More than 878,000 Californians filed for unemployment last week, a massive increase from the previous week.
The jobless claims filed during the week that ended March 28 shattered the previous record set in 2009 when 115,462 Californians filed claims in the span of seven days, according to data from the U.S. Department of Labor.
The number of claims filed between March 16-27 was over one million—about 6% of the state’s workforce and nearly 10 times more than the number of claims filed the two previous weeks.
Nationwide, 3.3 million Americans filed for unemployment during the week ending March 21—five times more than the previous record set in 1982. Last week, that number doubled to nearly 6.65 million.
The state does not provide county- or city-specific data related to the number of unemployment claims filed, but the ripple effects of stay-at-home orders and mandatory business closures that have put so many people out of work are undoubtedly being felt locally.
Since the orders went into place in an attempt to slow the spread of coronavirus, many owners have laid off large numbers of employees. Long Beach restaurateur Jason Witzl said he has laid off 80 employees between his two eateries, Ellie’s and Lupe De La Mar. In a previous interview with the Post, he voiced concern about the uncertainty of the impact that 80 unemployment claims may have on his businesses in the future.
Politicians across the state and country are looking to immediate relief measures for workers and longer-term support for businesses after such a dramatic downturn from the COVID-19 pandemic.
For instance, on Thursday, Gov. Gavin Newsom called for letting small businesses keep up to $50,000 in sales tax receipts for the next year.
Newsom said the reprieve would function as a loan to small businesses, with the state not charging fines or penalties. It likely would require approval from the state legislature, which has recessed until at least April 13.
In addition, unemployment claims across the state increased so dramatically during the last two weeks of March that a second round of federal funding has been unlocked to assist small businesses, according to the California Legislative Analyst Office.
As part of the Families First Coronavirus Response Act, which was signed by President Donald Trump on March 18, states qualify for additional federal funding if they experience a 10% increase in claims per quarter over the previous year.
“The state will clearly meet the federal 10% threshold,” a spokesperson from the legislative analyst office told the Post. “It is our understanding that states, including California, will seek these additional federal funds.”
In 2019, there were 539,000 unemployment claims filed in California during the first quarter, according to the legislative analyst office. This means only 593,000 claims during the first quarter of this year are required to qualify for additional funding. On Thursday, Newsom said 1.9 million Californians have filed claims since March 12.
To receive additional funding, the state is required to take actions to expand access to unemployment insurance for workers affected by COVID-19, including temporarily waiving work search requirements, temporarily waiving the seven-day waiting time and changing its calculation for the employer experience rating to exclude claims related to coronavirus.
Newsom has already waived the seven-day waiting time and the state is flagging unemployment claims related to COVID-19, according to the legislative analyst office.
“Given the unprecedented impacts of the COVID-19 virus on all non-essential industries, Pacific Gateway is incredibly concerned about the increased costs employers will incur by enacting immediate layoffs,” Nick Schultz, executive director of Pacific Gateway in Long Beach, told the Post. “Those costs [could] manifest themselves in future unemployment tax charges.”
Employers are required to pay an unemployment tax on each employee. The tax percentage varies depending on the employer’s experience rating, with a maximum rate of 6.2% on the first $7,000 paid to each employee annually. Rates are adjusted every December and unemployment claims filed by employees who have been laid off increases the rate.
For example, if Witzl’s rate is 3.4% on 80 employees, he would pay $19,040 in state unemployment taxes annually. If his rate were to increase to the state maximum due to mass layoffs, he would pay $34,720 annually for the same 80 employees.
Without the exclusion of layoffs due to COVID-19 in the tax rate calculation, the impacts on Witzl and other business owners who are laying off large numbers of employees could affect their unemployment tax rate for several years to come.
Another avenue for business owners to explore to ease impacts of COVID-19 is determine whether or not they are eligible for federal aid under the recently approved Coronavirus Aid, Relief, and Economic Security Act.
“We know the primary concern for many small business owners is their capacity to meet payroll and want those with under 500 employees to work with us to determine their eligibility for federal government aid under the Paycheck Protection Program Loan and the Small Business Administration Economic Injury Disaster Loan,” Schultz said. “We need local businesses to apply early as there is only $350 billion available nationally.”
Businesses who have already laid off employees are still eligible for stimulus assistance if they rehire staff by June 30, which would reduce the number of people receiving unemployment benefits.