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Coronavirus Preparedness: Can The US Afford UnempIoyment Insurance?

Updated : August 4th, 2020

Can The US Afford UnempIoyment Insurance

The novel coronavirus has posed the US government with a dreadful conundrum- save the economy or save lives? It’s a chicken and egg situation. The social distancing and the resultant economic slowdown, spiking unemployment and poverty will endanger people.  Without these measures, lives will be lost due to disease and co-morbidities. This begs the question: how is the US equipped to deal with a pandemic breakout? Is there coronavirus preparedness?

The government has made the obvious choice to save lives on priority. A researched model from Imperial College London is the basis of this decision. It suggests that without stringent measures COVID-19 can potentially kill 2.2 mn Americans.

Experts from UCLA estimate that the tightening government restrictions will cause 2 mn job losses and raise the national unemployment rate to more than 5%. This is if social distancing measures are not needed well into the year. 

Emerging Unemployment Crisis In The United States: What Coronavirus Is Doing To The US Economy

The world remembers the 2008 Global Financial Crisis that began in the United States. That crisis began with the banking sector due to bad mortgages. The Coronavirus effects on the economic slowdown are from many economic sectors simultaneously, like travel, tourism, restaurants, movie theatres etc. shutting down. 

Here are some of the sectors shutting down and the ripple effects they will have across the economy:

  • Detroit automakers are temporarily shuttering production to try to contain the spread of coronavirus. Millions of workers and parts suppliers not to mention sales professionals will be affected.
  • New York, New Jersey, Pennsylvania, and Connecticut are temporarily closing all indoor shopping malls, amusement parks, and bowling alleys. These entertainment centers employ thousands of employees earning hourly wages.
  • The capital markets are in jeopardy with fluctuations in all the indices. The Federal Reserve has slashed interest rates to zero.
  • Many eateries and restaurants have been forced to shut down.
  • The real estate sector is seeing trickle-down effects as people save funds for emergencies (and buying houses is not one). Similarly, the tech devices companies will also see effects soon.
  • Delayed shipments from China jeopardize many consumer goods companies.
  • By contrast, supermarkets and food processing industries might see a brief revenue spike. It is however unlikely to last as people will stop having cash to spend over time.

There has been a huge jump in the number of claims filed for unemployment insurance, reflecting the increasing number of layoffs. 

  • Rhode Island alone has 17,779 claims for unemployment insurance over just 8 days.
  • Oregon has had a jump from 800 on March 16 to nearly 19000 on March 18.
  • Texas saw more than 16,000 people filing for unemployment insurance between March 10 and 16.
  • Hawaii’s state labor department website crashed due to over 3000 claims being filed on a single day, March 18.
  • 30,000+ claims have been filed in Connecticut since 13th March.

Typically the number of claims filed on an average in a week number about 4000 in normal times.

The full extent of the pandemic is yet to make itself clear.

Preparedness Of The States To Meet The Financial Requirements Of UI

An important concern is whether the states have adequate funds to pay out the unemployment insurance benefits. This is reflected in the solvency of the states’ trust funds. What does this mean?

Solvency refers to the ability of an entity, the State Unemployment Insurance Trust Fund in this case, to meet its long-term financial liabilities. To understand whether the states’ funds are solvent, we look not at the dollar amount but at the ratio of the fund balance to the wages paid out that year, called Reserve Ratio.

Consider this graph sourced from the US Department Of Labor which ranks the states on the State Trust Fund Solvency. It is worrisome to see States like California, Texas and New York in the red. They host some of the largest employers.

Only 31 out of the 50 states have funds that are at or above the recommended amounts for solvency. One reason why so many states are underprepared may be that there are no federal requirements for any minimum amount of funds that should be maintained in a state’s trust fund.

states fund solvency

If states use up all of their funds on UI payments, they can pay out pending claims by borrowing from the Federal government through the Title XII program. They will have to pay interest on these borrowings, which they may finance through private sector borrowing instruments or through tax revenue deductions by the Treasury Department.

The aid package being planned will not be meant to finance UI alone. If the global production stoppages continue for months, it is unclear how unemployment insurance payments will be extended beyond the usual 26 week period. Not all states will qualify for the extension of an additional 26 weeks.

Can The Proposed Aid Package Spur Coronavirus Preparedness?

