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Never in Utah history have so many people filed for unemployment in such a rapid burst.
And never have the benefits been this generous. On top of state payments that average about $430 a week, the federal government is providing $600 more. That’s the equivalent of being paid more than $25 per hour.
The additional federal cash was part of a $2.2 trillion relief fund that a panicked Congress passed to prop up the economy during this coronavirus pandemic. But now that governors, including Utah’s Gary Herbert, are starting to ease up on restrictions and encourage some to go back to work, political leaders worry they’ve been too generous.
Their fear is that workers, making more from unemployment benefits than they did from their jobs, won’t be so eager to answer the call when their boss wants to welcome them back.
It might happen in some cases, but a review of Utah’s unemployment system and the realities for those seeking help reveal a far more complicated picture.
Since mid-March, when stay-at-home orders began upending the economy, at least 150,000 Utahns and 30 million Americans have filed jobless claims.
The $2.2 trillion Coronavirus Aid, Relief and Economic Security Act has also made the self-employed, independent contractors and gig workers eligible for jobless aid, another historic first.
According to the state Department of Workforce Services, more than 14,000 of those workers had sought unemployment help as of last week and will be in line as well for that $600 in federal help.
Herbert chose Friday to move the state from “red” to “orange” pandemic risk levels and put a partial economic reopening in motion. When he did, he repeated his concerns that the federally boosted unemployment aid might not be entirely helpful to a quick recovery.
“It doesn’t take probably a lot of rocket science to figure out if you’re making more money on unemployment, you’re maybe not quite as desperate to go back to work,” Herbert said last week with his partial loosening of the state’s Stay Safe, Stay Home directive.
“We see some of that showing up,” the Republican governor said, “but we’ll just have to live through it.”
At the same time, thousands of Utah businesses damaged by COVID-19 have spent these past weeks scrambling after what’s amounted to $3.7 billion in loans from the CARES Act.
These Paycheck Protection Program loans will all be forgiven — but only for employers who keep their employees or rehire furloughed or laid-off workers over the next few months.
Back to work?
Sen. Mike Lee, R-Utah, raises the same concern Herbert does. He told business leaders last week that if they want their PPP loans forgiven, they need to retain or rehire their workers by June 30.
He said some employers, particularly in southern Utah’s tourism sector, can’t expect to be fully profitable again for a while.
“They worry that they would just be paying their employees for the sake of paying them rather than paying them for the sake of working,” Lee told officials with the Salt Lake Chamber.
The senator said others have been approved for PPP but “can't keep their employees on because at least some of them want to stay on unemployment because they're making more money.”
There’s no state data quantifying if or how often that is happening.
But nearly 70% of Utah workers getting those beefed-up benefits at the moment are telling the state they remain “job attached” — meaning that, for now, their work loss is temporary and a position awaits them when the economy picks up again.
For those recipients, state officials are waiving their usual rule that they have to keep seeking work while they draw aid.
But Utah did issue a stern warning last week to those on unemployment, telling them that, as the economy reopens, “they must accept suitable offers to return to work or risk losing unemployment benefits.”
In other words, if their former boss calls and they refuse to return to their job — even if it is out of fear of contracting the virus — it’s as though they quit and they will lose all jobless aid.
“Unemployment benefits can serve as an important and helpful tool for dialing the economy back up,” said Jon Pierpont, Workforce Services’ executive director, “but they must be used correctly.”
Feeling the pinch
For many Utahns who’ve lost work hours due to the coronavirus, unemployment help hasn’t even kicked in yet.
Jobless claims to Workforce Services reached 33,000 in one week at the first of April. That number dwarfs the prior weekly record of a little more than 5,000 claims. Last week, nearly 18,000 new claims were filed, including 7,300 from gig workers.
And as weekly filings mount, Utah’s processing times have stretched from 21 to 30 days between when displaced workers apply and when they might start seeing cash or direct deposits — a delay that has squeezed many residents.
Eve Richmond was a self-employed home day care operator for four years. Over 60 years old and diabetic, the West Jordan resident reluctantly shut down her business in late March at the urging of her physician.
Richmond said she sought unemployment aid under the new Pandemic Unemployment Assistance program for self-employed workers on April 16, the first day applications became available.
