Jobless Claims May See Shutdown Surge

Jobless claims may surge this week if federal workers furloughed due to the partial government shutdown file for unemployment benefits.

About 800,000 workers have been affected by the shutdown but not all of them are eligible for unemployment benefits. About 420,000 employees have been designated essential and required to work without pay. But because they are working, and are legally required to be paid eventually, they are not considered unemployed and cannot collect benefits.

That leaves around 320,000 federal employees who may be entitled to receive benefits because they have been shut out of work.

Only a fraction of those workers are expected to claim unemployment benefits. Those that do and later get paid for the time in which the government was shut down, as has happened in all recent shutdowns, will have to reimburse the government for benefit payments received.

Still, with the federal government having been shut down since December 22nd, some federal workers may be becoming strapped for cash and turn to benefits as a temporary reprieve. With no sign that the border wall funding dispute will end anytime soon, federal employees may decide that they cannot afford to forego claiming benefits.

There was a surge in claims filed by federal government employees during the shutdown in October 2013. Nearly 60,000 additional federal workers filed for unemployment in the week after the government shutdown.

Jobless claims came in lower than expected last week, at just 216,000. Economists had been expecting that number to rise to 221,000 but those forecasts do not include furloughed federal workers. There is a special program for unemployed federal workers, separate from the ordinary state-run jobless benefits.  Claims by federal workers aren’t adjusted for seasonality and are reported with a one week lag.

Claims by workers for private contractors attached to the federal government, many of whom have been shut out of their jobs during the standoff, might also rise. Those workers would file under the ordinary state benefit program.

The size of the surge may indicate how much financial distress the shutdown is inflicting on federal employees. If only a few thousand additional claims are filed, that would suggest federal employees are doing relatively well despite missing their paychecks. If hundreds of thousands apply, that could mean the shutdown caught many federal employees unprepared and without adequate short term cash savings.

Both the House and the Senate have passed bill to guarantee back pay to federal employees once the government re-opens. President Donald Trump is expected to sign the bill into law.