A Stern Glance

The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce.

The Labor Department reported today that new claims for unemployment insurance rose by 8,000 to a seasonally adjusted 480,000.

The four-week average, which smooths fluctuations, rose for the third straight week to 468,750.

The figure is the highest in the past two months. Initial claims dropped sharply in late December, raising hopes that layoffs were nearing an end and the economy would soon start generating net gains in jobs.

The figures come a day before the Labor Department is scheduled to report the January employment figures, which are expected to show a tiny gain in jobs. The unemployment rate is forecast to rise to 10.1 percent.

The number of people continuing to claim benefits was unchanged at 4.6 million. That data lags initial claims by a week.

But the so-called continuing claims do not include millions of people who have used up the regular 26 weeks of benefits typically provided by states, and are receiving extended benefits for up to 73 additional weeks, paid for by the federal government.

More than 5.8 million people were receiving extended benefits in the week ended Jan. 16, the latest data available, up from about 5.6 million the previous week. The extended benefit data isn’t seasonally adjusted and is volatile from week to week.

Still, the increasing number of people claiming extended unemployment insurance indicates hiring hasn’t picked up. That leaves people out of work for longer and longer periods of time.

Some employers are continuing to cut jobs. Wal-Mart Stores Inc. said Wednesday that it will eliminate 300 administrative jobs at its headquarters. The company has cut almost 14,000 jobs in the past 13 months, including 11,200 positions at its Sam’s Club stores.

Sony Pictures Entertainment Inc., a unit of Japan’s Sony Corp., said Tuesday it is laying off 450 people and eliminating 100 open positions.

Among the states, Oregon reported the largest increase in claims, with 4,336. Puerto Rico and Hawaii also reported increases. The state data lags initial claims by one week.

California reported the largest drop in claims, a decline of 22,674. Michigan, North Carolina, Georgia and Missouri also reported decreases.

Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it’s expected that the Labor Department’s new estimate will be a loss of 8 million jobs.

The new reading will come when the economists at the department’s Bureau of Labor Statistics release their annual revision of U.S. payrolls from April 2008 through March of 2009 Friday, using data that wasn’t available as the monthly readings were being estimated and reported.

Typically the revision results in only a slight change in the previous estimate — about 0.1% to 0.2% of the total number of jobs. But there was nothing typical about the twelve month stretch that ended last March.

That period included the bankruptcy of Lehman Brothers, the seizing up of financial markets and the U.S. economy toppling close to the brink of another depression.

The government’s current readings show that 4.8 million jobs were lost in those twelve months, more than twice the jobs lost during any comparable April-March period going back to 1939, when the numbers first started to be compiled.

But the department has already given a preliminary look at this Friday’s revision, and it says it believes it will show 824,000 fewer workers on payrolls than the current estimates. That would be the biggest downward revision in the 30 years for which comparisons of those adjustments is possible.

The problem is that BLS models appear to have grossly overestimated the number of new businesses that opened during the recession.

The payroll number is created through a monthly survey of employers, but that survey misses employers who start a business during the course of the year, as well as those who have gone out of business.

So every month BLS uses what is known as a birth-death adjustment to estimate the number of jobs created or lost from that turnover in business.

During the April 2008-March 2009 period, that adjustment added jobs to the overall payroll number in 11 of the 12 months, resulting in a net gain of 717,000 jobs.

There is a concern that this problem didn’t end in March of 2009. In fact, the adjustment added even more jobs — 990,000 — in the nine months reported since then.

So another big revision in the payroll numbers could be looming a year from now. That means this Friday’s report should give pause to anyone who is depending on the official numbers to signal real improvement in the economy.