Maybe. Just maybe.
It will be a couple of weeks before we get a read on changes in the state job situation between mid-April and mid-May, but the two data points we do have suggest that unemployment in Washington peaked in mid-May and is trending down. This tracks with the gradual reopening of economic activity, especially in construction, which saw a large number of temporary job losses.
At the national level, preliminary data for May show that the employment situation has turned around. The May federal jobs report shows an estimated gain of 2.5 million jobs from mid-April to mid-May. Figure 1 shows those gains by sector.
This was a surprising result, and the “jobs Friday” report from the U.S. Bureau of Labor Statistics (BLS) is always subject to revision, sometimes quite significantly. The payroll services firm ADP, which provides national estimates based on its database of millions of payroll transactions, determined that jobs dropped 2 percent in May. Assuming that the actual job figures are between the BLS and ADP estimates, it seems likely that job loss and unemployment have bottomed out nationally.
At the state level, It appears that the “tsunami” of unemployment insurance claims that was predicted in April has not resulted in a tsunami of actual claims being paid. On the contrary, the rolls of people receiving unemployment benefits fell for the second straight week. Figure 2 shows the trends in first time claims, continued claims and payments, and shows the job loss level reported for mid-April.
Over the past two weeks the number of continued claims has been higher than the number of claims actually paid. This should be an indication of falling unemployment. Continued claims are active and valid, but some claimants with continued claims will be back at work already. Claimants are not required to tell the Employment Security Department (ESD) that they are working again: they just don’t file weekly claims, and after four weeks of no claims, ESD removes their claim from “continued” status. So as people return to work, the claims paid line will drop while the continued claims line will drop with a lag. We see that in the past two weeks in Figure 2.
First time claims continue to flood in. It is likely that some of these are valid, as some businesses that had hoped to hold onto employees found that they could not sustain their payrolls. But the state has also been hit with large numbers of fraudulent claims. The fact that continued and paid claims are falling, while jobs are just beginning to open up, indicates that fraud is likely behind a large number of the new claims. Only one out of three initial claims is now being paid, so the initial claims figures have ceased to provide much useful information.
Metro Area unemployment
This week the BLS issued April unemployment estimates for metropolitan areas. While this data is now six weeks old and will have changed, we can see the relative positions of metro areas around the country and the state. Figure 3 shows the unemployment rate for the 30 largest metro areas in the U.S., as of the week of April 12. The light part of the bar represents the unemployment rate one year ago, during a time when the country was considered to be at full employment. (Even during full employment 3 to 4 percent of the workforce is between jobs.) The darker part of the bar represents the additional unemployment added since the coronavirus crisis.
The Seattle metro area is relatively high compared to other metro areas in the country. This may be attributable to the early and more comprehensive shut-down of economic activity in Washington State. It may also be due to the higher reliance on hospitality and visitor industries and the booming construction market that was halted. Of the regions with higher unemployment rates, Las Vegas has suffered from the drop in hospitality, Detroit from the shutdown of auto plants and Los Angeles from shutdowns in the entertainment industry.
Figure 4 shows unemployment for the metro areas of Washington State.
Many areas of the state had higher unemployment levels prior to the coronavirus, so even if they were less affected by the shutdown, their total unemployment will be high. The areas that have been least affected have some common characteristics. Central and Eastern Washington are heavily dependent on agriculture and food processing industries, which have largely remained open. Olympia, Tri-cities, Walla Walla and Bremerton have large government employment bases, and layoffs and furloughs from government agencies have been low.
Although the national employment and unemployment figures are encouraging, the pace of reopening of economies varies widely around the country, so it is difficult to predict state and local employment from the national figures. We will continue to watch the weekly continued claims and paid claims data for hints on trends in employment. The May jobs report for the state and the Seattle metro area will be released on June 17.