Last week, the United States saw a big spike in both initial unemployment claims and continued claims, and Dr. Peter Rupert, a UCSB economics professor, said he’s worried about that trend showing in Santa Barbara County.
The week of Jan. 9, around 965,000 people in the U.S. filed for unemployment insurance, according to the U.S. Employment and Training Administration’s seasonally adjusted data. The previous week of Jan. 2 reported 784,000 weekly claims.
Also in the week of Jan. 2, there were 5,271,000 continued claims according to seasonally adjusted data, which went up from 5,072,000 the week of Dec. 26.
The seasonally adjusted data shows the numbers considering the layoffs and hires that occur seasonally rather than the raw data, taking into account holidays, school schedules and the harvest period.
The most recent seasonally adjusted data of unemployment rates in Santa Barbara County, according to the UCSB Economic Forecast Project, reported the county’s unemployment rate at 7.4% in November, with 15,528 civilians filing claims. This is lower than the state’s rate, which was reported as 9.7%, but higher than the national rate, which was reported at 6.7%.
While the numbers for December haven’t been reported locally yet, Dr. Rupert, who is also the director of the Economic Forecast Project, said he’s concerned to see the effects of the holiday season on the county, especially with the most recent shutdown.
“I don’t see any reason that it (Santa Barbara County’s unemployment rate) won’t go up a similar amount as the United States,” Dr. Rupert told the News-Press. “Like everyone else, I think that due to the shutdown starting over Christmas and the spikes we saw in COVID, I expect to see numbers not so good coming out from the last month.”
Another set of data that the professor said he’s concerned about is long-term unemployment, which is classified as being unemployed for 27 weeks or more. The Economic Forecast Project reported that, nationally, at the start of 2020, a little less than 5% of people were unemployed for longer than 27 weeks.
Now, that number is almost up to 40%.
“If people are very long-term unemployed, they lose skills,” Dr. Rupert said. “If you’re an employer and see someone who’s been out of a job for 27 or 52 weeks and you’re trying to make a new hire versus someone who’s just come out with an undergrad degree, they would tend to say, ‘This person’s been unemployed for a long time.’
“With some of them, it might not be any fault of the worker and they may have not had any skill decline, but how does the firm know that? Maybe the firm says, ‘We’ll try a new person who we know for sure hasn’t had a skill decline.’”
The second problem, he said, is that firms like to have low turnover and keep workers that they know, which rules out individuals who have been jobless for a long period of time.
Dr. Rupert said that right after the Great Recession, 45% of people who were unemployed had been employed for 27 weeks or more, and it took almost 10 years and “we still didn’t get back to where we were.”
Other lasting effects of long-term employment he discussed included workers having to settle for lower wages and having worse job prospects in terms of income growth.
“We haven’t even been barely 27 weeks into this thing,” Dr. Rupert said. “It takes a while for people to be unemployed for 27 weeks. With more time, we’ll see that go up a little bit more.
“I’m not sure it’ll hit the height we did during the Great Recession, but it could.”
This Friday, December’s unemployment statistics for Santa Barbara County will be released, and Dr. Rupert said he’s not too optimistic about what’s to come.
“I think we haven’t seen the worst of it yet in the data,” he said. “When we see this next spike, people should worry about it. We’re still on this horrible roller coaster, and with the vaccine, maybe it’ll start to slow things down in the next month or two.
“But with the Public Health announcements, there’s still a lot of worry out there. We still have a problem with ICU beds, so people should not think that the worst is over — it’s probably not. We’re going to see some ugly numbers in a month or two.”