Despite low unemployment, professor sees “permanent damage” to Utah economy

SALT LAKE CITY – Despite low unemployment statewide, thousands of Utahns are still seeking financial help to get by.

This leads a Utah economist to conclude that the state still has some work to do to recover from the COVID-19 pandemic.

“We have already seen permanent damage to the economy in the form of business closures, lost productivity and so on. The longer it takes to vaccinate the population, the more permanent damage we will suffer and the longer it will take to recover. “said Andrew Keinsley, professor of economics at Weber State University.

New data Thursday from the Utah Department of Workforce Services shows 4,535 people filed new jobless claims last week. 32,462 others filed continuing complaints. And while last week the state reported an unemployment rate of 3.6% for December – the fifth lowest in the country – the number of unemployed is still more than three times higher than last year, while just under 10,000 people applied for unemployment assistance.

One of the reasons, notes a state official, is the extension of new benefits related to the pandemic.

“The recent passage of the Continuing Assistance Act, extending various unemployment programs, has been followed by an increase in new unemployment claims as well as a subsequent increase in continuing claims,” ​​said Kevin Burt, director of the Unemployment Insurance Division. “However, we have now seen an overall decrease in new claims for two consecutive weeks as well as the recent release of an unemployment rate of 3.6% for the state of Utah; two positive indicators that employment opportunities continue to exist as Utah’s economy recovers from this difficult pandemic. “

Regarding the consistently high volume of claims filed, Burt noted the added benefits for workers who normally did not have coverage.

“Keep in mind that historically, when you look at unemployment claims in the past, some of these programs did not exist. For example, pandemic unemployment assistance, which is for the self-employed, is included in that number of 4,500, but has never historically existed, ”said Burt. “So part of that (number) is made up of people who have never applied before or who were not eligible for unemployment benefits. … This inflates the number because it introduces a new population that applies that has not been in the past. “

He also said January is typically the month with the highest volume of traditional complaints due to seasonal workers seeking help during the less busy months in cold weather.

Barring something unusual, the next two months should see a gradual decrease in the number of complaints received by his office, he added.

Keinsley said the low unemployment rate and higher volume of claims may be indicative of the impact of the pandemic on the state’s economy, which is still recovering.

“It seems contradictory that we can simultaneously see a 3.6% unemployment rate and still high levels of initial UI claims. However, it’s important to remember where we were before the pandemic, ”Keinsley said. “In February 2020, the unemployment rate was 2.5%, which doesn’t seem like a big difference, but it adds up when you consider the size of the labor force. In December, there were about 20,000 more unemployed than in February, an increase of 48%. The combination of initial claims to the Standard Unemployment Insurance Program and the New Pandemic Unemployment Assistance Program was around 4,000 to 5,000 per week, which means that around 20 to 25% of unemployed people have recently lost their jobs. “

He said that while Utah’s workforce is in a much better position than the national average, the state still has a lot of work to do to return to pre-pandemic levels.

“From a growth perspective, I expect strong growth for most of 2021, but it will still be a recovery from 2020. Given that the hardest hit sectors are the service sectors, I don’t expect much to overtake the previous trend, ”Keinsley said.

There could be pent-up demand for travel and hospitality services, but many service industries are “probably just hoping for a return to pre-pandemic levels.”

“For example, in the past 10 months I’ve missed 10 haircuts, but I’m not going to go out and get 10 more hairstyles in 2021 to make up for that. If I had postponed the purchase of appliances for my home, I might be able to compensate for these expenses, as the appliances still need to be replaced. But most services just don’t work that way, ”he said. “So overall I’m expecting robust growth in 2021, but I just can’t convince myself that we’re going to see extremely fast growth, high inflation and so on. I would like to be proven otherwise, but I just don’t see a viable path for it. “