by Timothy McQuiston, Vermont Business Magazine Weekly unemployment claims fell by over 100 last week and are at their lowest level since the first week of March. However, there are still about 35,000 Vermonters receiving either regular or pandemic unemployment benefits.
For the week ending September 12, 2020, the Labor Department processed 612 Initial Claims, down 119 from the previous week and 372 more than the same time last year. Summer typically produces the lowest UI numbers.
Comparing the data to the same time last year likely provides the best insight to current conditions.
Initial Vermont claims for the week of March 21, 2020, were 3,784, up 3,125 from the week of March 14. The last time claims were under 600 was on March 7 when there were 446.
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 month.
Total new and continuing claims, which had been falling during the reopening period in the spring, again fell for a total of 24,573 claims, a decrease of 1,733 from the previous week, but 22,429 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 unemployment statistics 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.
President Trump signed an executive order at the beginning of August that would reinstall a $400 payment, with states picking up $100 of that.
Scott has said at his press briefings that the state will use CARES Act funds to pick up the state's share of $100. He said it would cost the state $4-5 million a week. Between the regular UI and PUA there are about 40,000 Vermonters who would be entitled to the extra $400.
Scott said the state is earmarking $20 million with FEMA adding nearly $40 million. Scott acknowledges that this money is only a "stop gap" measure and would only last about three weeks. Recipients therefore will receive about $1,200 over those three or so weeks.
They will receive a separate check for these new funds, which was expected to kick in as early as this week.
Scott said he is still hoping that Congress either allocates more money for unemployment or at least allows the states more flexibility in using unspent CARES Act funds.
For now, the Legislature has written a budget bill that spends all the CARES money, which must be allocated before the end of this year, on everything from "bridge" funding for the state colleges to about $100 million in economic relief for impacted businesses, primarily in the hospitality sector.
The governor was hoping for $133 million in economic relief. The bill is now before the Senate which is expected to act on it within a few weeks.
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, upwards of 100,000 new claims have been filed in Vermont when including PUA.
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 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.
Nationwide, according to the US Labor Department for the week ending September 12, initial claims for state unemployment benefits totaled 860,000 last week. That was down from the 893,000 a week earlier and better than Dow Jones estimates of 875,000.
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.
While more industries open up and Scott "hopes" to have 100 percent of businesses back open this fall, he also extended his Emergency Order until October 15.
He said Vermonters can expect he will keep extending the order as long as required. The order allows him to both open and close the economy and change health care requirements as needed.
He acknowledged the damage done to industries like hospitality, but continues to insist that it would be worse for the economy to close down again if infection rates surged.
There are still state and some federal grants available. See the latest business recovery grants story HERE, as Governor Scott has expanded the recovery programs and seeks assistance from the Legislature to expand them more.
As of current guidance, all of the $1.25 billion CARES funds must be spent by the end of this year. Over $100 million in recovery grants has been awarded so far with more still available.
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 $293.6 million in its trust fund and saw the fund decrease by a net of nearly $8 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 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.
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 are similar in percentage to those from a year ago, though of course much higher in number in each industrial category.