Weekly unemployment stays low and steady

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Weekly unemployment stays low and steady

Fri, 10/08/2021 - 2:22pm -- tim

by Timothy McQuiston, Vermont Business Magazine Weekly unemployment claims continue to hold at typical pre-pandemic summer levels, with very little fluctuation, even as we get into October. For the week of October 2, there were 333 claims, down 31 for the week and 273 fewer than this time last year. The state unemployment rate is also near its low pre-pandemic levels (3.0 percent August).

For new and continuing claims, as of last week there were a total of 3,218 claims, down 244 from the week before and 15,064 fewer than last year.

So far, the now-expired Federal Pandemic Unemployment Compensation programs have not had a noticeable effect on the labor situation in Vermont, which remains exceedingly tight. However, nationally there appears to be some growth in the first week of October, after a dismal month of September report (see below).

In addition, state legislative leaders have requested clarification by the federal government on why Vermont was not allowed to pay regular UI claimants an extra $25 a week.

The Legislature was hopping mad that a bill it passed and the governor signed last spring cannot be implemented to help out those still on unemployment with that $25 supplement.

Legislators have blamed Labor Commissioner Michael Harrington for dropping the ball by failing to anticipate a technical problem in the bill and once informed by the USDOL of a problem with it, did not inform lawmakers in time to make a change.

Governor Phil Scott has defended Harrington during one of his regular press briefings in September: “From my standpoint this is pretty simple. This was a supplemental benefit that was described as a supplemental benefit by the Legislature.

“We had agreed to try and fund this supplemental benefit with the Trust Fund. So we are under certain restrictions. The Trust Fund is just that. We are entrusted to protect the fund and there are certain criteria, restrictions and so forth, details, that we can't misuse the Trust Fund. The restrictions are in place for good reason, so they aren't used for any other purpose other than unemployment.

“So, again, we, with full knowledge of the Legislature, we reached out to the federal government, the secretary of labor in the Biden administration, and asked them if this was an approved use of the funds. They determined after a long period of time that it is not something that we can utilize out of the Trust Fund, which means that it will have to come from other funding sources if we move forward, which means the General Fund.

“I know that there's a lot of conspiracy theorists out there that this is something dark and mysterious that happened, but it really is about the federal government just saying this is not appropriate. You can't do this. And we have to follow the rules and regulations.

“So it's as simple as that. Now we have to go back to the drawing board a bit with the Legislature to see where they want to get the money from.”

Scott said that short of bringing back the Legislature back for a special session, which he does not intend to do, there is nothing the state can do about this issue until lawmakers reconvene next January. He said the $25 stipend issue is not significant enough to order the Legislature back.

The Federal Pandemic Unemployment Compensation (FPUC), which includes the popular PUA, has been credited with helping keep the economy afloat while also lowering the poverty rate (see US Census report below). Even in its last week, the FPUC was putting about $3.6 million extra into the hands of unemployed or underemployed Vermonters.

Act 51 of 2021 authorized a $25 per week supplemental benefit for all unemployment claims beginning October 3, to individuals receiving unemployment benefits in the regular state unemployment insurance program.

However, the Vermont Department of Labor was formally notified on September 1 by the United States Department of Labor (USDOL) that the $25 per week supplemental benefit does not meet the federal unemployment insurance program requirements and therefore the state cannot use Unemployment Trust Fund dollars to cover this benefit, as was intended under the legislation.

In May 2021, while the General Assembly was considering this legislation, the Department submitted a formal inquiry to USDOL for guidance on the creation of a supplemental benefit prior to it becoming law. The goal was to ensure any law passed met the federal government’s requirements; however, USDOL did not respond until after the bill passed both chambers and went into law.

“The legislative intent was to create a supplemental benefit structured like the Federal Pandemic Unemployment Compensation (FPUC) program, which added a flat amount to each weekly benefit payment. While this is exactly how USDOL structured FPUC over the last year, we were informed that a similar state program is not permitted under federal unemployment insurance law,” said Commissioner Harrington in early September. “It’s unfortunate we are learning about it after the law passed, but we must now adapt to ensure we comply with federal law.”

The Vermont Unemployment Trust Fund is well capitalized. Despite claims reaching a historic peak of 90,000 per week early in the pandemic, the Trust Fund still has nearly half its more than $500 million it had accumulated before the pandemic hit the state in March 2020.

As of last week, there was $210.8 million in the Trust Fund, down $971,016 for the week (as claims are paid out on one side, employers are contributing to the fund on the other). The Trust Fund balance as of March 1, 2020, was $506.2 million.

The end of the Federal Pandemic Unemployment Compensation program on September 4 is now showing a significant drop off in total claims. Already, as of this current reporting week, total claims are down 3,630 from a total of 8,116 just before the programs shut down. 

