by Timothy McQuiston, Vermont Business Magazine Weekly unemployment claims increased again last week after being near their lowest levels since the beginning of the pandemic. Claims increased by 44 to 750 (up 87 from the same time last year). The last time claims were under 500 was on March 7 when there were 446.
As for the week's ongoing jobless claims, for the week ending October 24, 2020, the Labor Department processed 12,305 claims, down 936 from the previous week and 9,598 more than the same time last year.
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.
Labor Commissioner Michael Harrington said Friday that nearly all of the last of the emergency unemployment Lost Wages Assistance money has been distributed.
People who are unemployed because of the pandemic can still call the Labor Department, but they would likely need to be reclassified or seek adjudication because of an error or other reason if they have either been rejected for those extra benefits or are being asked to return benefits.
The federal government portion of extra benefits, which is nearly all of the pandemic funding, must meet strict guidelines and there is very little the state can do to mitigate an issue.
The total number of unemployed is about 20,000, including the extra PUA claimants, which is down from the peak last spring of about 90,000 Vermonters getting some type of unemployment insurance.
Congress and the president so far have failed to come up with a new pandemic recovery plan.
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 third 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 4.2 percent unemployment rate likely portrays a rosier economic picture than what actually exists.
Labor Commissioner Michael Harrington said at a recent press briefing held by Governor Scott that the real unemployment rate is more in the 6-8 percent range.
He 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.
Per federal rule, this ultimately decreases the ability of the state to offer extended UI benefits, as they were able earlier in the year.
There are also over 8,000 Vermonters on Pandemic Unemployment Assistance (sole proprietors/self employed etc).
The PUA claims are not included in the unemployment rate calculation.
Harrington also addressed issues faced by the self-employed in collecting benefits.
If SPs did not file their tax returns by a certain time they missed out on some benefits. Harrington said this is a federal government rule. The state was allowed a 21-day grace period, but cases are still being adjudicated.
Also, another issue has been when a self-employed person received even one dollar of regular UI benefits, they are disallowed, again by federal rule Harrington said, from receiving any PUA.
For instance, some people who work for themselves also carry a part-time job. If they got laid off from that job and received any UI payments, then they're stuck on the UI side and cannot get PUA.
The PUA benefits in some cases are more advantageous; for instance they will last through the end of this year. PUA claimants also can get partial payments even if they have some income.
Harrington said the state's "hands are tied" by the federal rules. They are working with individuals still to sort out the benefits. Some individuals have been notified that they must return some or all of their benefits.
In some cases, he said, the automated system was overwhelmed early on and subsequently had to be adjusted with person-to-person contact between Labor and claimants in order to sort out the appropriate benefit level.
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.
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.
In the waning days before the election, a possible agreement fell apart and it appears now that a new proposal will not materialize for the rest of this year.
Scott has also extended his Emergency Order until November 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.
Also, the $1.25 billion CARES Act federal funds have all been allocated, though some budgetary shifting could still occur. The money must be spent by the end of December.
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).
"That $600 is concerning. I know a lot of families are counting on that to cover a lot of their expenses," Scott said over the summer.
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.
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.
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.
Nationwide, according to the US Labor Department for the week ending October 31, initial claims for state unemployment benefits held at 751,000. This is the lowest number since the week of March 14 (282,000). Claims last week were 787,000, which was down from 842,000 the week before.
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. 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 $262.3 million in its Trust Fund and saw the fund decrease by a net of $565,889 last week. This is the smallest decrease in several weeks. 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:
Unemployment rate falls to 4.2 percent in September
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.
