Unemployment up as a result of government shutdown (but other factors are in play, too)

The government shutdown has already begun to take its toll on our country in a number of ways, including the unemployment rate.

First-time unemployment claims made a definitive and rapid jump during the first full week of the shutdown. Specifically, almost 375,000 people filed for their first week of unemployment benefits during that week.

That number is a shocking 66,000 more than the previous seven-day period, and is the largest jump since November 2012, when Superstorm Sandy ravaged the Eastern United States.

These numbers don’t even include federal workers who may have filed for unemployment benefits while on furlough during the government shutdown. While they are eligible for unemployment, the government is tracking their transactions separately – and there is a two-week delay in the tabulation of their data.

This time, many of the new claimants can be chalked up to the shutdown. For example, about 15,000 applicants came from private sector workers who depend on government businesses currently being furloughed. However, there are other external factors at work as well. For example, about 50% of first-timers during the week in question came from California alone. Why? Processing errors in a new “upgrade” of their computer system has caused delays in many people receiving their first checks. In other words, the unemployment figures in California were artificially held down, and now that the computers are working the number is artificially high for the week.

Because of the shutdown, these unemployment statistics are of utmost importance. But with all this other volatility going on, it’s difficult to be able to ascertain anything substantive or be able to analyze and changes and/or trends in the labor market.