Weekly Unemployment Claims Are Dropping, but Not in This State

While the overall U.S. economy is improving, one state's unemployment numbers are rising.

After months of depressing news on the unemployment front, things finally seem to be taking a turn for the better. For the past few weeks, new jobless claims have dropped, and for the week ending May 29, they totaled just 385,000.

But while things may be improving for the broad economy, some states are lagging behind, and California is one. For the week ending May 29, California workers filed 74,625 new jobless claims, an increase of 3,570 compared to the week prior. If things don't improve, the state could soon have a serious crisis on its hands.

Boosted benefits only go so far

At a time when many states are experiencing labor shortages -- so much so that they're pulling the plug on boosted unemployment benefits early in an effort to get more jobless people back into the labor force -- California's unemployment level is now 67% higher than where it typically was prior to March 2020, when the pandemic began.

In April of this year, 1.58 million California workers were still unemployed, and last week, California accounted for 17.5% of all U.S. jobless claims. Given that California is home to about 11% of the country's workforce, that's significant.

The good news is that jobless workers in California are still entitled to the $300 weekly boost from the American Rescue Plan -- the relief package signed in mid-March that also put $1,400 stimulus checks into Americans' bank accounts. But that boost expires in early September, and given economic improvements, the chances of an extension are growing slim.

State aid may become available to California's jobless -- if there's money for it in the budget. But for now, those still out of work in California may feel like there's a huge fire under them -- and understandably so.

That said, California has yet to fully lift its coronavirus restrictions. Once the state's economy reopens in full, which is slated for June 15, more jobs could emerge, helping to solve the state's unemployment crisis.

Of course, some workers may still face barriers to getting back into the labor force, from health-related concerns to childcare constraints. A lot of people who want to go back to work can't, because they don't have access to in-person school for their kids. That's a deal breaker for minimum wage workers, because the cost of daytime childcare can wipe out the bulk of their wages.

And while coronavirus vaccines are widely available, some people can't get them due to medical issues. Going back to work could mean compromising their health. Therefore, while there's a strong chance more jobs will open up in California in the coming months, whether the unemployed can capitalize on them is still up in the air.