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This Number Is a Misleading Indicator of U.S. Labor-Market Strength

Low level of jobless-benefit claims reflects factors including pullback in state aid
Photographer: Luke Sharrett/Bloomberg

The fewest Americans in 42 years are filing applications for unemployment insurance, which on the surface looks like a sign of a historically hot U.S. labor market. The real picture is more complicated.

The decline does reflect overall improvements in hiring, and the headline numbers are impressive. Initial filings have remained below 300,000 for 84 straight weeks — the longest streak since 1970 — and continuing unemployment claims, at 2.05 million, are at the lowest level since 2000.

But the improved job market isn't the only force pushing down the numbers to historical lows. The proportion of jobless workers who collect benefits, or the recipiency rate, is also down, in part because states have scaled back assistance and new filing technology has adversely affected the number of applications.

New laws implemented across several states after the recession have cut the duration of benefits. Until 2011, all states paid at least as many as 26 weeks of aid to eligible, unemployed individuals, according to an August report from the Congressional Research Service. Now, about eight states have less generous plans in effect, ranging from as few as 12 weeks of aid in Florida and North Carolina, conditional on the state's unemployment rate. That makes it less attractive for people to file a claim to begin with.