by Timothy McQuiston, Vermont Business Magazine After a steep decline as the economy began to reopen in April, initial unemployment claims for the last several weeks have flattened and are holding in the 2,000 per week range. They hit their peak in early April. At that point, Governor Scott's "Stay Home" order resulted in the closing of schools, restaurants, construction and more, while many other industries cut back operations.
As the governor has continued to open up the economy, the weekly unemployment insurance claims fell rapidly until early June. The last few weeks has seen them bouncing up and down.
Meanwhile, the May unemployment rate, released two weeks ago, fell nearly four points to 12.7 percent.
For the week ending June 27, 2020, the Labor Department processed 2,163 Initial Claims, up 774 from the previous week and 1,560 more than the same time last year. Initial claims over 700 by themselves would be a relatively high number during normal times.
Total new and continuing claims, which had been falling during the reopening, reversed course with claims at 44,583, an increase of 513 from the previous week, and 40,888 more than the same time last year. Like Vermont, continuing claims nationwide saw a modest increase.
Labor Commissioner Michael Harrington said recently that he attributed the previous increase to the "fluid situation" of the current employment situation.
Harrington added that some workers who had come back part-time might have returned to the unemployment rolls.
The Labor Market, as presented with the most recent unemployment rate report, also saw a small increase from last year.
Since March 1, upwards of 100,000 new claims have been filed. The official Vermont March unemployment rate was only 3.1 percent, but the April rate was 15.6 percent. The US April rate was 14.7 percent, the highest rate since its was first calculated in 1948 and the highest unofficially since the Great Depression of about 25 percent.
The US rate fell in May to 13.3 percent and fell again in June to 11.1 percent. The Vermont unemployment rate in May fell to 12.7 percent (16.5 percent in April up from 3.1 percent in March. The Vermont June rate will not be available until July 17).
Nationwide, according to the US Labor Department for the week ending June 27, initial claims for state unemployment benefits were 1.43 million, slightly higher than economists' expectations.
The previous week they were 1.5 million, about the same as the previous two weeks.
The week before that they were 1.9 million which was down from 2.1 million, before that it was 2.7 million, from 2.98 million the week before, from 3.18 million, and 3.85 million and 4.4 million the previous weeks. (The weeks previous to that were 5.2 million and 6.6 million. The weeks before that there were 3.3 million and before that 282,000 claims.)
About 44.2 million Americans have filed for claims since the beginning of the coronavirus outbreak.
While more industries open up and Scott "hopes" to have 100 percent of businesses back open within two-three months, he also extended his Emergency Order on Monday another month. It is now set to expire July 15.
The recently-launched Pandemic Unemployment Assistance (PUA) has added to the ranks of those receiving benefits, but is not counted in the official unemployment rate. The PUA serves the self-employed who previously did not qualify to receive UI benefits and might still be working to some extent.
This surge during the Great Recession for the entire year in 2009 spiked at 38,081 claims.
The claims back in 2009 pushed the state's Unemployment Insurance Trust Fund into deficit and required the state to borrow money from the federal government to cover claims.
Right now (see data below), Vermont has $360.7 million in its trust fund and spent $11.5 million on claims last week, which was down slightly from the previous week. Payments lag claims typically by a week.
Vermont at the beginning of the pandemic had more than double the Trust Fund it did when the economy started to slide in 2007. It went into deficit and the state had to borrow money from the federal government to pay claims. Some states like California are already in UI deficit because of the COVID crisis.
Given the Trust Fund's strong performance and the burden of unemployment taxes on employers, Governor Scott last week reduced the UI tax on businesses. He also announced that starting the first week of July, the maximum unemployment benefit to workers will increase about $20 a week.
While the UI Trust Fund will not fall into deficit under current trends, the governor has acknowledged that they simply cannot predict it given how economic conditions could swing if there is a second surge of COVID-19. Still, he's moving forward with the UI changes now because the burden on employers and employees is now.
The impact on jobs from the coronavirus (COVID-19) in Vermont on weekly unemployment claims is expected to be profound and the federal aid package more than doubles current UI payments to Vermonters.
The federal government will add $600 a week to the Vermont benefit. That federal benefit is set to expire July 31.
UI tax rates for employers fell again on July 1, 2018, as claims continue to be lower than previous projections. Individual employers' reduced taxable wage rates will vary according to their experience rating; however, the rate reduction will lower the highest UI tax rate from 7.7 percent to 6.5 percent. The lowest UI tax rate will see a reduction from 1.1 percent to 0.8 percent.
Also effective July 1, 2018, the maximum weekly unemployment benefit will be indexed upwards to 57% of the average weekly wage. The current maximum weekly benefit amount is $466, which will increase to $498. Both changes are directly tied to the change in the Tax Rate Schedule.
NOTE: Employment (nonfarm payroll) - A count of all persons who worked full- or part-time or received pay from a nonagricultural employer for any part of the pay period which included the 12th of the month. Because this count comes from a survey of employers, persons who work for two different companies would be counted twice. Therefore, nonfarm payroll employment is really a count of the number of jobs, rather than the number of persons employed. Persons may receive pay from a job if they are temporarily absent due to illness, bad weather, vacation, or labor-management dispute. This count is based on where the jobs are located, regardless of where the workers reside, and is therefore sometimes referred to as employment "by place of work." Nonfarm payroll employment data are collected and compiled based on the Current Employment Statistics (CES) survey, conducted by the Vermont Department of Labor. This count was formerly referred to as nonagricultural wage and salary employment.
UI claims by industry last week in Vermont were not calculated.