Lawmakers are weighing a $1 trillion assistance package to small businesses, to keep them afloat during the coronavirus outbreak. The aid will likely have preconditions as measures to force bailed out companies to keep workers on their payrolls. These may include limits on executive compensation, and prohibitions on stock buybacks which have risen to unprecedented levels in recent times.

Many states have submitted requests to the U.S. Small Business Administration for the extension of SBA Economic Injury Disaster Loans to small businesses. They are facing the brunt of the slowdown.

The President has signed into legislation The Families First Coronavirus Response Act

which gives $1 billion to the states so they can meet the administrative costs of processing unemployment insurance. This will briefly rescue those 23 states with very low UI funds even before COVID-19 hit. Read all about the new law here.

Are You Eligible For UI Benefits If You Lost Your Job Due To Coronavirus?

To help the newly unemployed, the U.S. Department Of Labor has announced unemployment benefits to those who lost their jobs temporarily. However, having understood the state of emergency, the authorities have eased the eligibility criteria. Know the updated rules of UI benefits before filing a claim. 

Most states have passed executive orders exempting people from the work search requirements. The waiting period of a week to receive the first payment has also been waived. Even part-timers and the self-employed are now eligible, as are those forced to remain away from work due to illness or caregiving duties.

Despite the eased rules, those who haven’t met the minimum number of hours of work, or those who haven’t worked in a specific state long enough may find their application rejected. Those ineligible for UI but eligible for Disability Insurance or Family Leave should certainly apply for those.

What Is The Likely Future And How Much Coronavirus Preparedness Do We Need?

More easing of UI norms will be needed along with longer payment periods to support the larger numbers of unemployed citizens.

So far, the government safety net to help the unemployed does not appear sufficient to handle the surge in the claim numbers. Labor websites have been crashing across the states and phone lines have been jammed. The departments find themselves woefully understaffed as some states have recalled retirees and temporarily hired staffers to handle the new claims.

Many employees are under quarantine leading to calls going unanswered.

The Families First Coronavirus response Act is a good start but a more robust response is needed for coronavirus preparedness. It only provides relief to employers with less than 500 employees, and their employees, not addressing bigger employers or groups like students and gig workers who move around a lot.

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  1. I had trouble getting my proof of self-employment to upload in secure file exchange and finally got it submitted by 12:06 am , 6 minutes late. What are the possibilities that they will deny it? I have received unemployment from March 2020 to some of Jan and some in Feb 2021. Most of Dec, Jan, Feb, March, & april were stopped for this proof of employment.
    Also, I see proof of Income as a 2nd issue but it is always on there. That was not on my TO DO list.
    I feel for u all on ID.ME…

    Anyone trying to reach UI, call their number, press 2 or 3 (questions abt filing a claim?) and then wait thru the message. At the end of it, u will be connected to a live person! I promise.. don’t push another button.. I’ve done it 4 times and it never failed.

    We lost our home, my ex took my child…. (kept her after a visit and called cps facilitating drama while the cops wouldn’t give her back without paperwork locked up in the court house..shut down for covid) I raised her by myself for 12 years & now she is with a violent alcoholic and parental alienating parent .. ….my dog, my 9-year sweet little best friend, was attacked, passing away 3 days later.. all in this time frame.
    But! It will all be ok. I have faith.

    Be grateful for your life and all that is in it today. What u dwell on daily will be your strength or weakness.
    Good luck to all of u.
    And thank you, Jeff, for responding out here. It is appreciated!
    Davulia S.

  2. I filed over two months ago. I have not received any information. My status says “pending resolution”. I have no way of contacting anyone. My position was eliminated at my job and I submitted the documentations online. I dont know what else I can do.

  3. I have been apply Ohio Pua unemployment since July 5th still pending issues. Upload what they ask for when ever I call says your case is in Adjudication. Very very frustrated, financially I am broke. Health issues. Waiting a long period.Don’t know what I will do ?

    1. Nafisa,

      I can understand your situation. There will be a delay considering the number of applications that are being processed. Please continue chasing the office/check your status online at regular intervals until payments normalize.

    2. Same here since Feb 2021 turned in all the documents still pending issues 3 months now. When you call they tell you to be patient. Pulling my hair out it’s so frustrating.

