New claims for unemployment insurance jump as automakers idle plants for summer shutdowns
New weekly unemployment claims in Michigan rose by 130% last week compared with the week prior, the U.S. Department of Labor said on July 10, as automotive companies shut down manufacturing plants for the typical summer shutdowns.
New claims, a proxy for layoffs, rose to 15,581 in the week ending July 5, compared with 6,783 the week before, the labor department said. A year ago at this time there were 17,675 new claims for unemployment benefits in Michigan, according to labor department data.
Overall, there were 227,000 seasonally adjusted initial claims for unemployment benefits in the United States last week, a decrease of 5,000 claims compared with the week prior.
A 2020 Chevrolet Silverado HD being built Thursday, Jan. 24, 2019, at General Motors Flint Assembly in Flint, Michigan. Automakers, including GM, often shut down plants in the summer months for maintenance or retooling. New claims for jobless benefits in Michigan often spike in the weeks surrounding the July 4 holiday as automakers use that time for retooling or maintenance. Nick Assendelft, a spokesperson for Michigan's Unemployment Insurance Agency, confirmed that the increase in claims is seasonal and is "related to manufacturing jobs and retooling in the auto industry."
Michigan's unemployment rate has inched up in the last few years after reaching its low point post-pandemic of 3.7% in May 2023, and has hovered above 5% since last August. The state's rate is higher than the average U.S. rate of 4.2%.
Most recently, Michigan's unemployment rate edged down slightly to 5.4% in May after months of increases. More details on June's unemployment rate are expected to be released on July 17.
More on the state's jobless rate in May: Michigan's unemployment rate drops slightly in May but is still above U.S. average
There are signs that's Michigan unemployment rate could remain at these elevated levels in upcoming months.
More than 230 employees of the publicly traded cannabis company TerrAscend Corp. in Michigan will lose their jobs this year as the company, which owns brands such as Gage Cannabis and Cookies, pulls out of the Michigan market, according to a WARN Act notice filed recently with the state.
More on why TerrAscend is leaving: Cannabis giant TerrAscend to exit Michigan market, closing 20 stores and cutting 230 jobs
Meanwhile, Blue Cross Blue Shield of Michigan laid off nearly 220 nonunion employees and eliminated more than 400 open positions in June, and is looking to cut $285 million in administrative costs this year. Michigan State University said late last month that it plans to lay off some faculty and staff as it battles rising costs and shrinking revenue.
Contact Adrienne Roberts: [email protected]
This article originally appeared on Detroit Free Press: Unemployment benefit claims spike as auto plants take summer shutdown