Individuals on regular UI will continue to collect benefits as they are eligible under regular unemployment, but they no longer see the $300 FPUC supplement.

Employers are hoping that once workers come off UI they will return to the workplace.

Nationally, there is a worker shortage. It is acute in Vermont. Many states, like Vermont, are looking for new Americans, including the recent evacuation of refugees from Afghanistan. Vermont is expecting 100 Afghan refugees in the coming months.

COVID also largely stopped immigration, cross-border workers and college students from alleviating the worker shortage. The Canadian border is still not open to regular traffic. The deadline has been put off because of the persistent Delta variant.

Vermont has a relatively high number of college students. UVM and Bennington College are reporting their largest freshman classes in their history. Middlebury students left campus when COVID hit in the spring of 2020 and are now back.

COVID cases on Vermont campuses so far this fall semester have been very low. The DFR reported on October 5 that there were only 19 cases the previous week out of 28,560 total students on the 16 campuses.

Governor Scott has said he hopes that between the high vaccine rates, the return of college students and the end of the federal program that there will be some relief for employers, especially in the service industry.

Scott has acknowledged that all that will not solve the worker shortage in Vermont, which he has repeatedly point out was a big problem before the pandemic. He also is aware that workers in those hard-hit industries might simply not want to go back to those jobs, or will seek a career change.

There is some concern that the COVID-19 Delta variant could further keep workers away concerned for their health as it could also keep businesses at lower capacity, as potential customers once again play it safe.

This appears to be playing out across the nation.

The Employment Situation Summary (US Bureau of Labor Statistics) for September reported gains of 194,000 jobs, and a large decline in labor force participation.

“This is far lower than most models predicted, and suggests the COVID-19 pandemic continues to slow economic performance across the nation,” according to Dr Michael Hicks, director of the Center for Business and Economic Research at Ball State University, on October 8.

The US unemployment rate also fell from 5.2 percent to 4.8 percent anyway.

Here are more of Dr. Hicks’ takeaways from the September Jobs Report:

• The labor force losses were effectively composed entirely of women, whose levels in the workforce declined by 296,000. This is evidence that continued child care responsibilities are keeping many women out of the labor force.
• Job gains were modest, and spread across most private sectors. This differs from the august report that saw job losses concentrated in hospitality and tourism. Still, 36 percent of all unemployed workers came most recently from jobs in in retail, wholesale, hospitality and tourism sectors. 
• Job losses were clustered in educational services and in healthcare, especially in long term care and specialty care facilities.
• Overall wages for production and no supervisory workers grew well in September, and are up almost five percent over the past 12 months. Some sectors have seen much sharper gains, such as leisure and hospitality which are up 12 percent for the year.
• If any more evidence were needed, it should now be clear that the end of Pandemic Unemployment benefits was not a panacea to employers. Today’s available labor is close to 5.5 million workers fewer than we would’ve expected without the pandemic. That, along with slowing demand is what is causing or moribund job growth at this point of the recovery.

Meanwhile, the state has implemented programs to help people change careers.

The worker relocation program to bring new workers to Vermont also was recently launched.

The Vermont unemployment rate for August was 3.0 percent, unchanged from July. This is near the very low pre-pandemic level, but the labor force, despite gains, has not fully bounced back and is still 4,800 workers less than August 2020.

“As these federal programs end, we know we have more work to do. The Department, and especially our Workforce Development team, are already connecting with claimants and employers to help people get back into the workforce and minimize the impact of this change in benefits”, said Harrington.

The Department has continued to connect with unemployment insurance claimants through direct email and phone outreach to provide information on how the end of federal benefits will impact them, as well as what workforce development support services are available to assist them with re-employment.

Workforce Development team members are located at Job Centers now open for expanded hours across the state and are available for both virtual and in-person career consultations.

Local career specialists can assist jobseekers in finding career and training opportunities, as well as employers looking for talent through job promotion, hiring events, and applicant referrals.

Local and statewide teams continue to hold weekly virtual workshops and events, including sessions on resume writing, re-employment strategies, and virtual job fairs. Learn more at Labor.Vermont.gov/Jobs

NATIONALLY

Weekly jobless claims totaled 326,000 last week, according to the USDOL, a drop of 38,000 from the previous week and below economists projections of 345,000. Continuing claims fell to 2.71 million, which is a decline of 97,000. This reverses a September trend of more claims as the Delta variant plagued the economy as well as the people.

The data suggests that as the FPUC plays out and US COVID numbers decline, employers will more aggressively hire and workers will again seek jobs. Total UI claims under all programs fell to 4.17 million.