Unemployment benefits are vanishing faster than the job market is improving

August 22, 2013

Here's a noteworthy chart from Sarah Portlock of the Wall Street Journal. The number of Americans who receive unemployment benefits seems to be falling even faster than the labor market has been improving:

The blue line shows the number of Americans filing initial claims for jobless benefits each week. That's been falling gradually, a sign the labor market is on a slow but steady uptick.

Now look at the green line, which shows the total number of people in the United States receiving unemployment benefits. That's been falling much, much faster. A year ago, there were 5.6 million people getting checks. Today, that's dwindled to 4.4 million people.

Why is that? Partly because people are finding work. But another big factor here, Portlock points out, is that people who have been unemployed for a long, long time (as in, a year or more) are now exhausting their benefits — even if they haven't found jobs. At least one million Californians have reached this milestone.

A third reason: Over the past year, both states and the federal government have been throttling back on the maximum length of time they'll offer unemployment insurance. As a result, hundreds of thousands of people have seen their benefits end early. Here was the state of play for unemployment insurance in January of 2012:

Now here's what things look like in August 2013, courtesy of the Center on Budget and Policy Priorities:

Few states offer the same sort of benefits they did in 2011, even though unemployment is still very high in places. The jobless rate is 8.8 percent in North Carolina, for instance, but the state now offers just 19 weeks of insurance, the lowest in the country.

Here's an old post detailing how Congress and the states have been paring back their unemployment programs. And Matthew O'Brien recently wondered whether the cutbacks could be warping our economic data — there's recent research suggesting that the long-term unemployed may simply drop out of the labor force once their benefits get cut off. That makes the official unemployment rate look better, but it's not exactly a sign of a healthy economy.

Related: If the economy's still weak, why are states cutting unemployment benefits?

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Jim Tankersley · August 22, 2013