Why Unemployment Claims May Be Overcounted by Millions

That figure is often treated by economists as an estimate of the number of people receiving unemployment benefits. But that isn’t actually what it measures, at least not directly. It counts applications, not all of which are approved. And rather than counting the number of individuals applying for benefits, it counts the total number of weeks of benefits they apply for.

That distinction doesn’t matter much in normal times, when most people apply for benefits on a weekly basis and are quickly approved. But because benefits are paid retroactively, if there are delays processing applications, people can end up applying for multiple weeks of benefits at once, skewing the continuing-claims number.

That seems to be a particular issue in California, according to a new analysis of state unemployment data by researchers at the California Policy Lab. Some of the recent flood of applications for Pandemic Unemployment Assistance there are from people saying they lost jobs in the early weeks of the pandemic, meaning they could be owed months’ worth of benefits, said Till von Wachter, an economist at the University of California, Los Angeles, who was an author of the Policy Lab analysis.

State officials say many backdated claims in that new flood may be fraudulent. But others may not be, Mr. von Wachter said. Someone in the film industry, for example, might not have applied for benefits right away last spring, on the assumption that business would bounce back relatively quickly. But now, with no reopening in sight, the worker might decide to file — and to claim, legitimately, to have been out of work since April.

Weekly unemployment reports are a timely but flawed measure of the economy.

Article source: https://www.nytimes.com/2020/09/16/business/economy/unemployment-claims-numbers.html