Once Again, Pandemic Unemployment Assistance Data Confound

Today’s initial claims report from the US Department of Labor includes the usual mix of initial and continuing claims data about the permanent federal-state unemployment insurance (UI) program, as well as various temporary federal programs. Those federal programs include Pandemic Emergency Unemployment Compensation (PEUC), a program providing extended benefits to those who exhaust UI benefits, and Pandemic Unemployment Assistance (PUA), a program providing unemployment checks for the first time to gig workers, independent contractors, and others who earned too little to qualify for UI benefits.

As I noted previously, PUA data — and especially “continuing claims” data — have been subject to wild swings, in part because they include weeks of backlogged claims. For example, if someone applied for PUA 10 weeks ago and was only made eligible for PUA benefits this week, they would appear to be 10 “persons” under the current count of PUA continuing claims. As Bloomberg News noted this morning, “the number of continued claims…has been inflated by states counting multiple retroactive weeks by one person instead as multiple people.”

This dynamic meant that for many weeks the number of people apparently “on” PUA was significantly greater than the number who had ever applied to get on. At one point, that nationwide “PUA gap” — the degree to which apparent PUA “recipients” outnumbered people who had ever applied for PUA benefits — was nearly six million. 

While the PUA gap shrank significantly in recent weeks as states cleared their PUA claims backlogs, it appears to be making a comeback with this week’s data. Today’s DOL report includes the following table of data (highlights added):

The table suggests that during the week ending August 15, 524,986 individuals filed an initial claim for PUA benefits, yet somehow the total number of people receiving PUA benefits nationwide that week rose by 2,597,557. Digging a little deeper into the report provides more explanation for what is going on. A later table displaying state-by-state PUA continuing claims for the week ending August 15 shows that California’s reported continuing claims rose by a massive 2,350,119 (76 percent) from the week before. The increase in California accounts for 90 percent of the reported rise in national PUA continuing claims for the week ending August 15.

Meanwhile, the most recent news release from California’s Economic Development Department indicates the current four-week moving average number of PUA recipients (through the week ending August 22 and thus including the week ending August 15) was 1,480,000. That’s still a huge number, but almost four million fewer than the 5,424,687 apparent “continuing claims” for PUA in California listed in today’s DOL report. Ironically, while a major explanation for the current week’s PUA gap in California is presumably the clearing of more backlogged claims, this week’s DOL initial claims report leaves off the “Backdated claims data may be included in these figures” disclaimer included in last week’s and other recent initial claims reports. Another possible explanation may be fraud, which has been a major concern for PUA nationwide.    

This week’s DOL report also shows a continuing rise in the number of initial claims for PUA benefits filed nationwide in recent weeks. That’s a more solid number, and reflects a trend worth watching, including as PUA benefits are payable to parents who can’t work because their children are home from school. Another contributing factor to the rise could be the depletion of state UI trust funds, which have been hammered by massive claims for UI benefits. Already 18 states (including California) have exhausted their UI trust funds and depend on federal loans to continue making good on UI benefit promises. More states are likely to join them in needing federal loans. That will only add to the state and federal UI payroll tax hikes ahead. Given that, states have a strong incentive to shift unemployed individuals onto the PUA program whenever possible, as PUA is 100 percent federally funded and thus apparently “free” to them and their taxpayers. As unemployment continues to be elevated, that dynamic bears close attention as well.