Feb 12, 2021 - Economy

Millions returned to pandemic unemployment programs in January

 Data: U.S. Department of Labor; Chart: Axios Visuals
Data: U.S. Department of Labor; Chart: Axios Visuals

The number of Americans receiving unemployment assistance jumped by 2.6 million, rising to more than 20.3 million, the latest report from the Labor Department showed.

Why it matters: The data suggest that the U.S. made essentially no progress on reducing unemployment during December and January, especially for those affected by the coronavirus pandemic.

What happened: The number of Americans receiving unemployment benefits looked to be declining meaningfully in December and for the week of Jan. 2 fell to less than 16 million, the lowest since March.

  • But that was largely because some states shut down benefits for PUA and PEUC recipients, economists say.

What we're hearing: "The decline wasn’t people getting jobs, it was people getting kicked off the system," Ernie Tedeschi, managing director and policy economist for Evercore ISI, tells Axios.

  • "Now, it’s not that people are losing new jobs, they’re just getting back on the rolls."

Be smart: The decline in the number of unemployment recipients was the result of the delay by Congress in passing legislation to extend special programs like Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation.

  • That was exacerbated by President Trump's decision to wait for days to sign the bill once it was passed.

Watch this space: Of the 1.5 million people added to the PUA program for the week ending Jan. 26 (the most recent week for reporting) 972,286 came from one state — Pennsylvania.

  • Of the 1.2 million people added to the PEUC program that week, 1.08 million came from New York.

Not-so-fun stat: The latest downturn in jobs has largely been pinned on the resurgence of the pandemic. However, the January job cuts report from Challenger, Gray & Christmas found that the three industries with the most layoffs last month were aerospace/defense, telecommunications and warehousing — three industries not highly correlated to pandemic shutdowns.

  • Demand downturn, restructuring and market conditions all were cited ahead of COVID-19 as reasons for the layoffs.

Go deeper: A million American mothers are out of work

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