Weekly unemployment claims finally fall under 600

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Weekly unemployment claims finally fall under 600

Fri, 10/16/2020 - 4:03pm -- tim

by Timothy McQuiston, Vermont Business Magazine Weekly unemployment claims fell under 600 and are at their lowest levels since the first week of March. The last time claims were under 600 was on March 7 when there were 446.

For those still unemployed or with reduced wages, more financial assistance is on the way. Vermont Labor Commissioner Michael Harrington said at Governor Scott's press briefing today that $900 checks from the federal Lost Wage Assistance Program will be issued next week.

He said there are about 34,500 claimants who will receive the checks with a total value of about $25 million. Not everyone will receive the full amount depending on their work history.

This new program has somewhat different requirements, for instances claimants had to have lost work to some extent directly from the pandemic and they needed to have received benefits of at least $100 a week.

The state will issue its own batch of $400 checks by the end of October. Scott conceded that this money is only a "stop gap" measure.

This will be the end of the federal funds available to unemployed and underemployed Vermonters, Harrington said.

Governor Scott said the state has been in contact with Vermont's congressional delegation on trying to change the formula the US Census Bureau uses to determine the state's unemployment rate.

Because the state's unemployment rate keeps falling, the state will lose extended benefits for many of those pushed out of work because of the COVID-19 pandemic. But, he said, the reason that the rate keeps falling is because the Labor Force, which is the denominator in the equation, also keeps falling for reasons unique to the current pandemic circumstances.

Those circumstance include people not being able to go out to a job for health concerns or perhaps needing to stay home to care for a child not able to go to school. Other states, Scott said, are having a similar problem.

The state is also urging Congress and the president to come up with a new relief plan. The House has passed a plan but the Senate has suggested a less comprehensive one.

Scott said today that he doubts there will be a relief package before the November 3 election.

Scott also this week extended his Emergency Order until November 15.

As for the week's jobless claims, for the week ending October 10, 2020, the Labor Department processed 543 Initial Claims, down 63 from the previous week and 235 more than the same time last year.

Comparing the data to the same time last year likely provides the best insight to current conditions.

As for further comparison, initial Vermont claims for the week of March 21, 2020, were 3,784, up 3,125 from the week of March 14.

After a spike of claims at the beginning of the pandemic, followed by a steep decline as the economy began to reopen in April, initial unemployment claims fell consistently since the beginning of July before flattening over the last couple months.

Total new and continuing claims, which had been falling during the reopening period in the spring, again fell for a total of 16,003 claims, a decrease of 2,279 from the previous week, but 13,865 more than the same time last year.

Claims 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.

Meanwhile, the state unemployment rate, which was the lowest in the nation before the pandemic, is now fourth lowest in the nation.

However, the VDOL points out that the US Census modeling has not caught up with the reality of the pandemic and Vermont's 4.8 percent unemployment rate likely portrays a rosier economic picture than what actually exists.

Also, the additional $600 in weekly benefits from the federal government for all unemployment programs ended July 25.

The PUA program, which is full funded by the federal government and is intended for non-regular UI workers, will last until the end of the year. They will receive regular benefits (but, again, not the extra $600).

Congress, mired in political bickering, is considering another emergency assistance plan.

"That $600 is concerning. I know a lot of families are counting on that to cover a lot of their expenses," Scott said.

Nationally, economists are concerned that the loss of that extra $600 could send the national economy back into a tailspin, as it will affect everything from consumer spending to the ability to pay for housing.

Over $500 million of federal money has been added to Vermont unemployment checks so far.

Since March 1, over 80,000 new claims have been filed in Vermont when including PUA.

Vermont's unemployment rate fell to 4.8 percent in August from 8.3 percent in July and from 9.4 percent for June, as it continues to edge lower since it spiked in April.

The official Vermont March unemployment rate was 3.1 percent, but the April rate was 15.6 percent, which is the highest on record. The Vermont unemployment rate in May fell to 12.7 percent.

The US rate fell to 7.9 percent in September from 8.4 percent in August from 10.2 percent in July from 11.1 percent in June and in May from 13.3 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.

As in Vermont, the drop in the US unemployment rate is attributed to a decrease in the Labor Force.

Nationwide, according to the US Labor Department for the week ending October 10, initial claims for state unemployment benefits totaled 898,000, which was about 70,000 claims higher than expected and the highest since late August. The weeks before last they were 837,000 and 870,000 and 893,000.

The previous week they were 1.1 million, slightly down from the previous week to that, but up from 963,000 the week before that. Previous to that they were 1.2 million, which fell from 1.43 the previous week.

Claims generally have been falling since the early weeks of the pandemic in March. Early on in the pandemic, US claims reached 5.2 million and 6.6 million claims. Just prior to the steep job loss, there were 282,000 claims on March 14.

US GDP had its worst quarter on record as it fell 32.9 percent in the second quarter; the next worst was in 1921.

The Pandemic Unemployment Assistance (PUA) has added to the ranks of those receiving benefits, but is not counted in the official unemployment rate or these weekly numbers. 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 $270.1 million in its Trust Fund and saw the fund decrease by a net of $3.9 million last week. Payments lag claims typically by a week. Balance as of March 1 was $506,157,247.

Vermont at the beginning of the pandemic had more than double the UI 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.

Scott said the UI fund is not expected to run out under current projections.

"We are in a much healthier position than many other states," Labor Commissioner Michael Harrington said.

Given the Trust Fund's strong performance and the burden of unemployment taxes on employers, Governor Scott 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.

Stories:

August unemployment rate drops steeply to 4.8 as Labor Force falls

Over $100 million in recovery grants awarded, still more available

Businesses to see double-digit rate decrease in workers’ comp insurance in 2020

Tax revenues finish year nearly $60 million above targets

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.

The Vermont Department of Labor announced Thursday, October 1, 2020 an increase to the State’s minimum wage. Beginning January 1, 2021, the State’s minimum wage will increase $0.79, from $10.96 to $11.75 per hour. The calculation for this increase is in accordance with Act 86 of the 2019 Vermont General Assembly.

This adjustment also impacts the minimum wage of “tipped employees.” The Basic Tipped Wage Rate for service or tipped employees equals 50% of the full minimum wage or $5.88 per hour starting January 1, 2021.

The Vermont Department of Labor has announced that the state is set to trigger off of the High Extended Benefits program, as of October 10, 2020. This determination by the US Department of Labor follows the recent announcement of Vermont’s unemployment rate decreasing from 8.3% in July to 4.8% in August.

Vermont's minimum wage rose to $10.78 on January 1, 2019.

The Unemployment Weekly Report can be found at: http://www.vtlmi.info/. Previously released Unemployment Weekly Reports and other UI reports can be found at: http://www.vtlmi.info/lmipub.htm#uc

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 are similar in percentage to those from a year ago, though of course much higher in number in each industrial category.