For the third week running, Washington state saw fewer new claims for unemployment insurance — another sign, perhaps, that the state’s job market may be stabilizing after months of pandemic.
But with Washingtonians still filing more weekly unemployment claims than they were during the Great Recession — and with job seekers still outnumbering job openings three to one — Washington could also be settling in for a long, very slow slog back a pre-COVID-19 “normal.”
Even if this spring’s massive layoffs are truly behind us, the rapid rehiring in May and June has also subsided, and some experts fear that a high unemployment rate, which hit 9.8% in June, could persist for months.
That gloomy scenario runs counter to the more optimistic “V-shaped” recovery that was discussed early in the pandemic.
But it’s a forecast that has become increasingly common among economists and it could already be playing out in Washington, said Jacob Vigdor, an economist at the University of Washington’s Evans School of Public Policy and Governance. “I wouldn’t be surprised to see the rapid recovery [in May and June] transition into the plateau phase as summer transitions to fall,” he said.
That’s bad news for workers now getting pink slips, even if there are currently fewer of them.
For the week ending August 8, workers filed 22,140 new, or initial, claims for regular unemployment insurance in Washington, an 11.4% decline from the prior week, and third drop in as many weeks, the state Employment Security Department (ESD) reported Thursday.
Nationally, initial claims fell 19%, to 963,000, the U.S. Labor Department said Thursday.
At the same time, however, the total number Washingtonians who now rely wholly or in part on unemployment benefits remains at a historic high.
For the week ending August 8, approximately 391,000 individuals were collecting unemployment benefits in Washington. That’s a decrease of nearly 14% from the prior week, but it still represents an eighth of the state’s non-farm workforce, which stood at 3.18 million at the end of June, the most recent month for which employment numbers are available.
Paid claimants isn’t a perfect indicator of the job market: For example, it misses workers who filed for benefits but haven’t received any, and was likely skewed by the big unemployment fraud in May.
But it still gives a sense of the scale of job losses the state has suffered during the pandemic, and just how far it has to go to full recovery. Washington’s non-farm workforce hasn’t been as low as 3.18 million since late 2015.
Of course, a recovering economy would probably add new jobs faster than was the case in the months leading up the pandemic, when the economy was close to full-employment, said Paul Turek, state economist at ESD. But there are plenty of hurdles before the recovery process can truly start, he said.
The obvious ones relate to the virus — How fast a vaccine or other treatment can be developed for COVID-19, and how badly cases surge in the meantime.
Turek notes how that risk is interwoven with other economic factors that will affect both how fast employers are ready to rehire and how fast workers are ready to go back to work.
Older workers or others at risk from the virus will have “lingering caution” about coming back, he said. Likewise, with most schools hewing to an online format, many women may feel pressure to stay home with kids and “may have some second thoughts on whether they will go back,” Turek said.
On the employer side, the residual effects of the early shutdowns combined with ongoing uncertainty over the pace of the reopening could lead to a second wave of business closures and layoffs.
Already, company layoff notices filed with the state increasingly indicate that the layoffs are permanent, in contrast to earlier in the pandemic, when most were categorized as temporary, Turek said.
On Wednesday, for example, HMS Host, a restaurant operator at airports and travel plazas, notified the state that it intends to permanently cut 297 positions, most of them in SeaTac, on Oct. 15.
On Thursday, the Kent location of Carlisle Interconnect Technologies, a Boeing supplier that manufactures fiber optic and other cable products, announced it would close and permanently cut 595 jobs.
That trend “suggests that more businesses aren’t going to make it through the virus, so we’re going to have fewer jobs available coming out on the other side,” Turek said, adding that the state has “three unemployed people for every job opening.”
Such obstacles don’t automatically rule out a quicker recovery, Vigdor said.
That can still happen under scenarios where falling COVID-19 cases allow schools, child care centers, and consumer-facing business to reopen in the near future – and where federal relief continues to flow to workers and employers in the meantime.
But it’s also easy to picture a scenario where the unemployment rate “is going to bump around over the next few months” — especially as the weather changes, Vigdor notes.
“Right now, for example, we have quite a few restaurants taking advantage of the nice weather to offer outside seating,” Vigdor said. “How’s that going to work in October when it is cool, dark, and drizzly — and there are no football fans in town on any weekends?”