What Are Jobless Claims?

Jobless Claims Explained in Less Than 5 Minutes

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DEFINITION
Jobless claims are a measurement of the number of people who have filed for unemployment benefits.

If you’re trying to assess business conditions or make economic forecasts, one statistic you might monitor is the number of weekly jobless claims. Jobless claims are a measurement of the number of people who have filed for unemployment benefits. They’re reported weekly by the U.S. Department of Labor. There are two types of jobless claims: initial claims, which are filed immediately after a worker loses a job; and continuing claims, which are filed by people already receiving unemployment benefits.

Learn how jobless claims work and how to make sense of them when you’re following the news. Find out why jobless claims are closely monitored by economists, along with some of the limitations of using these statistics.

Definition and Examples of Jobless Claims

Jobless claims are a measurement of workers filing for unemployment insurance published each week in a news release by the U.S. Department of Labor. There are two types of jobless claims:

  • Initial claims: When a person loses their job, they file an initial claim with their state unemployment office to determine their eligibility.
  • Continued claims: Once a worker has filed a claim and experienced at least one week of unemployment, they file continued claims to receive subsequent unemployment benefits.

The number of initial jobless claims is considered a leading economic indicator, meaning it can be used to predict economic trends.

A spike or drop-off in new unemployment claims can show changes in the labor market, although some ups and downs are normal due to the seasonality of some jobs.

For example, in March 2020, the number of jobless claims skyrocketed as the pandemic shuttered many businesses deemed non-essential. Initial claims for the week of March 14, 2020, were just 256,000. By March 28 of that year, initial claims soared to nearly 6 million before peaking the week of April 4 at about 6.2 million.

How Jobless Claims Work

However, jobless claims don’t tell you the overall unemployment rate. Many types of people are excluded from these claims, including:

  • Self-employed people
  • Unpaid family workers helping at a family farm or business
  • Some seasonal workers and employees of not-for-profit organizations
  • Unemployed workers who have run out of benefits
  • People who haven’t worked long enough to qualify for benefits when they lose jobs
  • People who were fired from their job due to misconduct rather than economic factors
  • Unemployed people who are eligible for benefits but don’t file

In a typical recession, the number of jobless claims starts ticking upward several months before the recession officially begins. Initial seasonally adjusted jobless claims rose during the six-month periods leading up to each of the six recessions before the 2020 crisis. But an increase in jobless claims doesn’t necessarily mean a recession is imminent. Several short-term increases have occurred that haven’t been followed by a recession.

Continued claims aren’t considered a leading indicator because they tend to fluctuate based on the economic cycle. However, they provide supporting evidence of where the U.S. economy is headed.

The number of jobless claims tends to be a good predictor of personal income growth in the six months ahead. An increase in claims is associated with slower income growth, while a drop in claims is typically followed by faster income growth.

To meet the government’s definition of unemployment, a person must be jobless, actively seeking work, and available for work.

Jobless Claims vs. Unemployment Rate

Jobless Claims Unemployment Rate
Released weekly by the U.S. Department of Labor (DOL) Released monthly by the U.S. Bureau of Labor Statistics (BLS)
Counts the number of people who filed for jobless benefits through their state unemployment offices Estimated using a survey of 110,000 individuals, called the Current Population Survey (CPS)
Only includes workers who have submitted claims for unemployment insurance  Includes those who are ineligible for unemployment insurance but are actively looking for and available to work

Jobless claims measure the number of people who have filed for unemployment benefits. They’re compiled based on statistics reported by state unemployment offices. Typically, claims data is published two weeks after the claims were filed.

In most states, a worker can receive unemployment benefits for a maximum of 26 weeks, although extended benefits are often available during periods of high unemployment. Under the CARES Act, workers who lost their jobs due to COVID-19 were eligible for an additional 13 weeks of benefits through federal unemployment programs. Expanded benefits under the CARES Act expired Sept. 6, 2021, although many states opted to end them earlier.

The monthly jobs reports released by the U.S. Bureau of Labor Statistics provides a more complete picture of the unemployment rate than the jobs report because it goes beyond the number of workers who filed jobless claims. It uses a monthly survey of about 110,000 individuals called the Current Population Survey (CPS) to estimate the percentage of the labor force that is employed versus unemployed.

The jobs report counts many people as unemployed who aren’t eligible for unemployment insurance and therefore, wouldn’t show up in jobless claims. For example, people who quit their jobs in search of other work or those who are searching for their first jobs won’t show up in jobless claims. However, these workers would be considered jobless for the purpose of determining the unemployment rate.

Not everyone is considered part of the labor force, though. The labor force only includes those who are employed or unemployed but actively looking for and available for work. Excluded from the workforce are people such as retirees, people in nursing facilities or correctional institutions, and those who have given up on their job searches.

Key Takeaways

  • Jobless claims are statistics reported weekly by the U.S. Department of Labor that show how many people applied for unemployment insurance.
  • Initial claims are filed by workers shortly after losing their jobs to determine their eligibility for unemployment benefits. Continued claims are filed by workers who already have filed claims.
  • The monthly jobs report provides a more complete picture of unemployment because it includes workers who aren’t represented in jobless claims, as they aren’t eligible for or don’t seek unemployment benefits.

Article Sources

  1. U.S. Department of Labor. “Unemployment Insurance Weekly Claims.” Accessed Dec. 22, 2021.

  2. Federal Reserve Bank of St. Louis. “Initial Claims (ICSA).” Accessed Dec. 22, 2021.

  3. U.S. Bureau of Labor Statistics. “How the Government Measures Unemployment.” Accessed Dec. 22, 2021.

  4. California Legislative Analyst's Office. "Why Are Unemployment Claims a Useful Economic Indicator?" Accessed Dec. 22, 2021.

  5. U.S. Department of Labor Office of Unemployment Insurance. “What Is Unemployment Insurance?” Page 3. Accessed Dec. 22, 2021.

  6. U.S. Department of Labor. “Unemployment Insurance Relief During COVID-19 Outbreak.” Accessed Dec. 22, 2021.

  7. U.S. Bureau of Labor Statistics. “How the Government Measures Unemployment.” Accessed Dec. 22, 2021.