The Illinois Department of Employment Security in Chicago on Friday. The U.S. unemployment rate was 13.3% in May.
Photo: Nam Y. Huh/Associated PressInitial unemployment claims fell to 1.5 million and workers receiving benefits fell slightly to 20.9 million in the latest week, the Labor Department reported Thursday.
Although states continue to work through a backlog of claims, new applications for unemployment benefits have trended down since the pandemic and related lockdowns triggered a surge in claims at the end of March.
As businesses reopen and some recall workers who were furloughed, the labor market appears to be picking up after millions of jobs were lost in March and April. Although unemployment is still at levels unseen in many decades, with employment down by nearly 20 million jobs since February, the jobless rate in May declined to 13.3%, and employers added 2.5 million jobs that month.
Policy debates over the pace of economic recovery are at the heart of discussions regarding the next coronavirus stimulus bill. Democrats and Republicans have been sparring over whether to extend the extra $600 a week that jobless claimants are receiving as part of a federal stimulus bill passed in late March. The expanded benefits are scheduled to expire at the end of July.
Republicans are concerned that the supplemental benefits, which give many workers more money than they were making before the crisis, will discourage people from returning to work, slowing the economic recovery. Democrats want to extend funding for the larger unemployment payments, arguing that if businesses don’t rebound quickly, the additional money will keep millions of workers afloat financially.
Meanwhile, workers are still facing delays in accessing benefits. A recent survey by job search company ZipRecruiter found more than a third of individuals who applied for unemployment benefits after losing their jobs because of the pandemic were still waiting to receive payments. The survey was conducted June 1-4, and included 757 people who applied for benefits because of the pandemic and had logged into the job search site.
Since the pandemic hit the U.S. labor market, many state labor departments have reallocated staff from other departments and updated their decades-old computer systems with cloud-based technology to address a surge in claims.
Now, they are confronting new barriers to delivering unemployment payments. That includes the implementation of a new federal unemployment insurance program for independent contractors and self-employed people.
Nevada started accepting applications from gig and contract workers under this new program on May 16 and has struggled to deal with a surge in filings in recent weeks.
A dedicated phone line meant to help determine whether individuals are eligible for the new unemployment assistance program received nearly 140,000 calls when it launched June 1, according to the Nevada Department of Employment, Training and Rehabilitation. Heather Korbulic, the department’s director, said the high call volume required the center taking the calls to restart its servers, which led to some callers being disconnected.
“This is a system that is entirely new to the state,” Ms. Korbulic said. She said Nevada is dealing with a new technology system and needed to connect the system with other data service hubs. The state also had to refine eligibility rules and work with banks to make payments. “That’s a complex undertaking, and that’s what’s been taking the time.”
Las Vegas resident Adam Kowalski, 39 years old, said he has been out of work since mid-March, when his gig work as a Lyft driver and social media manager dried up. He applied for unemployment assistance under the new program for gig workers on May 16 but confronted an error message in his account about a week later. He said he hasn’t been able to reach anyone for help.
“I have a little savings lined up, I’m not starving,” he said. “But if I go another month without seeing any movement, it might get to a point where ramen noodles will be my meal for the night.”
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In Washington state, officials acknowledged that efforts to deal with a global unemployment fraud ring have slowed down payments for some applicants.
Washington Employment Security Department Commissioner Suzi LeVine said more than 100,000 people were still caught up in concerns about possible identity theft as of last week, many of whom are legitimate claimants. She said fraudulent claims contain increasingly convincing information and need to be dealt with by trained investigators.
“The criminals that have taken advantage of this crisis have also complicated and slowed down efforts to get payments to folks who have been waiting the longest, both here and across the country,” Ms. LeVine said.
She said on June 4 that due to fraud, it would take longer than she had anticipated to finish dealing with all of the claims from applicants who applied before May 1. The state is also holding all claims for two days before making a payment to guard against fraud.
Write to Sarah Chaney at sarah.chaney@wsj.com and Kim Mackrael at kim.mackrael@wsj.com
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