It's still a tight job market, despite record-low initial unemployment claims

Initial claims for unemployment insurance hit a milestone this week: Initial claims fell by 22,000 last week, to 187,000. That’s the lowest level in more than 50 years — when there were about half as many people in the labor market to even get laid off and file for jobless benefits to begin with.

That number could be a sign of a really, really good job market, with extra-low layoffs, and even when folks do get laid off, they find new jobs so fast they barely have time to apply.

Or some other, maybe not so favorable, stuff could be going on.

It used to be that first-time jobless claims provided a pretty good snapshot of the labor market. But, according to Michele Evermore at the National Employment Law Project, initial claims data is “no longer a very reliable economic indicator.”

She said fewer people who get laid off are applying for unemployment insurance. Many states now offer less than 26 weeks of benefits, eligibility has been tightened, and unemployment checks are anemic.

“It replaces so little of prior income. People are better off taking some sort of terrible gig job than they are collecting unemployment,” Evermore said.

Fewer than 1 in 3 unemployed people are even eligible, said University of Michigan economist Betsey Stevenson. Which means those low and falling jobless claims don’t mean we have a robust and healthy labor market, she said.

Stevenson said it is pretty good if you have a job and can keep it. But?

“A low-hire-low-fire environment is particularly hard for people to enter or re-enter the labor market,” she said.

Meanwhile, the percentage of people who’ve been job searching for six months or longer is up sharply over the past year. These workers are “much less likely to reject any job offers they get. They feel like they don’t really have options,” said Daniel Zhao, an economist at Glassdoor.

Younger, less-experienced workers are also facing big challenges, said economist Sneha Puri at the Indeed Hiring Lab.

While senior-level job postings are up 15% year-over year, she said they’re down 6.3% for entry-level roles.

At the same time, more experienced workers are applying for those entry-level positions, increasing the competition for recent high school and college grads.