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The weekly initial jobless claim statistic is one that gets reported widely and the trend of new claims is important as a gauge of the health of the employment market. This chart indicates that jobless claims were falling last year and then, in November of 2009, they stopped falling and the trend leveled out or flatlined. What happened? This report and chart has an interesting and, no doubt, somewhat controversial thesis. Here’s the chart:

Source: Political Calculations

As you can see, weekly initial jobless claims were falling over the summer of 2009 and well into the fall. Then, they stopped falling. See if you can figure out what happened back then? I’ll wait.

The folks at Political Calculation believe one very important event was the introduction of the Affordable Health Care for America Act. The act was introduced on October 29, 2009. Ultimately, it passed both houses of Congress and was signed into law in March 2010.

Here is the take from Political Calculations [emphasis added]:

…What we find is that overall the overall trend in the number of initial unemployment insurance claims filed each week is flattening out, and has nearly become flat.

The problem is that the number of new unemployment claims is becoming flat at a level far higher than the average 318,000 level that was typical during the full-employment, low-unemployment years of 2006 and 2007. Instead, we find the level of new jobless claims would appear to be stabilizing around a level of 465,000 weekly claims, some 147,000 claims higher than would be consistent with a growing U.S. economy.

…At least, until something happens to break the current trend, must as the introduction of health care reform legislation did to change the trend for the employee retention decisions of U.S. businesses back in November 2009. Prior to the introduction of the HR 3962 bill, the situation for new jobless claims was actually improving at a rapid rate, but the strong likelihood that health care reform that would impose higher costs on businesses would pass into law derailed it…

We cannot really know why initial jobless claims have flatlined. Uncertainty over health insurance reform costs and regulations almost certainly was one factor, but I don’t buy that it alone was the causal factor.

Another interesting factor in this is that support for health insurance reform is pretty weak. For example, the Kaiser Health survey found this [emphasis added]:

…The Kaiser Health Tracking Poll has support for the bill dropping 7 percentage points in August — down to 43 percent — while opposition rose 10 points to 45 percent. That’s the weakest showing since May — and a far cry from the bump proponents had hoped to see as some of the law’s more consumer-friendly provisions kick in..

A poll from Rasmussen Reports found this [emphasis added]:

Just over half of U.S. voters continue to believe that the new health care law will increase the cost of care and believe the law will be bad for the country…

I seldom attribute changes in a complex event such as jobless claims to a single cause, but something did happen late last year. The fact that it happened about the time health insurance reform legislation was introduced does not mean that was the sole cause, but I have a sneaking suspicion that it played a role. Other factors are widespread uncertainty over the economy, business conditions.

Any alternate ideas?

Source: Initial Jobless Claims: How Did They Stop Falling?