by Timothy McQuiston, Vermont Business Magazine Layoffs and business closures due to the economic downturn due to COVID-19 and Governor Scott's "Stay Home, Stay Safe" order have resulted in a rush of unemployment insurance claims. Now, new claims have subsided over the last two weeks but are still at historically high levels.
The weekly claims report indicated that for the week ending April 18, 2020, the Department processed 6,598 Initial Claims, down 3,064 from the previous week but 5,654 more than the same time last year. Total new and continuing claims are 70,911, an increase of 30,045 from the previous week and 65,568 more than the same time last year.
The Labor Department and its 30-year-old mainframe have struggled to keep up. They have added over 100 new staff. But in order to resolve ongoing cases with problems, the state issued over $10 million in direct, $1,200 checks to about 8,300 individuals last Monday.
The federal CARES Act now allows sole proprietors and independent contractors to also participate, which will further swell the numbers of officially unemployed. That program went live Wednesday evening. Individuals can file for claims starting Friday.
On Thursday afternoon, the Vermont Department of Labor distributed its weekly report on the Unemployment Insurance claims through the division of Economic and Labor Market Information.
State officials said while claims might be late, all money owed will be paid eventually back to the actual start date.
This four-week surge eclipses the peak of the Great Recession for the entire year in 2009 of 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 over $500 million in its trust fund and spent over $30 million on claims last week. Payments lag claims typically by a week.
The US unemployment rate for March jumped to 4.4 percent in March, the highest rate since August 2017. The US and Vermont unemployment rates are expected to keep increasing.
But with Governor Scott's order to at first close all restaurants and now all non-essential workers have been ordered home, the claims are expected to continue to mirror the spike in federal numbers, which increased by more than 6 million the last two weeks and more than 3 million the previous week.
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 will more than double current UI payments in Vermont as soon as it can be implemented. The federal government will add $600 a week to the Vermont benefit.
Nationwide, according to the US Labor Department for the week ending April 18, initial claims for state unemployment benefits were 4.4 million versus 5.2 million the previous week. (The week previous was 6.6 million. The weeks before that there were 3.3 million and before that 282,000 claims.) About 26 million Americans have filed for claims since the beginning of the coronavirus outbreak.
The US unemployment rate could go as high as 20 percent at this rate.
The effective unemployment rate in Vermont at almost 71,000 claims would be about 20.7 percent.
UI claims by industry last week in Vermont were not calculated.
Vermont's unemployment rate for March was 3.2 percent, up from February which held at 2.4 percent. SEE STORY.
The US unemployment rate for March, released April 3, jumped to 4.4 percent, the highest since August 2017 and well above market expectations of 3.8 percent.
All these numbers of course are expected to take a precipitous turn for the worse over the next few months, especially when the April report is released in May.
Stories:
Tax revenues for February on target, hit expected over next few months
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.
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.
