The Benefit Runs 26 Weeks. The Job Search Does Not.

One line in Thursday's claims report read 1.1 percent. That is the insured unemployment rate for the week ending October 10, published by the Department of Labor.

The headline figure was 194,000 first-time claims in the week ending October 17. Economists polled by Reuters had expected 200,000, and the four-week average fell to 197,750.

In the week of July 18 the count fell to 189,000, the lowest since September 1969. That is the comparison doing the work in the coverage.

Economists called it a low-hire, low-fire labor market. The low-fire half carried the day.

The key observation is that 1.1 percent of insured workers were drawing benefits while 4.2 percent of the labor force had no job.

One rate measures a benefit program. The other measures the labor force.

The insured rate covers workers who qualified for benefits and are still collecting. The Department of Labor put that count at 1.73 million as of October 10.

The Bureau of Labor Statistics counted 7.1 million unemployed Americans in September, out of a labor force of 170.3 million. More than five million of those people were not in the claims data at all.

A first claim requires a recent job and a qualifying separation. In most states the benefit runs 26 weeks.

When that runs out the claim ends, and the unemployment often does not. In September, 1.9 million people had been out of work 27 weeks or longer, which was 27.1 percent of everyone counted as unemployed.

The weekly count leaves them out by design. It was built to measure layoffs, not unemployment.

The longer people stay out, the more of them cross out of the insured count and stay in the unemployed one. Nothing in the weekly report tracks that crossing.

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This is a layoff-rehire lag.

The low-fire half holds up. The Bureau of Labor Statistics put the layoff and discharge rate at 1.0 percent in its August job turnover report.

Hiring is the slow side. The hires rate in that same report was 3.3 percent, which the agency described as little changed from a year earlier.

Few workers are pushed out, and the ones who go wait a long time for the next job. The claims count records the first half of that sentence and none of the second.

The quits rate was 1.9 percent in that August report. That is consistent with workers staying put rather than testing the market, though the survey does not ask them why.

Whether the long waits reflect choice or scarcity is not something these releases separate. The household survey records how long people have looked, not the reason.

Payrolls grew by 29,000 in September, and the unemployment rate stood at 4.2 percent. Both come from the same report.

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The hires rate in the Job Openings and Labor Turnover Survey. This counts jobs actually started rather than jobs posted, and the figures come out monthly, about a month behind the period they cover. A climb would open the exit from unemployment. A further drop would stretch the wait even if nobody else is let go. (Source: Bureau of Labor Statistics)

The labor differential in the Consumer Confidence Survey. Every month households say whether jobs are plentiful or hard to get, which reaches people the benefit rolls never touch. A tilt toward plentiful would put openings within reach. A tilt toward hard to get would lengthen the queue. (Source: The Conference Board)

Announced job cuts. This monthly tally collects publicly announced reductions, which are made before any affected worker files a claim. A jump would end the low-fire half of this market. A steady reading would keep the strain on the hiring side. (Source: Challenger, Gray and Christmas)

Keeping a job and finding one are two different problems. The weekly claims count only ever measures the first.

Talk soon,
The Playbook Daily