workers hoping to find a job, it is a stinging tail for the wider economy, because jobs are only officially created when someone is actually hired. In August, the United States added a meager 235,000 non-agricultural jobs—a sharp slowdown from the previous month.
Many analysts mainly blamed the slowdown in job creation last month on the surge in COVID-19 infections related to the Delta variant.
The economy still lacks 5.3 million jobs and cannot make up for all the losses caused by the lockdown last year-and this gap underestimates the depth of the loopholes that still exist in the labor market because it does not consider how much labor and the economy have grown up since then.
But the initial number of initial claims for unemployment benefits shows that with so many vacancies, employers are not in a hurry to lay off employees. Many companies have raised wages or provided signing bonuses to attract unemployed workers to leave.
The disconnect between unemployment and job vacancies was cited by several factors, including companies competing for the same skills when they reopened on a large scale.
Other possible reasons cited include continued lack of childcare services, older workers choosing to retire early, fear of contracting COVID-19, and increased federal unemployment benefits that have prompted unemployed workers to become more critical of their next job.
Those federal unemployment benefits that cover gig workers, including a federal unemployment benefit of $300 a week, have been accused by many politicians (mainly Republicans) as making it more difficult for small businesses to hire more workers and scale up operations.
As a result, more than half of the US states withdrew from the federal unemployment benefit program early. This week, these federal unemployment protection networks completely failed, and more than 8 million people had no unemployment benefits.
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