The share of jobless Americans receiving unemployment benefits appears to have fallen to a new low, casting doubt on the reliability of a popular gauge of the US labor market.

About 37% of eligible workers received benefits in 2021, well below the peak of 78% in 2020 when the US government ramped up pay to workers shut out of their jobs by COVID-19 restrictions, according to the latest US Employment and Training Administration data. Before the pandemic, that rate fell to 28% in 2019 from 44% in 2001. Economists estimate the share fell below 30% in 2022.

While thousands of people still file for benefits each week after job losses, restrictions in qualifying for these benefits and reluctance by many unemployed people to apply for them are leading to declines. Combined with recent strong monthly hiring figures, the market-moving unemployment claims have become a less reliable gauge of the US labor market.

"The numbers mean less now," said Stephen Wandner, a labor economist and senior fellow with the National Academy of Social Insurance. "It's harder to get benefits, it's harder to apply for benefits, it's harder to get your initial claims approved and people get benefits for a shorter period of time and get less in some states."

Latest data

There were 230,000 weekly claims for unemployment insurance during the week ending April 22, a drop of 16,000 from the previous week and an increase of 48,000 from the most recent low in September 2022, the US Labor Department reported April 27.

Weekly claims spiked to over 6.1 million in early April 2020, after unemployment benefits were increased and eligibility was broadened under the Coronavirus Aid, Relief, and Economic Security Act. These claims have fallen significantly since the early months of the pandemic and have not risen above 250,000 since January 2022.

Meanwhile, employers added 236,000 jobs in March as the unemployment rate sat near a historic low and the share of people employed or looking for work crept closer to pre-pandemic levels. Fresh data on hiring will be released May 5.

Unemployment benefits go to workers who lose their jobs through no fault of their own and remain willing and able to work. However, the weekly number is not a good gauge of whether more layoffs are underway, said Kathryn Edwards, an adjunct economist at the RAND Corp.

"I tell people to look for movement and direction, not number," Edwards said. "If it's going up, something bad is happening in the labor market, but the number of claims, the claims compared to prior years … I think that those are all meaningless."

Benefit hurdles

Unemployed workers are hesitant to apply for benefits thinking they may not be eligible, may have difficulty figuring how to get benefits, or may not think they need them, believing that they will quickly find a new job, said Nick Bunker, a director of economic research for North America at the Indeed Hiring Lab.

Disparate requirements in each state on how to qualify for these benefits and efforts by some state lawmakers to make it more difficult to receive unemployment insurance have also made this weekly data a poor gauge of job market health.

"There's substantial variation across states and who's eligible for the programs," Bunker said.

The rate of unemployed workers receiving benefits varies greatly by state. In 2022, Minnesota's recipiency rate was nearly 58%, the highest of any state, while Alabama's was just above 8%, the lowest.

Often, stark differences between how states administer unemployment benefits has skewed the relationship between the number of unemployed and the number of those who receive benefits, said the National Academy of Social Insurance's Wandner, who plans to release a book this summer on the need for unemployment insurance reform.

Still, the weekly number, while flawed, can serve as a longer-term indicator of where the domestic jobs market may be headed, Indeed's Bunker said.

"It's a blunt instrument," Bunker said. "It's not a perfect measure, no measure is, but if more people are applying for unemployment insurance it tells you something. It's got a long track record of predicting slowdowns in the US labor market and the US economy."