In brief

U.S. jobless claims post surprise drop

U.S. claims for unemployment benefits fell unexpectedly to a one-month low though the recent increases in coronavirus cases and business closures threaten to keep layoffs elevated through early 2021.

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Initial jobless claims in regular state programs declined by 19,000 to 787,000 in the week ended Dec. 26, according to a Labor Department report Thursday. That was less than the 835,000 median estimate in a Bloomberg survey of economists. Without adjustments, claims dropped by 31,736.

Continuing claims for state programs, which roughly correlates to the total number of people receiving state unemployment benefits, also decreased, to 5.22 million in the week ended Dec. 19. Economists projected an increase to 5.37 million.

Underscoring the pandemic’s damage to the job market as 2020 draws to a close, claims for benefits have averaged 1.45 million a week this year compared with about 220,000 in 2019.

The surprise decline in claims is a welcome sign, though the level remains elevated as economic fallout from the coronavirus continues to reverberate. While the stimulus package should cushion the blow of further shutdowns and closures, it may take some time for funds to reach consumers and without a widely available vaccine, is only a temporary measure.

Online tool provides path to more lucrative career

Job seekers can increase their earning power with an online database launched this month by the Federal Reserve Banks of Philadelphia and Cleveland that matches the skills a worker uses in a low-paying job with those in a more lucrative position.

The Occupational Mobility Explorer resulted from a research report released in June that studied the 33 largest labor markets in the United States. The study found that the skills involved in 49% of lower-wage jobs pair up with similar yet higher-paying jobs in the same labor market, according to Keith Wardrip, community development research manager at the Philly Fed and an author of the report.

Fed researchers defined lower-wage jobs as paying below median wages, roughly below a range of $37,000 to $40,000. In Philadelphia, the mark is about $40,000, Wardrip said. Some of the jobs that fall within the lower-wage group include retail sales and food service cashiers, position hard hit by the pandemic.

Researchers found 4,100 “top transitions,” or pairings of occupations that shared similar skills in the same labor market, but with one of the jobs paying at least 10% more. The higher-paying position should also not require a college degree to qualify as a “top transition” job. The online tool includes information on transitions for 257 occupations in Philadelphia: 130 lower-wage and 127 higher-paying occupations.

“You know, roughly two-thirds of American adults don’t have a college degree,” Wardrip said. “And we wanted to shine a light … on the fact that the labor market doesn’t include just two types of jobs: lower-wage jobs and jobs for college-educated people.

According to 2018 figures from the U.S. Census Bureau, about 20% of adults have a bachelor’s degree and 8.5% more hold a master’s.

Fed officials called this middle ground of jobs opportunity occupations. “We found that just under 22% of all employment meets our definition of opportunity employment,” Wardrip said.

Though imagined as an aid for workers, the tool also might show employers that many lower-wage workers might have transferable skills in ways that may not be apparent, Fed officials said.

Wardrip cautioned that his tool paired similar jobs, not identical ones. “So some level of reskilling or upskilling will be required,” he said.

Users can find the free online tool at https://www.philadelphiafed.org/surveys-and-data/community-development-data/occupational-mobility-explorer.

Homebuyers face worst affordability squeeze in 12 years

Record-low mortgage rates were supposed to make it easier for homebuyers. Instead, they’ve helped push affordability to a 12-year low.

Buyers in the fourth quarter needed to spend almost 30% of the average wage to afford a typical house, the biggest share for any three-month period since 2008, according to preliminary figures from Attom Data Solutions. Low borrowing costs, now below 3% for a 30-year loan, have spurred a buying frenzy, driving up prices across the country as shoppers compete for a shrinking supply of listings.

During the pandemic, prices have increased faster than earnings, leaping by double digits in 79% of the 499 counties included in the report. More than half of those counties are now less affordable than their historic averages, Attom said in a report Thursday.

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Mortgage rates ended 2020 near the lowest on record, with the average for a 30-year loan at 2.67%, Freddie Mac said Thursday.

“The future remains wholly uncertain and affordability could swing back into positive territory,” said Todd Teta, chief product officer at Attom. “But, for now, things are going in the wrong direction for buyers.

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