OKLAHOMA CITY – The state unemployment insurance trust fund is brimming with a little over a billion dollars.
Over the last 21 years, the trust fund balance has never dipped below a third of a billion dollars, while the highest five-year average payout of benefits was $340.5 million, and the highest amount paid out in any single month during the 2007-09 recession was $58.3 million in June 2009.
However, Oklahoma has never experienced a socioeconomic shutdown the magnitude of the coronavirus pandemic. Communities across the state, large and small, have mandated “shelter-in-place” and literally tens of thousands of businesses – from “big-box” stores to boutique shops – have been shuttered, temporarily if not permanently.
JOBLESS CLAIMS SKYROCKET
March 11 was when the coronavirus threat came to Oklahoma. That night a game between the Oklahoma City Thunder and Utah Jazz was canceled after a Jazz player tested positive for the virus.
The impact of COVID-19 on state and national initial unemployment claims since that date has established all-time highs, according to Cyndi Phillips, chief of staff at the Oklahoma Employment Security Commission (OESC).
For the week ending March 28, unadjusted initial claims in Oklahoma totaled 44,970.
Unadjusted initial claims in Oklahoma for the previous week, ending March 21, numbered 17,720, which was adjusted upward to 21,926. Both statistics constituted one-week records.
The previous highest week for initial claims was 9,778 for the week ending Jan. 12, 1991, OESC ledgers extending back to 1987 reflect.
Total unemployment claims in Oklahoma – first- time coupled with continuing claims previously filed – numbered almost 69,500 by week’s end March 28, OESC records indicate.
INITIAL CLAIMS SOAR NATIONALLY
Nationally, the seasonally adjusted initial claims for the week ending March 28 totaled 6,648,000, an increase of 3,341,000 from the previous week’s revised level. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series, Phillips said.
The previous one-week high nationally was 695,000 in October 1982, records reflect.
The national weekly, seasonally adjusted, initial claims report is one of 10 components in the Composite Index of Leading Economic Indicators. To smooth out the volatility in the weekly initial claims data, a four-week moving average is used to assess trends.
In Oklahoma, the less volatile initial claims four-week moving average climbed to 17,575 for the week ending March 28.
The advance unadjusted number for continued claims totaled 24,519, an increase of 7,665 from the same file week ending March 28. The continued four-week moving average increased to 18,731.
“To call this unprecedented doesn’t begin to explain the enormity of the impact COVID-19 related job losses are having on our state and our economy,” said OESC Executive Director Robin Roberson. “We know people are anxious. We know people want to work. We know assistance is needed, and we appreciate Oklahomans working with us to process this tsunami-like wave of claims quickly and efficiently.”
UNEMPLOYMENT FUND SUPPORTED WITH TAXES PAID BY EMPLOYERS
The trust fund is fed from taxes imposed on employers, not from employee paychecks.
For the 12-month period ending June 30, 2019, the number of employers contributing to Oklahoma’s Unemployment Insurance Trust Fund was 90,029, Phillips said. Some employers, such as farmers, are exempt from the tax.
The unemployment tax is collected on a percentage of the company’s payroll, per employee, up to the annual taxable wage base ($18,700 this year), she explained.
The tax rate is higher for employers that dismiss workers at relatively high rates, and lower for employers who have a relatively steady workforce.
Except for a few historical instances when the federal government has pumped special deposits into the state’s Unemployment Insurance Trust Fund (known as Reed Act distributions), federal funds are not infused into state unemployment funds.
Federal edict decrees that the state’s unemployment fund is not a “slush” fund that can be tapped by the Legislature. The trust fund’s exclusive purpose is to provide financial support to workers who have been laid off through no fault of their own.
Unemployment benefits paid to a worker who has been laid-off are determined by the employee’s prior earnings.
The amount for which an individual qualifies is based on wages earned from his/ her employer during the base period, which is the first four of the last five completed calendar quarters, Phillips said.
HIGHER BENEFITS FOR LONGER PERIOD
Typically, an employee must work for a certain amount of time before they qualify for unemployment benefits. “For the majority of individuals, we use money earned in the first four of the last five calendar quarters,” Phillips said.
To identify a worker’s last employer, the employee must be there 15 days. “To monetarily qualify for benefits they must have covered earnings of at least $1,500 and a total amount of wages equal to or exceeding 11⁄2 times the taxable wages in their high quarter during the base period,” she said.
Nevertheless, a worker who does not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefits, may qualify under the new federal Pandemic Unemployment Assistance program, she added.
Under normal circumstances, a laid-off worker can draw unemployment benefits for half a year, 26 weeks. However, extended benefits often have been authorized during periods of higher unemployment rates and economic recessions, such as the 2008-09 downturn, Phillips noted.
The coronavirus pandemic is one of those occasions.
“The new federal law expands the number of weeks of unemployment available
to individuals impacted by COVID-19 related eligibility standards,” Roberson said. “It also increases the amount of funds an individual may receive weekly over the state’s established maximum payment for unemployment insurance.”
In Oklahoma, the maximum weekly benefit amount (WBA) is capped at $539, and the WBA “will not be less than $16,” Phillips said.
“We’re probably at least two weeks away from receiving federal funding approved by Congress and President Trump last Friday for non-traditional workers seeking relief through the Federal Pandemic Unemployment Assistance provision of the CARES Act,” Roberson said last Thursday. “We look forward, in a short amount of time, to being able to assist most Oklahomans who are out of work through no fault of their own.”
The one-week waiting period to file for unemployment has been waived for first- time claimants. The state also is waiving the Benefit Wage Charge for employers with allowed claims directly related to COVID-19 closure or workforce reduction.