Their Take: UArizona’s Eller Professor Says Arizona Unemployment ‘Worrisome’

In response to a recent article in the Wall Street Journal reporting that the trend downward in number of new weekly jobless claims has stalled, Juan Pantano, Associate Professor of Economics at the University of Arizona’s Eller College of Management, believes this focuses more on the aggregate national picture and that the national figures mask substantial heterogeneity across states.

“In Arizona, for example, there has been a surge in the last two weeks on applications for Pandemic Unemployment Assistance (PUA). This new supplemental unemployment benefit is for self-employed workers, contractors and gig workers,” he says. “While Arizona tends to have a larger share of those in its workforce relative to other states, the numbers of new PUA filings are just too large. Arizona seems to account for one third of all new weekly filings nationwide, while only having 2% of the population. If those filings are all legitimate, and there are no backlog reporting issues that could explain the spike, that would be a very worrisome sign.”

Pantano says it’s important to monitor the details of unemployment benefit duration and benefit amount to which people are entitled because some of the early unemployment benefit filers from mid-March are starting to hit the 26-week limit. However, he adds that Arizona, like most other states, has a 13-week extended benefits period that’s kicking in and should continue to help the ones who remain unemployed until the end of this year.

He states, “It will be important to see what happens in December when the benefits for the large number of filers from late March and early April are exhausted. Some argue that people will search more vigorously once they can’t get the benefits, but to me it’s a big question mark of how many of those will be able to return to work, even after putting their best job search efforts.”

Pantano also points to the amount of benefits as the generous $600 supplement expired in late July but was replaced with six weeks of $300 top-off benefit for six weeks. Now that limited supplementation has now also expired, most people are back to the regular unemployment insurance benefit, which in Arizona only pays up to $240 per week. “This more modest weekly benefit might spur some of the unemployed to try harder to return to work,” he says.

The unemployment rate is another area to keep an eye on, according to Pantano, because it serves as a more traditional indicator of the state of the labor market that is updated on a monthly basis. He adds it paints a somewhat better picture: the Department of Labor’s latest numbers for August, released last week, shows one of the largest declines in the unemployment rate experienced by any state was here in Arizona, dropping from more than 10% in July to just 5.9% in August, a number very close to the unemployment rate prior to the  pandemic began.