December 31, 2020

Federal Holidays Lead to Decline in Initial Claims

Dave Shideler and Jonas Crews

Seasonally adjusted and unadjusted initial claims both fell for the week ending December 26; the declines are likely the result of the unusually large number of unemployed workers having fewer days to file in person, with many unemployment offices closed on Christmas Eve and Christmas. Congress was able to pass a new economic stimulus package, which includes a $300-per-week federal unemployment benefit.





Heartland Forward is tracking two key metrics on a weekly basis to understand how the current crisis is impacting the economies across different states: insured unemployment rate and initial unemployment insurance (UI) claims. Seasonally adjusted and unadjusted initial claims both fell for the week ending December 26; the declines are likely the result of the unusually large number of unemployed workers having fewer days to file in person, with many unemployment offices closed on Christmas Eve and Christmas. Congress was able to pass a new economic stimulus package, which includes a $300-per-week federal unemployment benefit. It remains to be seen how the additional benefit will influence unemployed workers’ incentives to file unemployment claims.

Insured Unemployment Rate (IUR)



Observations:

• IUR for the Heartland1, the non-Heartland region and the United States saw IUR decrease for the week ending December 19. Thirty-five states had declining IUR, while 15 states had increasing IUR. Decreasing trends are consistent with the reopening of economies across the country, but also with unemployed workers reaching the maximum number of weeks they are allowed to claim benefits.

• The five states with the highest IUR are: Kansas (6.9 percent), Alaska (6.3 percent), California (6.1 percent), Illinois (5.7 percent) and New Mexico (5.7 percent).

• The five states with the lowest IUR are: South Dakota (0.9 percent), Alabama (0.9 percent), Utah (1.0 percent), Nebraska (1.2 percent), and Tennessee (1.4 percent).

UI Initial Claims



Observations:

• Nationally, 787,000 persons (seasonally adjusted)2 or 841,111 persons (not seasonally adjusted) applied for UI for the week ended December 26, 2020.

• Seasonally adjusted claims fell by 2.4 percent (after revision), and actual claims (unadjusted) fell by 3.6 percent. While seasonal adjustment should take into account unemployment offices being closed for the holidays, it may not have been able to fully adjust for the impact of the closing on the unusually large number of workers seeking to file a claim.

• These states had the highest number of initial claims for the week ending December 26, 2020: California (167,622), Illinois (116,495), New York (50,353), Pennsylvania (37,907) and Kansas (28,949).

• Twenty-five states had more claims last week than the previous week. The 5 states with the largest percentage increase in claims last week are: Delaware (54 percent increase), Kentucky (49 percent increase), Tennessee (38 percent increase), South Carolina (32 percent increase) and Missouri (30 percent increase).

• These states realized the greatest decline in initial claims between last week and the week before: Oklahoma (33 percent decline), Alabama (33 percent decline), Georgia (30 percent decline), West Virginia (23 percent decline) and South Dakota (22 percent decline).

• Of the Heartland states, Illinois, Kansas, Texas, Ohio, and Michigan had the highest levels of initial claims. Nine Heartland states saw initial claims rise. Oklahoma realized the greatest percentage decline in claims, followed by Alabama, South Dakota, Illinois and Texas.

More On Key Terms And Our Methodology

Unemployment Insurance And Initial Unemployment Insurance Claims
Unemployment insurance (UI) is a state administered program that provides a fraction of an individual’s prior wages when they are separated from an employer for reasons beyond the individual’s control. The fraction of wages paid, as well as the length of time an individual can receive benefits, vary by state, however, the Coronavirus Aid, Relief and Economic Security (CARES) Act provided expanded eligibility and enhanced benefits across all 50 states.3 These enhanced benefits officially ended on July 31, 2020, though the last benefit payment was made for the week that ended on July 25, 2020.

Weekly unemployment insurance claims data4 provides the most up-to-date data on employment trends that is available. Economists watch these data as indicators of the economy’s health, as movements in unemployment insurance foreshadow periods of economic contraction or expansion.

The map allows you to observe how the levels of UI initial claims by state and week since March 7, 2020. Shades of red reflect rising claims, while shades of green reflect declining claims. If you hover over a given state, you will be given the level claims for the current data, as well as the level and percent change over the previous week.

Insured Unemployment Rate
The insured unemployment rate (IUR) is the ratio of the number of continuing claims in a given week divided by the number of employees covered by UI during that quarter. Continuing claims are filed to receive benefits for a week of unemployment, so these represent individuals receiving UI benefits. Covered employees is a proxy for the local workforce, as it represents all employees (working and unemployed) that are eligible to receive UI benefits. Data for the IUR represents benefits received for the week before last, or December 19, 2020.

The IUR is proxy for economic activity. An increasing trend indicates economic contraction, since more individuals are receiving UI benefits from week to week. A decreasing trend indicates economic expansion, indicating that people are finding jobs (or returning to their previous jobs) and no longer needing UI benefits.

The user can customize the chart by selecting any or all of the states, including aggregate values for the Heartland and U.S. Hovering over a state’s line will provide the continuing claims, covered employment and IUR corresponding to the week and region nearest the cursor.

Endnotes

  1. The Heartland region consists of these states: Alabama, Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas and Wisconsin.

  2. Seasonal adjustment is a technique used to remove labor market changes that correspond to changes in seasons, providing consistent data for comparison throughout the year. For example, one can anticipate a rise in summer employment as amusement parks or tourism venues increase employment between Memorial Day and Labor Day to accommodate the demand associated with the summer vacation travel season. This increase happens annually, so it would be inappropriate to interpret it as an increase in employment without accounting for the seasonality.

  3. Eligibility was expanded to cover individuals who are quarantined, caring for a family member with COVID-19, or who are voluntarily quarantining arising from health concerns. Additionally, independent contractors and sole proprietors are eligible for unemployment insurance benefits under the Pandemic Unemployment Assistance. Enhanced benefits included a $600 per week supplement to state’s regular payments through July 31, 2020, and an extension of every state’s benefits duration by 13 weeks.

  4. Unemployment insurance claims is reported weekly, 8:30 am Eastern Time on Thursdays, by the U.S. Department of Labor, Employment and Training Administration here: https://www.dol.gov/ui/data.pdf. Historical data is available for download here: https://oui.doleta.gov/unemploy/claims.asp.