Weekly unemployment claims edge down to near recent low – Vermont Biz

weekly-unemployment-claims-edge-down-to-near-recent-low-–-vermont-biz

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by Timothy McQuiston, Vermont Business Magazine Regular weekly unemployment claims last week fell by 64 to 782, which is just above the 2021 low reached in February. Nationally, claims have fallen under 700,000 to the lowest number since the beginning of the pandemic, but remain at historically high levels.

Weekly UI Report

Regular weekly UI claims in Vermont last week edged down for the third consecutive week (up 3,002 from the same time last year, as the  pandemic hit. Governor Scott signed the Executive Order March 13, 2020 and closed restaurants and bars after lunch on March 17).

As for ongoing jobless claims, for the week ending March 20, 2021, the Labor Department processed 13,185 claims, up 95 from the previous week and 7,520 more than the same time last year.

As for further comparison, initial Vermont claims for the week of March 21, 2020 (the first full week of the pandemic in Vermont), were 3,784, up 3,125 from the week of March 14.

Labor Commissioner Harrington has said at Governor Scott’s media briefings that the new federal stimulus and unemployment money will help Vermonters, even though the unemployment rate is on paper at near same level as it was just before the pandemic led to historic unemployment levels.

He has also said that the new round of UI stimulus has also brought a new round of fraud. He said this is largely not due to individual Vermonters trying to game the system, but from organized entities making a nationwide effort.

For instance, one Vermonter not seeking benefits reported to VBM that he was notified he had applied for benefits in both Vermont and Ohio.

Harrington said that some of these criminal enterprises might include those that swiped personal identification during the Equifax breach three years ago and have waited for the right time to use the information to defraud the UI system.

For the legitimate claims, there were 11,691 on regular UI, 14,208 on PEUC and 8,809 on PUA, and 33 on extended benefits as of March 13, 2021, according to VDOL.

VDOL table as prepared for the Legislature. Click HERE to see full report.

American Rescue Plan


• The American Rescue Plan (ARP) signed into law by the President on March 11 and includes provisions to extend various Unemployment Insurance programs:


o Pandemic Unemployment Assistance (PUA) was created in March 2020 as a program for individuals not typically eligible for regular unemployment insurance to file for and receive benefits (e.g. self-employed, independent contractors, etc.). This program has been extended until September 6, 2021. The benefit week ending September 4, 2021 will be the final week claimants are able to file in the PUA program.


o Pandemic Emergency Unemployment Compensation (PEUC) was also created in March 2020 as an extension program for claimants who exhausted their regular unemployment insurance benefits but remained unemployed. The ARP extends the number of weeks an individual may receive in the PEUC program from 24 to 53 weeks if they exhaust their regular UI benefits.


o Federal Pandemic Unemployment Compensation (FPUC) has also been extended through the benefit week ending September 4, 2021. Claimants will receive an additional $300 benefit which will be added directly to their state weekly benefit payment.


o Reimbursable Employers: The ARP increases the federal reimbursement rate for non-profit and municipal governments from 50% to 75% for the amounts of compensation paid for weeks of unemployment beginning after March 31, 2021, and ending on or before September 6, 2021.


o Unemployment Insurance Tax Exemption: The first $10,200 in 2020 unemployment benefits are exempt from federal income tax for households with incomes below $150,000 per year. This tax exemption is under the jurisdiction of the IRS. Claimants may find more information about the exemption on the IRS website here: https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion…

1099 Processing Incident


• Once a claimant has received and reviewed all of their 1099 documents, if they still feel that the information provided on the forms is incorrect, they can submit a 1099 correction request form. If a claimant needs a new 1099 or never received a 1099, they can also request to have the Department reissue their 1099. Individuals who receive a 1099 from the Department but never filed for unemployment benefits should file a fraudulent 1099 report with the Department immediate. All in formation regarding 1099 requests can be found at https://labor.vermont.gov/request-1099-correction.

Recapture Update


• As of March 7th, the Department had recaptured 61% (approximately 57,600 returned out of 94,800) of all original 1099s that were delivered to the post office.

Identity Protection Update


• The State has contracted with Identity Theft Guard Solutions, Inc (IDX) to provide identity protection service to claimants. This protection will cover claimants for a minimum of 12-months. Notices were mailed to all 2020 claimants on Thursday, February 18. Claimants have until May 18, 2021 to register with IDX for credit monitoring services, which are retroactive to the date of the incident (January 29, 2021).


• As of March 22, 2021, 11,573 individuals (11.7% of population) had enrolled in ID protection. Claimants have until May 19, 2021 to enroll. The industry average for enrollment is 10% of the affected population.

More than $3 trillion in pandemic relief, including CARES Act with the first round of PPP, helped the third quarter grow at a record pace of 33.4 percent.

US GDP had its worst quarter on record in the second quarter as it fell 31.4 percent in that April-June period; the next worst was in 1921, which led to the Great Depression.

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 the third lowest in the nation and back to its pre-pandemic level, which is not really that good of a thing.

