Last week, there as a jump of nearly 30,000 first time out-of-workers who filed for unemployment benefits. This week was even worse. That number jumped by 44,000 jobless claimants in a single work week with, now, 448,000 "total" workers filing for unemployment (See Full Story).
To put this into some perspective, this kind of jump isn't usually seen unless we have a serious national event such as 9/11 or Katrina or a national labor strike. Usually, increases in the jobless claims will run from an 8,000 to 12,000 increase in jobs per week in a weak economy. A jump of 44,000 is hardly normal!
I still believe that the automatic increase in the New Minimum Wage, that went into effect last Thursday, is at heart of this sudden jump in unemployment. My reason for this are contained in my blog entry titled: "The New Minimum Wage Effect?" (Click to See My Blog Entry). The economy is only growing by, at best, 1 percent. Suddenly, employers across the country are faced with a "Twelve Percent" unearned and automatic increase in their least senior employees.
What would you do if you were an employer and you were already struggling to pay your bills in this soft economy? My guess is that you, too, will let your least senior person go and that's the problem. If I am right, you should see an easing of this situation in the next two job reports. If I'm wrong and this is a trend, we are "seriously" (very seriously) heading for a hard recession.
Image by inoneear's photostream on Flickr with Creative Commons Licensing (Click to View Other Works).