By Art Woolf
The state processed a record 16,474 claims for unemployment insurance for the week ending April 4, according to the weekly report, Thursday, April 9. The previous record was set two weeks prior when the state processed 14,700 applications. In a normal week, about 500 people apply.
Since the economic shutdown began in mid-March, 72,000 Vermonters have applied for unemployment insurance, although only 35,000 claims had been processed, as of the most current tally ending April 4. To put those numbers in perspective, in all of 2019, a total of 28,000 people applied for unemployment insurance.
How much higher can this go? The state estimates as many as 100,000 people may apply, almost one out of every three workers in Vermont. At the current rate of processing about 15,000 claims per week, it could take four weeks until the backlog of claims is processed by the Department of Labor’s antiquated computer system which, was not designed to handle such a deluge of claims.
Ignoring the backlog issue, the number of people applying for unemployment insurance benefits will keep going up the longer the shutdown lasts.
The number of people applying is high not just because of the shutdown, but also because a change in eligibility requirements allows self-employed individuals to receive unemployment benefits. That has never been the case in the past because self-employed people do not contribute to the state’s unemployment insurance trust fund.
That fund has swollen to nearly $500 million over the past decade, but its level is now, for the first time since the Great Recession, decreasing as withdrawals exceed the taxes going into the fund.
Last week, 12,000 people received $4.7 million in unemployment compensation checks. That number is expected to skyrocket to 100,000, if the state’s estimate is correct. If 100,000 Vermonters ultimately receive unemployment checks, Vermont’s $500 million unemployment insurance trust fund will bleed $35 million per week and, if the shutdown continues through the summer, it will be empty.
Art Woolf is a columnist for VTDigger. He recently retired as an associate professor of economics at UVM.