September 3, 2020
US unemployment rate continues to fall; more states take federal loans to fund UI benefit payouts
The U.S. Bureau of Labor Statistics reports that the national rate of unemployment fell to 10.2% in July 2020, down from the June 2020 rate of 11.1%. Total nonfarm payroll employment rose by 1.8 million in July.
(USDOL-20-1589, 4-21-2020; USDL-20-1503, the employment situation for July 2020, 4-7-2020.)
Note, however, that the July 2020 national unemployment rate is 6.5% higher than in July 2019. As we previously reported, the national rate of unemployment was 4.4% for March 2020, 14.7% for April 2020, 13.3% for May 2020 and 11.1% for June 2020.
COVID-19 and the FUTA credit reduction impact
As of August 28, 2020, 19 jurisdictions (California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Ohio,
Pennsylvania, Texas, Virginia, the Virgin Islands and West Virginia) have applied for, and been approved to receive, federal UI loans. (Title XII Advance Activities Schedule, UI Department of Treasury website.)
As of August 27, 2020, California, Colorado (new), Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey (new), New York, Ohio, Texas and West Virginia have outstanding federal UI loan balances for loans paid to them in 2020. The Virgin Islands continues to carry a balance on the federal UI loan that it received in 2009. (U.S. Department of Labor UI trust fund loans; EY Payroll Newsflash Vol. 21, #337, 8-19-2020.)
Federal-state extended benefit program now in effect for all states except Idaho and South Dakota
Due to the states' currently high unemployment insurance (UI) benefit rates, the U.S. Department of Labor extended benefit (EB) trigger notice for August 23, 2020 reflects that all states, except Idaho (newly off the list) and South Dakota, have triggered on for an additional 13 weeks in UI benefits for individuals who have exhausted their previous state and federal UI benefits. Several states have UI benefit rates that are high enough that they have also triggered on for an additional seven weeks of extended benefits, for a total of 20 weeks of extended benefits.
As the states' UI benefit rates decrease, states are beginning to trigger off of extended benefits (i.e., Alabama announced that it will trigger off as of August 29, 2020, with the last EB payments paid through September 19, 2020).
Under federal law, the EB program offers up to an additional 13 to 20 weeks of UI benefits to individuals who have exhausted both their regular unemployment benefits and 13 weeks of the Pandemic Emergency Unemployment Compensation assistance.
EY Payroll News Flash