Coronavirus layoffs spark surge in state jobless claims
JEFFERSON CITY, Mo. - In Ohio, more than 48,000 people applied for jobless benefits during the first two days of this week. The tally during the same period the prior week: just 1,825.
In neighboring Pennsylvania, about 70,000 people sought unemployment aid in a single day - six times the total for the entire previous week.
Jobless claims are surging across the U.S. after government officials ordered millions of workers, students and shoppers to stay at home as a precaution against spreading the virus that causes the COVID-19 disease.
“We've been getting flooded with calls,” said John Dodds, director of the nonprofit Philadelphia Unemployment Project. “It's going to be a big mess, a double mess: illness and unemployment.”
The growing number of people filing for unemployment checks raises fresh questions about whether states have stockpiled enough money since the last recession to tide over idled workers until the crisis ends. Some fear the demand for help could outpace the states' ability to pay claims.
“Our unemployment insurance fund is getting hit pretty hard right now,” said Gov. Gina Raimondo of Rhode Island, where coronavirus-related jobless claims accelerated from zero to nearly 18,000 in barely one week.
Raimondo, a Democrat, said the state needs to start replenishing its fund and appealed for help from the federal government.
President Donald Trump's administration is proposing an economic stimulus package that could approach $1 trillion and include sending checks to Americans within a matter of weeks to help them pay for groceries, bills, mortgages and rent. The Senate gave final approval Wednesday to a separate bill that would inject $1 billion into state unemployment insurance programs.
The federal aid could rival or exceed that of the Great Recession in 2008, when a financial industry crisis led to widespread layoffs. Economic analysts warn the country is likely entering - or already in - its first recession since then.
Valerie Costa, a 41-year-old mother of two, quickly applied for unemployment benefits after the Rhode Island casino where she worked as a bartender and cocktail server closed because of virus precautions. For now, her husband is still working.
“We're limiting our spending. But we also really don't know what to expect,” she said. “Most of us live through our tips, and if no tips are coming in, that makes things tough.”
The last recession led to the insolvency of unemployment trust funds in 35 states that collectively racked up more than $40 billion of debt to keep paying unemployed workers. In many states, those debts were repaid through higher taxes on employers.
To shore up their trust funds, some states also cut the amount and duration of benefits for those who became unemployed in the future.
"States aren't really recession-ready, because it's so hard for people to get benefits, stay in the program, and the benefits are insufficient,” said Michele Evermore, a senior policy analyst at the National Employment Law Project, a New York-based group that advocates for low-wage workers and the unemployed.
Jobless claims and unemployment also are rising around the globe. The U.N.'s International Labor Organization estimates that fallout from the coronavirus outbreak could lead to nearly 25 million job losses worldwide and drain up to $3.4 trillion worth of income by the end of this year.
In the U.S., state unemployment trust funds generally are in better financial shape than they were before the last recession. Yet 21 states began the year with less than the amount recommended to remain solvent in an average recession, according to a U.S. Department of Labor report. At the bottom of the solvency list are many of the most populous states - California, Texas, New York, Illinois, Ohio and Massachusetts.
Ohio Gov. Mike DeWine, a Republican, was among the first to shut down schools, sporting events and certain businesses because of the coronavirus. Unemployment claims have since skyrocketed.
DeWine's administration acknowledged that state lawmakers likely will have to intervene to shore up the state's shaky unemployment trust fund.
“The workers out there should not be worried. It will be funded for their needs," said Ohio Lt. Gov. Jon Husted, also a Republican.
Pennsylvania in January finally made the last payment on billions of dollars of bonds issued in 2012 to cover the unemployment fund debt from the last recession. But its fund remains in danger of insolvency, according to the U.S. Labor Department report.
In Tennessee, new unemployment claims tripled over the past week. Michigan's unemployment agency said Wednesday that it has received over five times as many unemployment applications as normal. And Minnesota said it has been getting more than 2,000 unemployment applications per hour, compared with the usual 40 or 50.