By the end of Friday, the Colorado Department of Labor and Employment will likely have received 25,000 applications for unemployment insurance since Monday, the department announced.
In all of 2018, 84,000 Coloradans received unemployment benefits at some point in the year. This week’s number alone amounts to 30% of that tally.
“I lived through the Great Recession. I would say this is reminiscent of that,” said Cher Roybal Haavind, the CDLE’s deputy executive director. “But never did I have a week during the Great Recession like the week we had.”
Haavind said that CDLE received over 300 resumes for 150 call center positions and 150 document manager openings, and that the department will likely begin hiring next week. Training for the call center normally takes six weeks, but CDLE will seek to only use the temporary workers for claims intake, skipping training on the more technical elements of unemployment that callers might inquire about.
The week of March 9, the call center received 9,000 calls. This week, calls increased tenfold, to 99,000. Attempts to access the online applications exploded from 7,000 last week to 114,000 this week.
Haavind said CDLE is prepared to waive certain procedures that add to a claim’s processing time if the department receives clearance from Gov. Jared Polis. The three intended reforms are the elimination of a “waiting week,” typically to accommodate a final paycheck; waiving the requirement that an applicant be searching for work; and speeding up verification of claim details with prior employers. In order to handle massive increases in claims and not incur recession-era backlogs of 12-16 weeks, there may be some inaccuracies in processing.
“We know there will likely be some determinations that are made that would result in perhaps some overpayments,” she said. Haavind cautioned, though, that as with any unemployment benefits, recipients who receive an overpayment from the state may be asked to return it in the future.
As bars and restaurants have shut down and events have been canceled in the name of stopping contagion, employers have laid off workers so that they may receive benefits from the state. However, a December 2019 report to the legislature’s Joint Budget Committee revealed that the unemployment insurance trust fund, a $1.14 billion account that replenishes itself through employer-paid premiums, was not in the best shape heading into the pandemic.
“The 2019 report indicates that while the UITF remains solvent under current growth conditions, it will become insolvent within a year under moderate-to-severe recession conditions,” CDLE warned. The 2008 recession exhausted the fund and prompted the state to borrow money from the federal government. The state issued bonds, and employers paid a surcharge until mid-2017 to pay back the U.S. government.
Each year since the recession, the trust fund has paid out less money in unemployment insurance as the economy improved, allowing the account to build back up. CDLE projected that fiscal year 2018-2019 would result in payouts of $375 million amid a historically low unemployment rate. That number is down from the nearly $762 paid in fiscal year 2010-2011.
The U.S. Department of Labor recommended that Colorado add $400 million to the fund to ensure its solvency. As far back as 2010, audits suggested raising the wage threshold, currently at $13,100, on which employers would pay premiums into the fund to raise more money.
Even though CDLE supported the recommendation, its report informed legislators that “the Department has indicated to staff that adjusting the base for UI wage premiums is not part of its legislative agenda for 2020.”
Congress is currently crafting an economic stimulus package which could include direct cash assistance to adults. The bill proposal could amount to $1 trillion, and comes on the heels of prior measures to add money to food assistance programs and to establish a limited sick leave program.
Earlier this week, Legislative Council Staff presented a forecast of the coming fiscal year and noted that economic conditions change hourly depending on developments with COVID-19.
“While a near-term contraction is certain, this contraction could lead to a prolonged and severe pullback in economic activity,” the report warned. “The risk of recession in calendar year 2020 is elevated and poses significant downside risk to this forecast.”
People on social media expressed frustration this week at the CDLE application crashing and encountering long wait times at the call center. Haavind said average wait times are approximately 45 minutes. During the recession, waits approached three hours.
There are staff working overtime on the weekends to process claims, and many employees are working remotely to prevent the spread of COVID-19. CDLE plans to release daily updates, but the most comprehensive and accurate unemployment claims numbers will come out weekly as part of the U.S. Department of Labor update. Colorado typically authorizes benefits to claimants within four to six weeks.