To find out all about Coronavirus-related unemployment benefits     
FileUnemployment

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.

Related Tags : , , , ,

Did you find this article helpful?   YES | NO   image

  1. So I have been getting ue for 6 months and on Oct 21 I had a fact finding issue found and cleared after taking a month, I got put on hold I got nothing no benefits nothing because I am on hold until cleared up and it was another month later in my favor, I’ve been without payment since Oct 21 since then I have been on HOLD, I am beyond pissed, I call every Fri I see the letter I received saying its in my favor that says I am Monetary Eligible-yet I still have 6 payments on hold. I call DEO and I talk, I beg and I get told “we are working on it”, the letter is in my favor I am poor not rich I am poor Why how do you people get away with this

  2. Hello

    I’m 59 years old and was laid off in March 2020 due to Covid.
    In June 2020 I was advised my job was eliminated and there is no chance of me
    Being brought back. I’m collecting UI since March.

    Pondering the thought of taking my early retirement pension as I can’t survive on
    UI any longer. My pension is of course reduced due to my age. Full pension is age 62.

    If I apply for early reduced pension in this situation, does my UI benefit get decreased? I’m in New York.
    I’m still looking for full time work. No luck.

    Thank you so much
    Lorraine

  3. i was just layed off from my job, i did collect benefits in pa. my job is seasonal igot unemployment payments in jan. to april i had 26 weeks of unemployment , but only used about 13 weeks, and was called back to work. i received 2 weeks of 600 dollars of stimlus money. my question is now that i reopened my 2020 claim . i,m i still elegibe for any more stimlus payments along with my regular unemployment payments.

  4. I am 65 yrs old in California and being layed off in Dec 2020. If I apply for unemployment benefits and collect a company pension, will the pension reduce the unemployment benefits ? If you answer call unemployment what is the department or do you have a phone number for a help line. I have called and get automated questions that do not apply to my situation.
    Cannot get to a live person.

  5. Several years ago I was part of a reduction in force and was early-retired for pension purposes. I count on this small pension ($2K/mo) to supplement my employment which has been inconsistent this past two years. I am filing for UI in IL and I qualify for it, but they are saying my pension reduces my UI benefit to zero. Is that right?

    1. Mike,

      That is partially right. The pension will have an impact on UI benefits. Please check for relevant info on the Unemployment Office’s website.

  6. I have $219.00 left on my UE and still no work due to covid-19 will i be able to get a extension on my UE and will it cover the last two weeks. I request payment tomorrow.

      1. My benefits have expired, still.unemployed due to over 65, wdiebrtes, high blood pressure and have one kidney, Can I get PUA , Cares Act for any assistance

  7. im working at a place i have been layed off from a lot in my career.i got 30 yrs in there so i can retire now but need another job to make it hoping to stay working and get more hours.If i take a new job and get layed off there I will BE DRAWING 1400 A MONTH FROM THE JOB I WORKED 30 YRS would i be able to draw unemployment if the new job lays me off and would it be reduced because of my retirement money of 1400 month.

  8. My bf was laid off in April he got the the 600 to start with now he is only getting the unemployment and no extra when we hear ppl getting 3 checks totaling 40k that might be lies but still that is bullshit.

  9. I Sharon Bland or Sharon Scott or Sharon Ann Mccraw
    Use my phone to claim two of my boyfriends and my own benefits. Is that ok ?

  10. I’m getting pua on employment and it was supposed to be backdated to May 27th when I wasn’t ableable to start my new job and somehow it’s August 24th they said it would be backdated been sending messages and pua people keep saying they have emailed you guys too but nobody gets back to me who do I need to contact about this thank you

  11. I check my checking account balance every week but I cannot tell if I am getting my 300.00 extra unemployment. Also. How can I tell if I got my back time unemployment .

    1. Thelma,

      I did not understand what you meant. Please reach out to the Unemployment Office for precise answers to all your questions.

  12. I have exhausted my UI and all extensions. Not eligible for Fed Ed. Does EDD open a PUA claim for me. Or do I have to aoole for it. Its been past 30 days since receiving my Fed Ed denial letter.

  13. i have been unemployed for the whole year almost and since i have been trying to distance myself to better my all around health, it took me this long to file for benefits, i was hoping to get back pay all the way to the beginning.

    1. Zach,

      To qualify, the claimant is required to have sufficient earnings/employment during the “Base Period”. Please use the “Benefits Calculator” available on this website for more.

  14. Thank you o much for investigating this. When I received an overpayment statement and my benefits where stopped I felt my heart drop to my stomach. Already being evicted by a slumlord and now no income, i had to start working when i feel very at risk for getting the virus because of pre-existing conditions and the reason for filing in the first place. i am a cosmetologist and considered non-essential. I feel utterley hopeless and helpless in this situation.

  15. I cannot contact anyone in the unemployment offices because the phone hangs up on me in all cases after listening over and over the recorded message. I have called three numbers .

    I have received pandemic unemployment since March 31st. There was a pending adjudication but I never received any questions, letters nor emails about it and I was approved and paid. Now…this is what the website says:
    7 of 7 entries
    Issue Identification Number Employer Name Issue Type Status Date Mailed Level
    0002 7693 59-01
    PUA Pending 11/16/2020 Adjudication
    0002 4773 71-01
    Program Integrity Mailed 11/6/2020 Adjudicati
    Claimant Inbox
    Select the Search button to display your action items. To narrow your search, input issue date range below and select the Search button.
    Issue Date: From: To: 11/6/2020 to 11/16/2020
    Inbox
    • Below are the items that require your attention and that you need to take action on for your claim.
    • Select the Document ID
    I need this money to survive as others do while I am trying to re-establish any contract freelance work I am capable of doing….I report my small jobs as I get them but they do not come close to equaling my unemployment as of yet. Please tell me where I can go to find out what is needed here.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please answer a simple Math question: *

https://fileunemployment.org