Distancing Dislocates Half a Million Mass. Workers
Claims Show Unemployment Wave Still Gathering Strength
4/16/20 1:34 PM
APRIL 16, 2020.....Another 5.2 million Americans and 103,000 Massachusetts residents filed initial claims for unemployment benefits last week, the fourth straight week of surging demand amid the coronavirus pandemic.
Total new applications for jobless aid declined between April 5 and April 11 compared to the weeks ending April 4 and March 28, but both the national and state figures outstripped every pre-pandemic week on record dating back to at least 1987 and likely before that.
More than 22 million workers across the United States and almost 573,000 in Massachusetts have now sought help over the past four weeks, a never-before-seen level of need.
"It's a giant number," said Michael Goodman, executive director of the UMass Dartmouth Public Policy Center and a co-editor of MassBenchmarks. "Given the conditions as we understand them of the virus in the state, it's likely that this awful trend will continue until we see progress in the fight against COVID-19 and the opportunity to relax some of the distancing requirements that are obviously at the heart of these job losses."
The federal Department of Labor on Thursday reported about 5.25 million new claims filed between April 5 and April 11 in the U.S., a drop from the more than 6.6 million filed the week prior.
Massachusetts received 103,040 new applications last week, according to federal data, compared to 139,647 a week earlier. The state's own data release had a slightly lower level of claims at 102,828.
The COVID-19 crisis has prompted widespread business closures and an almost immediate economic downturn. Experts warned Tuesday that the unemployment rate in Massachusetts could rise as high as 18 percent, while the International Monetary Fund forecast the "worst recession since the Great Depression" as a likely outcome for the world.
In each of the past four weeks, labor officials reported a new national record for the four-week rolling average of seasonally adjusted new claims. The highest average before the pandemic hit was 659,250, set during the week ending March 28, 2009 while the country was in the throes of the Great Recession.
The latest four-week average was 5.51 million claims.
Massachusetts officials calculated the state labor force as about 3.8 million strong in February. Thursday's data indicate that nearly one in seven workers have sought unemployment benefits in the past month.
Baker said during his daily press briefing Thursday that the Department of Unemployment Assistance is paying benefits to 315,000 residents, about three times as many as it was at the start of March.
"The number of claims here is eye-popping given that for months we typically saw between 7,000 and 10,000 new applications per week and it represents a variety of new workers and businesses impacted by COVID-19," he said. "As we've said before, this is about way more than numbers. We all get the fact that there are people behind those claims."
Work is ongoing on a new platform to extend benefits to those who were made eligible under the so-called CARES Act, and Baker hinted he would "share more information about that system in the coming days."
Offering a rough calculation, Goodman said subtracting all unemployment claims over the past four weeks from the labor force indicates Massachusetts is at the lowest level of payroll employment since November 1997.
"Obviously, the state had a smaller population and a smaller workforce at that time, so it's not really an apples to apples comparison, but I do think it's fair to say we haven't had employment levels this low in this century," he said.
State labor officials will publish more detailed data Friday on unemployment and job losses during March, but Thursday's federal update listed Massachusetts as having an insured unemployment rate of 8.7 percent, the sixth-highest nationally, for the week ending March 28.
Many of the lost jobs are in the restaurant, retail and hospitality sectors, which have been disproportionately affected by social distancing guidelines and non-essential business shutdowns. When those jobs will return — and how many cut positions will be recovered — is anyone's guess as Massachusetts remains in the grips of the COVID-19 surge and officials say public health considerations are the current top priority.
Debate is ongoing at both the state and federal level about how to push the economy toward a rebound without endangering public health. Gov. Charlie Baker this week joined a pact with six other northeast and mid-Atlantic governors to work together on easing social distancing restrictions safely, while President Donald Trump has more aggressively pushed for an economnic reopening and reportedly plans to release guidelines Thursday.
Goodman stressed that he believes the distancing requirements are still necessary and that "lifting them prematurely would not bring relief to a degree that would warrant the human price," and he also said many of the jobs lost could return amid a period of recovery.
"I don't want to be too gloomy," he said. "I do think when we get to the other side of this, a lot of those workers will be recalled, but I don't think we know how many. It's going to be dependent in important ways on how long this lasts."
The Department of Unemployment Assistance has increased its customer service staff from about 50 employees to more than 600 to cope with the rush in applications. Officials say the system has endured the new level of demand without crashing, and the Baker administration also launched a Spanish-language unemployment portal.
A more than $2 trillion aid package Congress passed also made scores of previously ineligible workers, such as those who are self-employed or who use contracts, able to access unemployment benefits. Baker said last week that Massachusetts should begin accepting those applications by the end of the month.
Federal leaders have steered massive amounts of money into economic stimulus checks and the unemployment benefits system, but the surge in demand is putting great strain on state systems, which are funded with employer premiums.
Two separate think tank reports have warned in recent weeks that the unemployment insurance trust fund Massachusetts relies on to pay claims could be exhausted in weeks or months at the current level of demand.
State-by-state projections The Tax Foundation published last week, based on claims through April 4, warn that Massachusetts can only cover six weeks of benefits without supplemental funding. That ranked 46th among all states.
"When states exhaust their trust funds, they must look to other sources of funding, either within their own state budgets or through loans from the federal government, which must ultimately be paid back — in some cases with interest," report author Jared Walczak wrote.
The Boston-based Pioneer Institute also estimated the surge in new claims could drain the trust fund — which totaled about $1.74 billion at the start of February, according to the most recent data available from the state — within three months.
In a statement, Associated Industries of Massachusetts Executive Vice President of Government Affairs Brooke Thomson said state and federal lawmakers should consider direct congressional appropriations or low-interest loans to capitalize the trust fund.
"As a first step, we encourage the legislature to advance the unemployment insurance bill that is currently pending before them that, among other changes, would assign COVID-19 experience adjustments to the fund overall instead of to individual employers," she said. "As a second step, we encourage state and federal policy leaders to remain in constant communication with members of the business community to ensure that the fund continues to provide benefits to claimants.
"Throughout the state's unemployment system's history, we have never failed to pay a claim and we want to maintain this record even during these unprecedented times," Thomson added.
Steve Tolman, president of the Massachusetts AFL-CIO, told the News Service that he agrees the fund's current balance is "not enough" to meet the historic level of need.
While Tolman, a former state lawmaker, said both political parties have responded well to the crisis, he said past freezes in business pay-ins to the fund left it weakened.
"When the corporations come out and start to point fingers and say we have a problem here and want to be recipients of the program that is underfunded, they have to face the facts and realize over the past 30 years, they saved probably $10 billion in freezes," he said. "That, in my opinion, is probably one of the most significant attributes to the non-solvent fund."
Massachusetts Fiscal Alliance spokesman Paul Craney cited both the Tax Foundation report and the Pioneer Institute report in a press release last week, calling for state leaders to reduce overall state spending and explore ways to kick-start the economy during the pandemic.
"If the Governor, Senate President, and Speaker do not begin to reign in state spending to a realistic level and allow for businesses to reopen in some capacity, the safety net for our state's unemployed will soon run out and put us into further debt on top of our already nation leading debt per capita," Craney said.
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