The VDOL points out that the US Census modeling has not caught up with the reality of the pandemic and Vermont’s 3.1 percent unemployment rate in February portrays a rosier economic picture than what actually exists.

Harrington has previously said that the real unemployment rate is more in the 5 percent range, and if it included the PUA, the rate is likely more in the 6-8 percent range.

The US unemployment rate is 6.2 percent, but Federal Reserve Chairman Jerome Powell recently said the real rate is closer to 10 percent.

Harrington 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.

The PUA claims are not included in the unemployment rate calculation.

The PUA benefits in some cases are more advantageous. PUA claimants also can get partial payments even if they have some income.

Scott has also extended his Emergency Order until April 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.

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. And now have climbed consistently the last couple of 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.

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 March 20, weekly jobless claims totaled 684,000 last week, a decline from the 781,000 the week before and below economists’ estimates. This is the lowest number in over a year and the first time they’re under 700,000 in the COVID-era.

Early on in the pandemic, US claims reached 5.2 million and then 6.6 million claims. Just prior to the steep job loss, there were 282,000 claims on March 14, 2020.

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.

As for regular UI claims in Vermont, during the Great Recession for the entire year in 2009, claims 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 $210.0 million in its Trust Fund and saw the fund decrease by a net of $3.3 million last week. Payments lag claims typically by a week. The balance as of March 1, 2020, was $506.2 million.

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 has said the UI fund is not expected to run out under current projections, which is why he wants permission from the federal government to use it for extended benefits now.

“We are in a much healthier position than many other states,” Labor Commissioner Harrington has 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.

1099-G Forms Reissued

As for the errors, the Department will continue to provide updates to claimants by letter, email, and social media. More information can also be found online at labor.vermont.gov/1099-incident-updates. Claimants who do not have access to the internet can contact the Unemployment Insurance Clamant Assistance Center at 877-214-3332 and select ‘Option 1’ for updates on the 1099-G issue.

The Labor Department typically sends out 6,000-8,000 1099s in a normal year, but between the spike in UI claims because of pandemic-related layoffs and the new federal relief programs, the total number of 1099s required is about 180,000 forms to 101,511 Vermonters.

The error was caught before most of the 1099s were issued. One person could receive more than one 1099 because of the different programs.

Some 1099s were sent to the wrong address and included Social Security numbers and other personal information. The state has recalled all those that were sent and is providing cyber security assistance to those claimants concerned that their personal information was compromised.

Impacted 1099-G forms by program as part of initial mailing:

  • $1200 Checks From Treasury: 7,049 forms
  • Lost Wage Assistance (LWA): 34,126 forms
  • VT Short Term Supplemental Benefit (VSTS): 34,043 forms

*1099 forms sent for LWA and VSTS programs amount to about 45,000 people

The total number of 1099s to be mailed across all programs for 2020 is 180,000. Again, individuals will receive one 2020 VDOL 1099-G form per program that they filed in.

  • Regular UI: 82,569
  • PUA: 18,942
  • Total 2020 Claimants: 101,511

1099 Processing Incident Statement from Vermont Department of Labor:

▪ The Department has created a 1099-G incident webpage summarizing the incident,as well as an FAQ document for claimants to reference. This information can be found at https://labor.vermont.gov/1099-incident-updates.

▪ We have identified the impacted populations which include primarily the LWA and VSTS 1099-Gs. However, out of an abundance of caution, we are recalling all 1099-G documents issued by the Department, regardless of whether the information is believed to be accurate.

▪ Many Vermonters are uncertain as to whether their information was compromised by this incident. To be safe, we are extending identity protection to all claimants who filed a claim with the Department during 2020, regardless of their level of exposure. Additional information about ID protection services can be found below.

▪ We have implemented an option on the UI claimant assistance line (877-214-3332) specific to the 1099-G incident. The script provides information on what happened and what claimants should do moving forward. We will continue to update this message as more information becomes available.

▪ Recapture Update: We have begun to mail out recall notices to individuals who received a 1099-G document. This notice gives a summary of the incident and includes instructions on how to return the initial 1099 document to the Department utilizing the self-addressed and pre-stamped envelope that is included. All recapture notices are expected to be mailed by the end of this week.

▪ Identity Protection Update: Identity protection services have been finalized and will be available to all claimants who filed a claim in 2020 (regardless of whether their information was compromised). The State has contracted with Identity Theft Guard Solutions, Inc (IDX) to provide identity protection service to claimants. This protection will cover claimants for a minimum of 12-months and instructions will be mailed directly to claimants in the coming days.

▪ Reissuing Correct 1099-GsUpdate: We are continuing to work through quality validation checks to be sure the corrected 1099-Gs include accurate information.Claimants will be notified when these documents are mailed out,which will occur in the next two weeks.

Stories:

Unemployment rate for February 2021 falls another tenth to 3.1 percent

Tax revenues still ahead of projections after revision, but less so: VBM Feb 17, 2021

Tax revenues soar with one-time money

SBA reopens PPP on January 11

Unemployment benefits extended with authorization of federal relief bill

Unemployment rate falls to pre-pandemic level of 3.1 percent

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. It tracks inflation.

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.

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