Jobless claims remain high, while Utah unemployment rate fifth lowest in US

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SALT LAKE CITY — Despite low unemployment statewide, thousands of Utahns are still seeking financial help to get by.

That leads a Utah economist to conclude the state still has its work cut out for it to recover from the COVID-19 pandemic.

"We've already seen some permanent damage to the economy in the form of shuttered businesses, loss of productivity, etc. The longer it takes to vaccinate the population, the more permanent damage we'll incur, and the longer the recovery will take," Weber State University economics professor Andrew Keinsley said.

New data Thursday from the Utah Department of Workforce Services shows 4,535 people filed new claims for unemployment benefits last week. An additional 32,462 filed continued claims. And while last week the state reported a 3.6% unemployment rate for December — the fifth-lowest in the nation — jobless numbers are still more than three times higher than this time last year, when just under 10,000 people filed for unemployment aid.

One reason, a state official notes, is the extension of new pandemic-related benefits.

"The recent passing of the Continued Assistance Act, extending various unemployment programs, was followed by increases in new unemployment claims as well as a subsequent increase in continued claims," said Unemployment Insurance Division Director Kevin Burt. "However, we have now seen an overall decrease in new claims for two consecutive weeks along with the recent publication of a 3.6% unemployment rate for the state of Utah; both positive indicators that employment opportunities continue to exist as Utah's economy recovers from this difficult pandemic."

Regarding the consistently high volume of claims being filed, Burt noted the added benefits for workers who did not normally have coverage.

"Keep in mind that historically when you're looking at unemployment claims in the past, some of these programs didn't exist. For example, the pandemic unemployment assistance, which is for the self-employed gig worker, is included in that 4,500 number, but historically has never existed," Burt said. "So a portion of that (number) is people who have never applied before or were ineligible for unemployment benefits ... That does inflate the number because it introduces a new population that is applying that has not been in the past."

He also said January is typically the month with the largest volume of traditional claims due to seasonal workers seeking assistance during the less busy cold weather months.

Barring something unusual, the next couple of months should see an incremental decrease in the number of claims being received by his office, he added.

Keinsley says the low unemployment rate and higher claims volume may be indicative of the pandemic's impact on the state's still-recovering economy.

"It does seem contradictory that we could simultaneously see a 3.6% unemployment rate along with still-elevated levels of initial unemployment insurance claims. However, it's important to remember where we were pre-pandemic," said Keinsley. "In February 2020, the unemployment rate was 2.5%, which doesn't seem like much of a difference, but it adds up when you consider the size of the labor force. In December, there were approximately 20,000 more unemployed individuals than in February, a 48% increase. The combination of initial claims to both the standard unemployment insurance program and the newly created pandemic unemployment assistance program has been around 4,000 to 5,000 per week, which means that about 20% to 25% of those who are unemployed have recently lost their jobs."

He said that while the Utah labor force is in a much better position than the national average, the state still has a lot of work to do to get back to pre-pandemic levels.

"From a growth perspective, I do expect strong growth for most of 2021, but that will still be recovery from 2020. Since the hardest hit sectors are the service sectors, I don't expect much in the way of overshooting the previous trend," Keinsley said.

There might be some pent-up demand for travel and hospitality services, but many service industries are "likely just hoping to see a return to pre-pandemic levels."

"For example, over the last 10 months I've missed out on 10 haircuts, but I'm not going to go out and get 10 additional haircuts in 2021 to make up for that. If I had put off buying appliances for my home, I might make up for that spending since the appliances still need to be replaced. But most services just don't work that way," he said. "So, overall, I expect robust growth in 2021, but I just can't convince myself that we're going to see extremely rapid growth, high inflation, and the like. I would love to be proven wrong, but I just don't see a viable path for it."