Jobless claims drop to new pandemic-era low as states get ready to slash benefits

This might look like a slam dunk for critics of those payments — but experts say the connection isn't as straightforward as it might seem.

"We still don't know how much of an effect the unemployment insurance benefits are having on the labor supply and people's eagerness to work," Jed Kolko, chief economist at hiring firm Indeed, told CNN Business.

JPMorgan CEO Jamie Dimon said during a hearing before the House Financial Services Committee Thursday that there are many reasons some unemployed people may feel hesitant from going back to work, including that "people actually have a lot of money and they don't particularly feel like going back to work."

According to Kolko's research, job search activity grew in May in states that announced they would end pandemic benefits early, ahead of the program's official September end date.

Data from Indeed show that a state's share of national clicks on job postings was nearly 5% higher on the day of that announcement, but the increase vanished only a few days later. If the effect is that short-lived, it's unlikely to be because of how much money the jobless receive in benefits.

In fact, Kolko said, there are many — mostly temporary — factors at play as the recovery comes along.

Some people choose to stay home due to continued health concerns. That's especially relevant for workers in jobs that require face-to-face contact. Child care worries are another as some schools and day cares aren't yet operating at their pre-pandemic capacity.

And some unemployed people still expect to be called back to their old jobs, Kolko said.

"People are optimistic about where the economy is going," he added, and that might mean that some "have more confidence to wait and see what their options might be."

Weekly claims for jobless benefits fell to 406,000 on a seasonally adjusted basis last week, the Labor Department reported Thursday. It was a better number than economists had predicted and a new pandemic-era low. Before Covid, weekly benefit claims were around the 200,000 mark.