States hit hardest by rising unemployment claims could soon run low on funds
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With new government data Thursday, around 22 million people have now signed up for state unemployment benefits in the last month during the COVID-19 emergency.
In just the week ending Saturday, it’s 5.245 million new unemployment claims. States pay out these benefits — and states are strained.
Each state pays out unemployment benefits from a trust fund paid for by taxes on employers.
“In good times, you have significantly more going in than is going out. But you’re supposed to save up for times like the one we’re experiencing now,” said Jared Walczak, a researcher with the Tax Foundation.
Walczak says according to federal data, several of the hardest hit states, like California, New York and Texas, could be running low on funds in a matter of weeks.
“And some of these same states struggled with this during the Great Recession and only very recently paid off the debt that they accrued,” he said.
When unemployment funds run out, states still have to pay the benefits, they just have to borrow the money from somewhere else — usually the federal government.
“If this lasts more than three or four months just about every state will have to borrow,” said Chris O’Leary, an economist with the Upjohn Institute for Employment Research.
Borrowing could result in higher taxes for employers or reduced benefits down the line. But, O’Leary says, the federal government could just give the money to states — it has before as part of disaster relief.
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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