Weekly unemployment claims keep falling, now under 800

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Weekly unemployment claims keep falling, now under 800

Fri, 02/26/2021 - 11:23am -- tim

by Timothy McQuiston, Vermont Business Magazine Regular weekly unemployment claims last week fell by 222, and are down to 777. Numbers also fell nationally, but remain at a relatively higher level. Economists suggest 2021 is off to a sluggish start.

As for the 1099-G errors sent to Vermont unemployment claimants on February 1, Labor Commissioner Michael Harrington said earlier this week that the new, corrected forms for all the UI programs will go out to claimants by the end of February. He also said that the state will provide claimants with free credit monitoring.

Harrington also reminded UI recipients that all the benefits are taxable.

Claimants had the option to have personal income taxes withheld when they enrolled in UI and PUA, however, taxes were not withheld from LWA, VSTS, or TREAS payments. That means claimants who received these benefits will need to pay state and federal income taxes on them.

For taxpayers concerned about meeting the tax deadline, information can be found on the Department of Taxes’ website at tax.vermont.gov/individuals/file-and-pay/request-extension, including how to request an extension to file federal or state personal income tax returns.

As for the errors, the Department will continue to provide updates to claimants by letter, email, and social media. More information can also be found online at labor.vermont.gov/1099-incident-updates. Claimants who do not have access to the internet can contact the Unemployment Insurance Clamant Assistance Center at 877-214-3332 and select ‘Option 1’ for updates on the 1099-G issue.

The Labor Department typically sends out 6,000-8,000 1099s in a normal year, but between the spike in UI claims because of pandemic-related layoffs and the new federal relief programs, the total number of 1099s required is about 180,000 forms to 101,511 Vermonters.

The error was caught before most of the 1099s were issued. One person could receive more than one 1099 because of the different programs.

Some 1099s were sent to the wrong address and included Social Security numbers and other personal information. The state has recalled all those that were sent and is providing cyber security assistance to those claimants concerned that their personal information was compromised.

Impacted 1099-G forms by program as part of initial mailing:

  • $1200 Checks From Treasury: 7,049 forms
  • Lost Wage Assistance (LWA): 34,126 forms
  • VT Short Term Supplemental Benefit (VSTS): 34,043 forms

*1099 forms sent for LWA and VSTS programs amount to about 45,000 people

The total number of 1099s to be mailed across all programs for 2020 is 180,000. Again, individuals will receive one 2020 VDOL 1099-G form per program that they filed in.

  • Regular UI: 82,569
  • PUA: 18,942
  • Total 2020 Claimants: 101,511

1099 Processing Incident Statement from Vermont Department of Labor:

▪ The Department has created a 1099-G incident webpage summarizing the incident,as well as an FAQ document for claimants to reference. This information can be found at https://labor.vermont.gov/1099-incident-updates.

▪ We have identified the impacted populations which include primarily the LWA and VSTS 1099-Gs. However, out of an abundance of caution, we are recalling all 1099-G documents issued by the Department, regardless of whether the information is believed to be accurate.

▪ Many Vermonters are uncertain as to whether their information was compromised by this incident. To be safe, we are extending identity protection to all claimants who filed a claim with the Department during 2020, regardless of their level of exposure. Additional information about ID protection services can be found below.

▪ We have implemented an option on the UI claimant assistance line (877-214-3332) specific to the 1099-G incident. The script provides information on what happened and what claimants should do moving forward. We will continue to update this message as more information becomes available.

▪ Recapture Update: We have begun to mail out recall notices to individuals who received a 1099-G document. This notice gives a summary of the incident and includes instructions on how to return the initial 1099 document to the Department utilizing the self-addressed and pre-stamped envelope that is included. All recapture notices are expected to be mailed by the end of this week.

▪ Identity Protection Update: Identity protection services have been finalized and will be available to all claimants who filed a claim in 2020 (regardless of whether their information was compromised). The State has contracted with Identity Theft Guard Solutions, Inc (IDX) to provide identity protection service to claimants. This protection will cover claimants for a minimum of 12-months and instructions will be mailed directly to claimants in the coming days.

▪ Reissuing Correct 1099-GsUpdate: We are continuing to work through quality validation checks to be sure the corrected 1099-Gs include accurate information.Claimants will be notified when these documents are mailed out,which will occur in the next two weeks.

Weekly UI Report

Regular weekly UI claims in Vermont last week decreased by 222 to 777 (up 167 from the same time last year, which was before the pandemic hit).

This was the fifth consecutive week that claims fell.

As for ongoing jobless claims, for the week ending February 20, 2021, the Labor Department processed 13,072 claims, down 761 from the previous week and 7,590 more than the same time last year.

As for further comparison, initial Vermont claims for the week of March 21, 2020 (the first full week of the pandemic in Vermont), were 3,784, up 3,125 from the week of March 14.

Labor Commissioner Harrington has said at Governor Scott's media briefings that the new federal stimulus and unemployment money will help Vermonters, even though the unemployment rate is on paper at the same level as it was just before the pandemic led to historic unemployment levels.

