- Credibility:
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SPRINGFIELD — More than 64,000 Illinoisans filed unemployment benefit claims with the Illinois Department of Employment Security between Monday and Wednesday as the initial damage caused by the spread of the coronavirus on the state’s economy emerged.
The new claims this week are more than 10 times the number of claims from the same three days during the third week of March in 2019, according to data from IDES.
An executive order from Gov. J.B. Pritzker last week allows those claiming unemployment benefits to receive a check one week sooner than usual, while emergency rules allow those who cannot work or lose their job because of the illness caused by the virus, also known as Covid-19 to claim benefits, in addition to parents or guardians who are unable to work because schools statewide are closed.
Those who are temporarily laid off because their place of work has temporarily closed are also eligible for unemployment insurance as long as they are actively seeking work. Under the emergency rules, those workers would not have to register with IDES’ employment service, according to the agency’s website.
IDES Assistant Director for Economic Information & Analysis Security George Putnam on Thursday provided grim projections for the state of Illinois’ Unemployment Insurance Trust Fund without additional help from the federal government.
During the Employment Security Appeals Board’s quarterly board meeting Thursday, Putnam told board members he was predicting major jumps in both the number of weeks people would have to be on unemployment insurance and the amount of total payouts — for the next three years — due to the economic effects of Covid-19.
“We’re looking at over $3 billion in [unemployment insurance] payments in 21, 22, 23,” Putnam said. “So what’s behind that is around a 30 percent increase in weeks paid in the current year — in 2020.”
Putnam said in addition to the increase in weeks the average worker is estimated to be on unemployment insurance in 2020, it could be even higher next year.
“In 2021, we’re looking at a jump of about 45 percent [of weeks paid],” Putnam said. “Those are large jumps.”
Putnam’s predictions — supported by projections from economic forecasting organization Global Insight — came on the same day IDES reported record low unemployment numbers in four of Illinois’ 14 metro areas.
Just one month ago, Pritzker proposed a state budget for fiscal year 2021 that relied on expectations that the economy would continue to be strong.
However, credit ratings agency Standard & Poor’s last week declared a global recession was already in effect due to the spread of the virus, and Fitch Ratings Inc. on Thursday said Illinois was particularly vulnerable to an economic downturn due to the state’s low credit rating.
Unemployment insurance is funded by federal payroll taxes paid by businesses. Out of work Illinoisans can claim 26 weeks of benefits.
The state’s Unemployment Insurance Trust Fund stood at $1.95 billion in 2018, the last year numbers were available, according to IDES. The fund sunk to a low of $2.36 billion in indebtedness in 2009 during the depths of the Great Recession.
But the economic effects of COVID-19 will be swift, Putnam said. In 2020, the fund could slip to $1.24 billion, then $380 million in 2021. The fund is expected to drop even further in 2022 and 2023,
IDES Acting Director Tom Chan said approximately a quarter of the IDES’ 1,100-employee workforce has been sent home in the wake of COVID-19.
While some IDES employees are able to do their jobs from home, the “vast majority…cannot telework” right now, which could have a dramatic impact on the agency’s performance on “core metrics,” Chan said. However, some of those employees are expected to be able to begin working from home in the coming weeks.
During the Great Recession, federal action made it possible for those who were out of work to be on some form of unemployment benefits for up to 99 weeks. But the Covid-19 relief measure did not include funds to allow Illinois to pay out additional weeks of unemployment benefits, Chan said.
In 2008, the federal government sent $7 billion to states for unemployment benefits help, which gave Illinois $300 million as determined by a federal formula. Under the new federal relief package, states are being sent $1 billion. Chan said IDES “shouldn’t be expecting very much” from those funds.
“If we received further infusions of cash as the result of this, it would greatly assist the trust fund at this time,” Chan said.
However, the federal relief package includes a provision waiving interest fees for borrowing for the state’s Unemployment Insurance Trust Fund through the end of the year.
Chan did say a program for extended unemployment benefits could be triggered if Illinois’ unemployment rate “got somewhere in the ballpark of 11 to 14 percent.” However, the state’s current unemployment rate is currently at 3.5 percent.
But Chan said a federal Emergency Unemployment Compensation program like the one passed during the Great Recession would be preferable, as that money would be available without first having to reach higher unemployment levels.
More unemployment assistance could also become available for those whose places of work were closed because of the virus if the president declares a disaster under the federal Stafford Act. The president declared an emergency under the act last week.
Under the federal coronavirus emergency relief package, employees of companies with fewer than 500 workers are eligible for two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for Covid-19, or if they are caring for sick family members. The law also gives 12 weeks of paid leave to people caring for children whose schools are closed or whose childcare provider is unavailable because of mass shutdowns to prevent the spread of the virus.
