Howard Fischer reports today, COVID-19 funds to prop up state unemployment fund:
Gov. Doug Ducey plans to put federal cash given to the state for COVID-19 relief into the soon-to-be-insolvent unemployment trust fund to save companies from having to replenish the account on their own.
But unemployed Arizonans will have to continue to live on no more than [a maximum of] $240 a week, before taxes.
Daniel Scarpinato, the governor’s chief of staff, said his boss believes that the state’s $1.8 billion allocation from the $2.2 trillion Coronavirus Aid, Relief and Economic Securities Act is designed to help Arizona blunt the economic effects of the COVID-19 outbreak. Some of that has gone directly to local governments, schools, the state health department and local hospitals.
He said, though, that the virus also has affected the unemployment rate, which is why the trust account from which jobless benefits are paid is going broke. And that, he said, makes it appropriate to use the CARES funds rather than put the burden on employers.
“I can’t think of any better way for them to get to real people than to ensure that we’re protecting our social safety net,” he said.
But that help doesn’t include boosting the benefits for the more than 400,000 workers currently collecting unemployment insurance who have been fired or laid off through no fault of their own. Those benefits that haven’t been adjusted in 16 years and are the second lowest in the nation, with only Mississippi paying less.
Note: The CARES Act extended unemployment benefits to 39 weeks, instead of the typical 26 weeks in most states. Those extra weeks will expire on December 31, 2020 (except for those states that established a longer period of time through 2021).
Another program ending at the end of the year is the Pandemic Unemployment Assistance program, also known as PUA. Self-employed workers contractors and gig workers normally don’t receive unemployment benefits, however, PUA allows them to receive weekly funds similar to other unemployed workers. This program is also set to expire on December 31, 2020.
“Governor Ducey’s focus right now as we deal with this pandemic and the effect it’s had on our economy is making sure that less people are unemployed, that more people have a job, that we have more jobs available,” Scarpinato said.
What that means, he said, is creating an economic environment where jobs are being created “so that people don’t have to be on unemployment, that they can get back to work, that they can earn their paycheck and have their livelihoods back.”
And the governor himself, asked about the $240-a-week cap, said the answer is simple: Get a job.
“There are jobs available,” he said, saying that employment levels in Arizona are at 96.9% of what they were before the pandemic.
In early October, Trump crushed the stimulus talks, endangering the U.S. economy and 26 million on unemployment (excerpts):
Companies from airlines to energy firms to restaurants have warned in recent days that they will have to undertake massive layoffs without more government aid. At least 75,000 layoffs were announced by major corporations at the end of last week alone, and Boeing has sharply pulled back its forecasts for airplane sales for years.
There’s growing concern among economists about a dangerous downward spiral. As businesses cut more jobs, people have less money to spend, which means they buy less at stores, restaurants and other companies, putting those businesses and workers at risk.
This new wave of layoffs will add more to the ranks of the 26 million Americans who were already receiving unemployment compensation.
The National Restaurant Association warned that 40 percent of restaurants are in danger of closing in the next six months without more aid. The American Hotel & Lodging Association warned that thousands of hotels can’t pay their mortgages right now, putting them in danger of closing. Overall, 21 percent of small business warn they will have to shut permanently if something doesn’t change in the next six months, according to a National Federation of Independent Business survey in August.
Trump risks the nation backsliding economically, putting more jobs and business in danger of going away.
With employers laying off people again because Republicans in Congress do not want to provide more coronavirus pandemic relief, the employment situation is about to get much worse, not better. You try finding a job in this depressed labor market, Governor. Don’t be blaming the unemployed who lost their job through no fault of their own. It was due to Donald Trump’s epic mismanagement of the coronavirus pandemic, and your own mismanagement following this fool’s lead.
The [governor’s] theme was echoed by Ducey’s chief of staff.
“The governor has an interest in creating jobs, in getting people back to work,” Scarpinato said. “That’s the best way to help people who are unemployed.”
But even in the best of circumstances there always will be those who are laid off or fired. Even when the state’s jobless rate hovered in the 4% range more than a year ago, about 17,000 people were collecting benefits every week.
Still, Scarpinato sniffed at the idea that raising the cap above $240 is a good idea.
“What you’re suggesting would be less than they would make in a job,” he said.
“They’re looking for work,” Scarpinato continued. “We want to make sure that there’s jobs available so they can transition from unemployment back into the workforce.”
