U.S. Jobless-Claims Data to Come With Disclaimer on Accuracy

The closely watched weekly reports on U.S. claims for unemployment benefits will soon come with a disclaimer that the figures aren’t accurately capturing how many people are actually claiming benefits, after a government watchdog found the figures to be “flawed.”

The Labor Department “plans to clarify in its weekly news releases that the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits,” the U.S. Government Accountability Office said in a report Monday.

The latest jobless-claims report said 20.5 million people were claiming benefits across all unemployment insurance programs in the week ended Nov. 7. This figure includes programs ranging from regular state unemployment insurance to special pandemic programs providing extended benefits and help for those not traditionally eligible for unemployment assistance.

U.S. Jobless-Claims Data to Come With Disclaimer on Accuracy

But if a person files for six weeks of benefits in a given week, for example, that’s typically counted as six separate people in the total, instead of one person. The GAO report said this method of counting is normal for the Labor Department, and before the pandemic provided a good proxy for the actual number of people claiming benefits.

But with unemployment skyrocketing in March and April and jobless-benefit programs multiplying during the current crisis, the method has led to consistent inaccuracies that have been evident for months.

For example, the number of continued claims submitted in the Pandemic Unemployment Assistance program through June 27 exceeded the number of people who had submitted an initial claim by nearly 20 million, a GAO analysis of 20 states’ data showed.

The accuracy of both regular state and PUA figures have been impacted by double counting, but multi-week claims “are especially prevalent in the PUA program,” the GAO wrote in the report. The Labor Department “improperly represented the number of unique individuals claiming UI benefits and the changes in these numbers from week to week,” the GAO said.

PUA is one of the pandemic programs established by the Cares Act in late March. It extends jobless benefits to those not traditionally eligible, like self-employed and gig workers, and is slated to expire at year-end.

Even though the GAO’s explicit statement that the department “has reported flawed estimates of the number of individuals receiving benefits each week throughout the pandemic” may be jarring, the news doesn’t come as much of a surprise for economists who have been closely watching the figures.

Bigger Trend

“On a longer-term basis, really we care about the trend rather than the level,” said Veronica Clark, an economist at Citigroup Inc. “So even if there is some of the murkiness in the levels of these numbers and still some fraud in even regular continuing claims, as long as we’re looking at the change over time, then that kind of sorts itself out.”

Even with data challenges, the story remains the same, said Joseph Song, senior U.S. economist at Bank of America Corp.

“Claims are still at very elevated levels, and it does suggest that there is still meaningful labor market slack out there,” he said.

It’s not clear if there will ever be an accurate picture of the data. The GAO recommended retroactively collecting figures from states, starting from January 2020.

But the Labor Department disagreed with retroactive collection, citing the coming expiration of the Cares Act unemployment insurance provisions and the “antiquated data systems” and “insufficient level of staff in the midst of historic claims levels” that would make any new reporting requirements challenging.

It would also take nine months to a year for required notice and comment for the new data collection, the Labor Department said in a letter included with the GAO report.

“You can call it something else, or you can come at it from a different direction, but what you’re reporting still needs to be accurate,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. “It’s one thing to say someone’s been receiving these benefits for X number of weeks, OK, but how many people are receiving them? That’s equally important.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.