He has also said that the new round of UI stimulus has also brought a new round of fraud. He said this is largely not due to individual Vermonters trying to game the system, but from organized entities making a nationwide effort.

For instance, one Vermonter not seeking benefits reported to VBM that he was notified he had applied for benefits in both Vermont and Ohio.

Harrington said that some of these criminal enterprises might include those that swiped personal identification during the Equifax breach three years ago and have waited for the right time to use the information to defraud the UI system.

For the legitimate claims, there were 12,834 on regular UI, 13,547 on PEUC and 8,801 on PUA, and 44 on extended benefits as of February 6, 2021, according to VDOL.

VDOL table as prepared for the Legislature. Click HERE to see full report.

More than $3 trillion in pandemic relief, including CARES Act with the first round of PPP, helped the third quarter grow at a record pace of 33.4 percent.

US GDP had its worst quarter on record in the second quarter as it fell 31.4 percent in that April-June period; the next worst was in 1921, which led to the Great Depression.

As for the direct stimulus payments that went to all adults ($600 individual, $1,200 household) starting just before New Year, the governor said that will inject about $350 million into the state economy right away on top of the unemployment benefits.

Those with direct deposit accounts listed with the IRS have already their stimulus. Those receiving paper checks should get them soon if they have not already.

Scott said the new, $1 trillion stimulus plan includes help for businesses with a new PPP plan but does not include more flexibility for budgetary relief or allowance for states to use unemployment trust funds to further extend benefits.

Most of this round of pandemic relief is in the form of a new round of PPP administered by the SBA, so Vermont small businesses should contact their lender and get the application in or at least ready to go, because it is on a first-come, first-served basis with finite funding available.

It did not include the same high level of discretionary funds for state governments that the CARES Act provided, when Vermont got $1.25 billion.

President Joe Biden has proposed a $1.9 trillion recovery plan. It includes another round of direct payments of $1,400, an increase in weekly UI benefits to $400, plus $400 billion to fight COVID-19, among other measures.

The House is on the verge of voting on this package, which will focus more on local and state budget gaps, as well as provide more flexibility similar to the original CARES Act.

Between the $3 trillion-plus in the first rounds of pandemic relief, plus the $900 billion in December and this proposed $1.9 trillion, total federal relief would be in excess of $6 trillion.

Meanwhile, the state unemployment rate, which was the lowest in the nation before the pandemic, then spiked during the pandemic, has retreated and is now the third lowest in the nation and back to its pre-pandemic level, which is not really that good of a thing.

The VDOL points out that the US Census modeling has not caught up with the reality of the pandemic and Vermont's 3.1 percent unemployment rate in December portrays a rosier economic picture than what actually exists (the November rate was adjusted down to 3.0 percent. The January rate will not be released until March 15 because of the annual reconciliation.)

Harrington has previously said that the real unemployment rate is more in the 5 percent range, and if it included the PUA, the rate is likely more in the 6-8 percent range.

The US unemployment rate is 6.3 percent, but Federal Reserve Chairman Jerome Powell recently said the real rate is closer to 10 percent.

Harrington and Scott said that while the data the US Census collects is not erroneous, they disagree with the methodology the federal government is using given the altered behavior of people during the pandemic.

They said people have left the workforce for reasons related to the pandemic, like for personal safety or childcare, which then lowers the total Labor force, which works as the denominator in the calculations, thus lowering the unemployment rate.

The PUA claims are not included in the unemployment rate calculation.

The PUA benefits in some cases are more advantageous. PUA claimants also can get partial payments even if they have some income.

Scott has also extended his Emergency Order until March 15. He has said that he will continue to extend the Order as long as necessary and that we are "only half-way through" the impact of the novel coronavirus.

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. And now have climbed consistently the last couple of months.

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.

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.

Nationwide, according to the US Labor Department for the week ending February 20, initial claims for state unemployment benefits totaled 730,000, well below the 845,000 expected and down from the 841,000 in the week before, which was up from 793,000. That report was down from 812,000 and 847,000 before that and down from 965,000.

Continuing US claims hit a pandemic low of 4.42 million last week.

Early on in the pandemic, US claims reached 5.2 million and then 6.6 million claims. Just prior to the steep job loss, there were 282,000 claims on March 14.

The 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.

As for regular UI claims in Vermont, during the Great Recession for the entire year in 2009, claims 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 $224.3 million in its Trust Fund and saw the fund decrease by a net of $3.8 million last week. Payments lag claims typically by a week. Balance as of March 1 was $506.2 million.

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 has said the UI fund is not expected to run out under current projections, which is why he wants permission from the federal government to use it for extended benefits now.

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

Stories:

Tax revenues still ahead of projections after revision, but less so: VBM Feb 17, 2021

Vermont unemployment rate up one-tenth to 3.1 percent

Tax revenues soar with one-time money

SBA reopens PPP on January 11

Unemployment benefits extended with authorization of federal relief bill

Unemployment rate falls to pre-pandemic level of 3.1 percent

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. It tracks inflation.

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.