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Photo by Dave Flessner / Despite continued high rates of jobless claims, some area employers like Dominos are hiring. The pizza chain is hiring 250 workers for its 21 stores in the Chattanooga area.

The number of unemployed workers filing initial claims remained elevated last week even as federal supplements paid to many jobless Tennesseans began to expire.

As a result, unemployment benefits paid to Tennesseans looking for work fell to the lowest level in six months last week and will likely drop even more in the coming month unless Congress restores more federal assistance.

The U.S. Department of Labor reported Thursday that 884,000 Americans, including 11,706 in Tennessee, lost their jobs and filed initial claims for unemployment benefits last week, unchanged from the previous week and higher than any week prior to the outbreak of the coronavirus pandemic in March. Including self-employed workers eligible for relief under the Pandemic Unemployment Assistance program, 1. 7 million Americans sought new jobless benefits last week, up from 1.6 million the previous week.

"The recent August employment report highlighted that jobs are being restored at a slowing pace with a deficit of more than 12 million positions still to recover compared to February," said Mark Hamrick, senior economic analyst for Bankrate.com. "As brick-and-mortar retailers, bars and restaurants continue to operate below par, the risk of permanent job loss remains ever present."

Although initial jobless claims have dropped by more than 90% from the peak reached in April, economists warn that the 13.4 million Americans still getting jobless benefits reflects an economy still recovering from major job losses this spring.

"The claims data were disappointing," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "It is especially concerning that the pace of layoffs has not slowed more materially even though the economy has reopened more fully and more and more businesses have come back online."

The economic crunch for those still unemployed is also intensifying as federal relief measures expire. Through July, the federal government gave an extra $600 a week in jobless benefits to unemployed persons, nearly tripling the benefits paid to most unemployed Tennesseans compared to the state jobless benefits paid before the pandemic.

Congress has failed to extend those benefits and a GOP relief measure failed to pass a procedural vote Thursday in the U.S. Senate.

The Federal Emergency Management Agency provided half of the previous federal jobless supplement, or $300 a week, during August. But the Tennessee Department of Labor and Workforce Development said Thursday that the FEMA money has run out for unemployed Tennesseans and won't continue after the backlog of payments are made to those who were unemployed up until Sept. 5.

Tennessee, which has been using only federal funds to pay jobless benefits since this spring, paid $67.4 million in benefits to 231,347 unemployed persons last week — or nearly $292 per worker. That is less than a third of what many of those workers got a few weeks ago.

Chris Cannon, assistant commissioner for the Tennessee Department of Labor and Workforce Development, said FEMA informed the state that funding for the $300 weekly "Lost Wage Assistance" ran out after the week ending Sept. 5.

"Eligible claimants will receive the additional $300 payment for the weeks ending Aug. 1, 8, 15, 22, 29, and Sept. 5," Cannon said. "Retroactive payments to claimants will be delayed by two or more weeks after the week ending date because of the time it takes to apply for funding, and then the time it takes for the state to receive the funding and process it."

Due to the nature of the federal grant, Cannon said future benefit payments to claimants will have a lag time of one or two weeks, if not longer. FEMA is approving Lost Wage Assistance for Tennessee on a week-to-week basis, Cannon said.

In neighboring Georgia, unemployed claimants will begin getting Lost Wage Assistance payments next week for the first time and will be eligible for up to three weeks of such payments in next week's checks. But those will not continue beyond six weeks of payments.

"Employment is coming back, but it still has a long way to go to get back to where we were in February and many of the measures that helped stabilize the economy during the worst of the downturn are now ending or being reduced," said Bill Fox, director of the Boyd Center for Business and Economic Research at the University of Tennessee.

Last week, the government reported that the nation gained 1.4 million jobs in August, down from 1.7 million in July. It was the lowest monthly gain since hiring resumed in May. The unemployment rate sank from 10.2% to 8.4%, a drop that economists said mainly reflected businesses recalling workers who had been temporarily laid off rather than hiring new employees.

Some local employers are eager to hire more workers, however. Domino's Pizza, which has benefited by more people ordering pizza delivery rather than eating in restaurants, is trying to hire 250 workers in Chattanooga for its 21 local stores.

"The increased demand for deliveries has amplified the need for additional team members," said Justin Shoemaker, a Chattanooga-area Domino's franchise owner. "Stores across the region are continuing to provide pizza to those who are looking for a delicious, hot meal, and at times like this, staffing is critical."

Amazon announced Wednesday it is seeking to hire 33,000 workers, including about 100 more to fill vacant jobs at its fulfillment centers in Chattanooga and Charleston, Tennessee. United Parcel Service also announced this week it is seeking 100,000 employees nationwide to help with its holiday rush in the fourth quarter.

But a government report this week showed that companies are advertising 9% fewer jobs than they did a year ago, leaving roughly 2.5 unemployed workers for every available position. Before the pandemic, there were more openings than unemployed people.

The Associated Press contributed to this report.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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