Unemployment Claims Are Falling, But Finding a Job Is Still Tough

Here's why the numbers don't tell the whole story.

Last week, about 210,000 Americans filed for unemployment benefits for the first time. That's slightly higher than the previous week but still considered low compared to historical trends, according to the Labor Department.

At the same time, the number of people filing ongoing unemployment claims (called "continuing claims") has been dropping since late last year. On the surface, this might seem like good news—but the reality is more complicated.
 

The Job Market Is Stuck in a Holding Pattern

Right now, we're seeing what experts call a "low-hire, low-fire" job market. Companies aren't laying off many workers, but they're also not hiring many new ones. Job openings are near their lowest point in years.

So if it's so hard to find work, why are continuing unemployment claims going down?
 

Three Reasons the Numbers Are Misleading

1. Layoffs Have Been Low for Months

Guy Berger from the Burning Glass Institute explained that layoffs have remained low, which naturally brings down the number of people collecting unemployment.

However, he warned that this could change—especially with rising energy prices linked to the ongoing war in Iran.

2. Many Job Seekers Don't Qualify for Benefits

Betsey Stevenson, an economist at the University of Michigan, pointed out that most unemployed people aren't even eligible for unemployment insurance. You typically need a solid work history to qualify.

This especially affects young people trying to enter the workforce for the first time. They're struggling to land jobs but can't file for unemployment benefits because they haven't worked long enough.

3. People Are Running Out of Benefits

Alí Bustamante, an economist at the University of New Orleans, highlighted another troubling trend: many job seekers have been unemployed for so long that they've used up all their benefits.

Most states only allow people to collect unemployment for about six months. The share of job seekers who hit that limit before finding work has jumped from around 30% in 2022 to about 40% at the start of this year.

In other words, the drop in continuing claims isn't because people are getting hired—it's because their benefits have simply expired.
 

What Happens Next?

The future of the job market depends partly on global events. Michelle Meyer from the Mastercard Economics Institute said the U.S. attack on Iran is a key factor.

If it continues and energy prices stay high, companies and consumers may start changing their behavior.

That could make job hunting even harder, especially in industries like manufacturing that are heavily affected by energy costs.
 

The Bottom Line

The falling unemployment claims might look like a positive sign, but the reality is more troubling.

Many Americans are struggling to find work, and the official numbers don't fully capture just how difficult the job market has become.

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