  4. I was receiving PUA unemployment. they made me file for a new claim in February. Now I am in adjudication even though I gave all the same information from my previous claim. Have been adjudication since February and I call and they say they will put in a ticket to have an Adjudicator call me. Nothing. I am wondering If I can go down to to Maryland Unemployment Office and demand that someone talk with me to release my claim for payment. It’s been 56 days. I read that they have a maximum of 45 days.

    1. Luis,

      Your adjudicator may be inundated with pending cases. Please continue to follow up (if you have the contact details) or consider the option of visiting an office in the vicinity if safe and feasible.

    2. t sounds just like mine only im disqualified yet actie every till sept 4th . they haven’t asked me for anything! i file then its disqualified yet im told im ok and have nothing to do bit wait for an answer? answer to what? they switched my program and all and asked me to provide proof for a claim that wa denied al eady back in 2018! deny me once and then again perhaps? lol idk

  5. My mom had unemployment in Florida. She just recently moved temporally to California with a sister since she needs assistance, and now the website is telling her she cannot do anything because she is register in another state. Can she keep filing unemployment in Florida, even if she is living and register now in another state? how is the process to change the unemployment? I tried calling and there is no answer. Thank you!

    1. Stephanie,

      Please ask your mother to consider transferring the UI benefits from FL to CA (details will be available on either of the websites). If there are benefits weeks left in the account, she will be able to claim them.

    1. Leatha,

      UI benefits are offered to claimants who lose employment involuntarily and be able to and available for work.

  6. I lived in ga in 2019 and move to florida in 2020 and work for the xmas months in nov-dec. I was told to do a combine wage claim. my question is which state do i file the claim in?

  7. I filed for pua in Ohio back in October 2020.My claim has been in ajudacatuon since 11/1/20.So 2 to 6 weeks is a total understatement! When I call.i am told to basically hurry up and wait some more.I have recently been redetermined and my claim is allowed.but I have one pending issue.How long is too long?

    1. Nicole,

      Unfortunately, nobody has an answer. There are perhaps thousands of pending applications. Please consider the option of visiting an office in the vicinity if safe and feasible.

  8. If you claim your weeks for unemployment and for the next 2 months you still have not received your money. Where can you go in volusia county to talk with a live person

      1. HI Jeff,
        I applied back in Dec 5th, 2020 and I haven’t received any correspondence, is there a local office that I can make an appt to make certain my claim is right.

        1. Adam,

          You can consider visiting an office in the vicinity if safe and feasible (details will be available on the Unemployment Office’s website).

  9. On NYS DOL website, my claim is saying current yet the information is for my old claim with 0 days remaining despite receiving 2 weeks of payments on the new claim and I was able to certify last night. I haven’t received anything; no letters or emails.

  10. I was disqualified for UI benefits for not providing an ID and other forms of identification. How do I fix this?

        1. Gary,

          You may not be eligible since unemployment insurance is only extended to those who become unemployed due to involuntary reasons.

    1. Hi Mike, I’m in NYS and was at the end of my BYE on 3/14, I was still certifying but wasn’t getting paid. I found out I had to file a new claim because my other was exhausted. I’m still waiting on approval. Maybe you have to file a new claim. I hope this helps.

  11. They say 2-6 weeks it’s more accurate to say 2-6 months; and when you call many of them are rude and unwilling to assist!

  12. someone needs to look into Sharon L. Anton gillette, wyo. or dickinson, nd she is a fraud and has done so many fraudulent things and please look into her

    1. Annette,

      Please report it to the Fraud Division of the Unemployment Office in your state. You can report on the website.

  13. I worked part time for thee years here in florida. I’m currently not working. I’m also retired and collects social security.
    My question is
    Am I qualified to file for unemployment ?

    1. Ruby,

      To be eligible, you’re required to have sufficient hours and earnings. Please use the “Benefits Calculator” available on this website.

  14. So adjudication takes 8 to 12 weeks. Oh okay, that explains why I havent received payment since July. That surely helps just like the rest of the information that you give. And by the way. What’s the NEW reason you can’t get through to the Call Center.

    1. Maria,
      I have gotten through to the call center (live agent) every time i’ve tried calling within the last 2 weeks. The number to a live agent (follow the prompts carefully) is (667)-207-6520. i have gotten through within 10 to 15 mins with each call i had made!

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