If there is someone who should be standing in the unemployment line, it is Scarpinato. Geezus, what an idiot!
And what of those folks who do find themselves unemployed, can’t immediately find work, and have to live on no more than $240 a week?
“Our message would be the governor is fighting for you,” Scarpinato said. “You actually have to have a policy on helping people find employment, having employment available for our workers so that they don’t have to be on a program that’s not going to pay them as much as a job.”
Oh really? COVID-19 is once again surging in Arizona and is expected to spread “exponentially” over the holiday season, and our Governor is doing nothing about it. Gov. Doug Ducey will only do the right thing about the COVID-19 surge if Trump loses. This will lead to more businesses shutting down, and more unemployment. Rising Covid cases leave Arizona ‘headed toward exponential growth,’ expert warns (excerpt):
A prominent health expert expressed worry Wednesday about rising Covid-19 numbers across Arizona, saying the trend is reminiscent of early summer conditions that preceded a spike in cases and rollback of measures to reopen businesses.
“This is a moment to sort of stop and take measure and think hard about: What can we do to prevent this?” said Joshua LaBaer, executive director of Arizona State University’s Biodesign Institute, which is tracking case trends across Arizona’s 15 counties, as well as in the state overall and the nation.
LaBaer said 902 new cases were reported Wednesday morning by the Arizona Department of Health Services, and “we haven’t seen that in a while.” One week ago, that daily number of new cases was 786.
Cases are rising in Maricopa, Yuma, Navajo and Coconino counties, among others, he said.
“In terms of numbers of new cases, we are on a path headed toward exponential growth,” LaBaer said. “The tricky thing about exponential growth is that it doesn’t look like it’s growing very fast at first. The numbers day over day don’t look like they’re big changes. But then all of a sudden, it really can take off. And so I am concerned.”
LaBaer noted that things might only get worse with Halloween, followed by Thanksgiving and the December holidays of Christmas, Hanukkah and Kwanzaa.
Back to Howard Fischer:
The move to tap CARES funds to bail out the trust fund and Ducey’s refusal to consider higher benefits are tied to his belief that the best thing for the Arizona economy is keeping costs down for employers through direct financial help — not raising their costs through higher jobless benefits.
Those benefits are paid through the trust fund, which is financed by a tax employers pay on the first $7,000 of each worker’s salary.
The actual levy depends on how often employees are fired or laid off. Premiums range from less than 1% for companies that retain their workers to more than 13% for those who do not.
Before the COVID-19-induced recession and Ducey-approved restrictions on business operations, the trust fund had more than $1.1 billion.
It is now in the $163 million range. And projections are it will become insolvent as early as this coming month, or December at the latest.
Under normal circumstances, the U.S. Department of Labor would replenish the fund and then impose an additional levy on employers to pay it back. Scarpinato said Ducey thinks it’s a bad idea to add to the financial burden of Arizona businesses as they are getting back on their feet.
Arizona has $400 million to $500 million left in CARES dollars. So Gretchen Conger, Ducey’s deputy chief of staff, said the plan is to start funneling some of that cash into the trust account to keep it from going broke — and keep employers from having to dip into their pockets to keep it from having to borrow money.
The move appears to lack precedent.
The last time the fund ran out of money was a decade ago, during a prior recession, at one point going $600 million in the red. That loan was paid back not with state dollars but instead with a surcharge on employers.
Scarpinato said this is different.
“We believe unemployment is, particularly in this scenario, directly tied to COVID,” he said.
More to the point, he said, lots of employers also have been hit hard by the economic fallout from the pandemic “and are working to come out the other side and stay in business.”
“That’s really important for our workers, for our economy, so that we can fund things like K-12 education and all the important things in the state,” Scarpinato said. Anyway, he said, it’s not like the state has shorted any legitimate need of CARES dollars.
Not everyone feels that way.
Officials from several of the state’s smaller cities complained earlier this year when Ducey started doling out CARES dollars.
He gave them only about $115 per resident. By contrast, Phoenix, Tucson and Mesa, whose share came directly from the feds — and over which Ducey had no control — got $174 per capita.
Asked why the smaller allocation, the governor said he wanted to save some of that cash for exactly what he plans to do now: help businesses by shoring up the unemployment trust fund rather than forcing it to borrow money employers would have to pay back.
Since there is no precedent for doing this, and it is doubtful that the governor’s office has reviewed this with the Feds to see whether the state can do this, expect to see a legal challenge from the Feds.