State official cautions that it’s too early to speculate on how quickly unemployed Iowans will return to work

The total number of Iowans who filed unemployment claims last week slipped to 172,115, new state data shows. Source: Iowa Workforce Development

The number of Iowans filing unemployment claims fell nearly 12% from the previous week, an indication workers are beginning to return to work as restaurants, bars and retail businesses begin to reopen after ordered closed to slow the spread of the novel coronavirus.

New unemployment data released today by Iowa Workforce Development shows that 172,115 Iowans filed jobless claims during the week that ended on Saturday, which is 23,150, or 11.8%, fewer than the previous week.

During the week that ended May 9, a record 206,668 Iowans filed unemployment claims. Since that high point, the number of weekly claims filed has gradually declined.

In early May, Iowa Gov. Kim Reynolds began allowing restaurants, retail shops, movie theaters and other establishments to reopen as long as social distancing and capacity restrictions were followed. Last Friday, bars and other establishments that serve alcohol were allowed to reopen. 

Beth Townsend, Iowa Workforce Development director, wrote in an email that the drop in jobless claims “is an indication that people are starting to return to work.”

But, she cautioned, “it’s early and we have to see a sustained decrease before we can draw any conclusions.”

However, economist Dave Swenson of Iowa State University finds it worrisome that while most businesses in the state have reopened, the number of jobless Iowans remains high.

The numbers are “still extremely high and will likely come down slowly but remain high, historically, for many months,” Swenson wrote in an email. “There is no reason to expect the state’s economy recovering its pre-pandemic real [gross domestic product] output until well into 2021.”

Swenson also wrote that it’s concerning that jobless claims filed by workers in the manufacturing sector continue to be high. Last week, 1,897 people who worked in manufacturing filed first-time jobless claims. Since mid-March, 57,462 or 24% of first-time filers have been from the manufacturing sector.

Swenson indicated the number of unemployed manufacturing workers could remain high because of the decline in output in durable goods in China, Great Britain, the European Union and United States. 

Consequently, “there will be substantial reduction in demand for many durable goods produced in Iowa,” Swenson wrote. “Slowdowns in durable goods have strong multiplier effects — to other regional suppliers of goods and services — and inevitably lead to higher and more sustained unemployment.”

The data released today by Iowa Workforce Development also shows that during the week that ended on Saturday:

  • 6,920 Iowans filed first-time jobless claims, a 52% drop from the previous week. During the week that ended on April 4, a record 64,194 first-time claims were filed.
  • 553 self-employed or independent contractors filed first-time jobless claims. Since mid-March, 49,787, or 21%, of the newly jobless have been self-employed or independent contractors; 47,648, or 20%, have been from the accommodation and food services sectors.
  • $51 million in jobless benefits was paid out of the state’s unemployment compensation trust fund. Since mid-March, Iowa has paid out more than $444 million in unemployment claims.
  • $105.7 million was paid from the Federal Pandemic Unemployment Compensation fund that was part of the $2 trillion federal coronavirus relief package. Since April 4, $766.7 million in additional benefits has been paid to Iowans from the federal fund. The additional benefit is $600 a week.
  • $4.6 million was paid to self-employed Iowans through the federal Pandemic Unemployment Assistance fund.
    Nationally, 1.87 million new unemployment claims were filed last week, down from the previous week when more than 2.1 million new claims were filed, according to the U.S. Department of Labor.

    In addition, the department reported that the number of people receiving jobless benefits for the week ending May 23 increased to 21.48 million, a spike of 649,000 from the prior week. The advanced seasonally adjusted unemployment rate for the week ending May 23 was 14.8%, according to the labor department. The continuing claims and unemployment rate lag by a week from initial claims filings.