Applications for jobless benefits are surging amid coronavirus fears, raising fresh questions about whether states have stockpiled enough money to pay idled workers.
Unionized hospitality workers wait in line in a basement garage to apply for unemployment benefits at the Hospitality Training Academy Friday, March 13, 2020, in Los Angeles. Fearing a widespread health crisis, Californians moved broadly Friday to get in front of the spread of the coronavirus, shuttering schools that educate hundreds of thousands of students, urging the faithful to watch religious services online and postponing or scratching just about any event that could attract a big crowd.
“We’ve been getting flooded with calls,” said John Dodds, director of the nonprofit Philadelphia Unemployment Project. “It’s going to be a big mess, a double mess: illness and unemployment.” President Donald Trump’s administration is proposing an economic stimulus package that could approach $1 trillion and include sending checks to Americans within a matter of weeks to help them pay for groceries, bills, mortgages and rent. A separate aid bill pending in Congress could inject $1 billion into state unemployment insurance programs.
The last recession led to the insolvency of unemployment trust funds in 35 states that collectively racked up more than $40 billion of debt to keep paying unemployed workers. In many states, those debts were repaid through higher taxes on employers. In the U.S., state unemployment trust funds generally are in better financial shape than they were before the last recession. Yet 21 states began the year with less than the amount recommended to remain solvent in an average recession, according to. At the bottom of the solvency list are many of the most populous states — California, Texas, New York, Illinois, Ohio and Massachusetts.
Pennsylvania in January finally made the last payment on billions of dollars of bonds issued in 2012 to cover the unemployment fund debt from the last recession. But its fund remains in danger of insolvency, according to the U.S. Labor Department report.
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