Introduction To The Continuing Claims Report

By Brian Twomey AAA

The U.S. Continuing Claims report is released every Thursday morning at 8:30 a.m. Eastern Standard Time. The economic release determines the number of workers that initially filed and continued to receive unemployment insurance. Data is compiled by the Employment and Training Administration (ETA), an agency within the Department of Labor, from all 50 states, Puerto Rico, Virgin Islands and Washington D.C.

The ETA calculates rates of unemployment for seasonally adjusted workers, non-seasonally adjusted workers, newly discharged veterans, former federal civilian employees and railroad retirement board employees. The ETA further calculates first-time claims and claims that were either extended or received under emergency unemployment compensation, disaster relief and those that fall under previous Trade Readjustment Acts.

The History of Trade Acts
Modern day trade acts began with the Trade Act of 1974 (HR 10710), under which benefits were extended to 52 weeks. Since then, allowances have increased.

The railroad industry was granted a special provision in 1938 under HR 10127, titled the Railroad Unemployment Insurance Act, that allows railroad employees to collect unemployment but are exempt from federal tax on those benefits.

Trade Adjustment Allowances are paid by the federal government to persons whose jobs were affected by foreign imports and who have exhausted unemployment compensation. The Trade and Globalization Adjustment Assistance Act of 2009 is just one example of an act where benefits and cash payouts were extended to workers, as well as provisions instated for retraining.

SEE: Planning For Unemployment

Unemployment Insurance: Then and Now
Unemployment Insurance for disaster relief began in 1974 with the Disaster Relief Act but has been expanded over the years to include pregnant women, sickness and hardship cases. Federal civilian employees began coverage in 1954 under HR 9707, while Korean War veterans began receiving unemployment insurance in July 1952 under HR 7656, named the Veterans Readjustment Assistance Act of 1952. Since 1952, the collection of benefits has expanded with passage of HR 4717 (the Revenue Act of 1982) to all service personnel.

Unemployment insurance as it is measured in the Initial and Continuing Claims report today began in 1935 with passage of the Social Security Act (HR 6635). Coverage was initially extended to national and state banks who were members of the Federal Reserve System and to instrumentalities not owned by state and local governments. As more laws were passed, more industries began coverage with benefit weeks that continued to change.

For example, 1946 saw the expansion of UI benefits to maritime workers; Korean War vets received 26 weeks of benefits yet federal civilian workers received 20 weeks. When HR 12065 was passed in 1958, benefits could be extended by 13 weeks for those who exhausted their claim but were still not gainfully employed. Extensions up to 39 weeks were granted in the early '60s after HR 4806 was passed and the Employment Security Amendments of 1970 (HR 14705), saw UI benefits extended for 39 weeks to employees who were affected by recession. As the recession ended, benefits were scaled back. Today, all industries are eligible under the UI program with an expansion in not only benefit weeks but also extensions.

The federal government has been collecting data about employed and unemployed workers in the UI program since the Social Security Act was originally passed in 1935. Back then, UI information was collected on an annual basis; as a formal, weekly economic release, the continuing and initial claims report began in 1967. The states electronically send their weekly UI claims to the ETA, and the information is broken down by initial claims and continued claims, as well as separated by each state to report trends and changes. The report released Thursday is quite detailed and includes increases or decreases in reported filings for initial or continuing claims. The ETA doesn't include reasons why industries may have experienced an increase or decrease in claims; they only report initial and continuing claims on the full report along with any changes to states.

Seasonal Adjustments
The term seasonally adjusted first entered the lexicon after HR 12987 established the National Commission on Employment and Unemployment Statistics. The purpose of this commission was to measure employment and unemployment trends to find possible deficits in industries that may need help in the future. Since then, the ETA adopted the seasonally adjusted aspects in their report marked for the first time by a four-week moving average to smooth the data. Seasonal spikes occur, for example, during holiday periods such as Christmas, Thanksgiving and Easter, so initial and continuing claims are factored for both seasonal and non-seasonal factors.

SEE: Capitalizing On Seasonal Effects

Calculating the Employment Rate
The calculation of employment rates is based on a covered denominator, which as of 2010 was 130,128,328. Where does this number come from? The Bureau of Labor Statistics in their division of Quarterly Census of Employment and Wages factors the total number of jobs in the United States. The QCEW tracks employment, unemployment and wages to determine how much employers must pay for UI claims. Between a small tax called the future unemployment tax allowance (FUTA) paid by employers and a small tax paid by recipients, UI program expenses and benefits can be paid to the next set of recipients.

What is not covered under the UI program and not factored in the initial claims reports are those that collect benefits under Emergency Unemployment Compensation Claims. This number is lumped together with initial and continuing claims. Exhaustion rates are not calculated by the ETA, nor are they reflected in the initial claims reports. That is the domain of the QCEW. Initial and continuing claims is a straight number that records claimants of initial and continuing claims in the UI program.

SEE: How Unemployment Affects You (Even If You're Working)

The Bottom Line
Continuing claims is an important indicator of economic health and progress. For workers, a rising amount of unemployment claims usually means more hours at the same pay as they try to do their work along with their laid-off coworkers' workload. For investors, changes in this metric can help them spot downturns and recoveries by following the month-to-month and week-to-week employment claim changes.

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