“They still haven’t paid out a dime,” Richmond said Thursday, nearly two weeks later. “I am frustrated because my husband got laid off on April 16 and he got his first check on Tuesday,” she said. “They’re leaving me out to dry.”
Kevin Burt, director of Utah’s unemployment insurance system, said that because Pandemic Unemployment Assistance for contract workers is new, it took additional time and back and forth with federal authorities before cash began flowing.
He said he sympathizes with Utah workers who are still waiting for benefits and said state officials are working diligently. He also says the system is geared toward handling sudden shifts in employment and that will help as the economy starts to amp up.
Unemployment recipients report their job status to the state weekly, including any partial wages they might earn, he noted. Utah then adjusts its benefits accordingly, Burt said, and as long as recipients qualify for some state aid, they’ll continue to get the $600 stipend on top each week for as long as that lasts.
This means if a full-time worker was furloughed and then brought back on a part-time basis, he or she could still get some unemployment benefits from the state and the $600 from the federal government.
“The unemployment benefit will turn off, turn on, turn up and turn down accordingly,” Burt said, “to support them as we’re trying to figure out how fast we can turn the dial up on this economy.”
How rich is too rich?
That $600 stipend is no doubt a game changer.
Under usual circumstances, Utah’s unemployment system can seem miserly, designed as it is to replace up to half of a worker’s lost wages, for up to a maximum of $580 weekly. The average state payment is $430 weekly — or $10.75 per hour.
The federal stipend jumped it to $25.75 per hour.
That’s a wage likely to rival what many earned on the job, especially for droves of restaurant, hospitality and retail workers who’ve seen some of the heaviest job losses due to social distancing closures.
Last week, Utah paid a total of $22.6 million in state benefits from its unemployment trust fund, which now holds about $1.1 billion and is flush by national standards.
Workers in the state got double that — a total of $40.4 million — from the stipend, a big chunk of it for retroactive payments for weeks that recipients missed out on the $600 while the state was still processing their claims.
That’s decent money by Utah standards, but an advocate for lower-wage earners in the state said politicians and business leaders should keep the stipend in context. The delay in benefits means that money is gradually reaching people in desperate need, many who lived paycheck to paycheck before this crisis began. They are often already way behind on rent, bills and other expenses.
“If you’re struggling to pay the rent every month, losing your job is a disaster,” said Bill Tibbitts, associate director at Salt Lake City’s Crossroads Urban Center. “And in that situation, getting just a normal state unemployment benefit that is less than your normal paycheck could put a person into homelessness.”
He also noted that the $600 per week federal benefit doesn’t last long. It expires at the end of July.
Tibbitts said that makes it highly doubtful that someone idled by COVID-19 would reject a job in hopes of gaming the system.
“Nobody,” he said, “is going to turn down a permanent job at a time when unemployment is this high just for a really short-term windfall.”
Another federal boost
Sen. Mitt Romney, R-Utah, originally championed the direct payment to U.S. workers that was included in the CARES Act, resulting in direct payments of $1,200 to many.
He now has another idea to incentivize workers to turn aside the generous unemployment benefits and return to work. He calls it “Patriot Pay.”
Romney’s plan would be a temporary per-hour federal supplement to the pay of “front-line workers,” such as health care professionals, grocery store clerks and food processors. The U.S. government would add an addition $9 per hour to those paychecks through a refundable tax credit for the employer, and in exchange, the employer would agree to boost pay by $3 per hour.
So someone making $10 per hour to stock shelves would make $22 per hour, at least through July.
“It’s designed to make sure that the people who are working to care for us are actually making as much money or more money than those that are on unemployment,” Romney said, “because our unemployment system has been changed in such a way through the CARES Act that sometimes it looks like people get more money by being unemployed than by continuing to work in their jobs.”
The Labor Department would decide what jobs would qualify for Patriot Pay.
The U.S. unemployment picture, much like politics, changes weekly with the pandemic. This week, the Senate returns and may debate Patriot Pay and more aid to small businesses. Also, on Thursday, the state will issue its first unemployment report since Herbert eased restrictions. And for many Utahns who filed claims in early to mid-April, those first unemployment benefits will start showing up — just in time to pay May rent.