Last week’s economic news presented a sobering picture of the damage caused by the lockdowns in response to COVID-19. U.S. Gross Domestic Product (GDP) fell by more than nine percent, which means all of the nation’s economic growth since the end of 2014 was completely wiped out.
In some better news, however, last week’s decrease in the number of initial unemployment claims filed appears to be turning into a larger trend. While last week’s more than 18,500 initial unemployment claims were the lowest since the pandemic began, this week’s figures fell even lower, as Louisianans filed only 12,500 claims.
Given that the data on those currently collecting unemployment insurance is a week behind initial claims, it’s also unsurprising that we’re seeing that number continuing to hold relatively steady.
So, why did the number of new unemployment claims drop so dramatically? While other states typically offer reasons for fluxes of more than 1,000 unemployment claims, Louisiana has yet to comment on any of the Department of Labor reports. However, the timing and national numbers lead us to deduce the answer is a reduction in unemployment benefits.
Because Congress was unable to reach an agreement about an extension of enhanced unemployment benefits, which provided those out of work with an extra $600 a week, the payments for being on unemployment dropped dramatically at the end of July. A near quarter-million decrease nationally in people applying for unemployment suggests that what is happening in Louisiana is no fluke, but rather a simple matter of incentives.
While a decrease in unemployment claims is certainly something worth celebrating, the real victory will happen when more Louisianans get off of unemployment and return to work. Unfortunately, it will still be a few weeks before we see if Congress’ lack of extension of enhanced benefits will have that effect. Regardless, we’re still a long way from getting Louisiana back to where it was before COVID-19. Until then, we need to do everything possible to reopen the state as quickly and safely as possible.