Colorado unemployment claims slowed last week, but are still far outpacing Great Recession levels

Gig workers and other independent contractors can start applying for unemployment benefits next week, at the earliest, according to Colorado’s labor department, which is still preparing its computer systems to accept the new type of applicants for the first time.

Such workers typically don’t qualify for benefits because they don’t pay into the state unemployment system. But thanks to the $2 trillion federal stimulus package, gig workers affected by COVID-19, the disease caused by the coronavirus, can receive up to $600 a week in unemployment pay.

The state Department of Labor and Employment, however, did not have the system in place to accept the new wave of applicants and only received federal guidelines on Sunday.

“And all of these new worker categories require manipulation of our systems and our programs to determine that these folks are eligible, that we’re giving them the correct benefit amount, and that we’re properly paying them,” Cher Haavind, the agency’s deputy executive director and spokeswoman said Thursday during a call with reporters — and individuals from the public who jumped in to ask their own personal unemployment questions. “We’re hoping for somewhere around mid-April. I realize that’s next week, and we are working diligently to meet that timeframe.”

All people eligible for unemployment benefits because their job was interrupted by the spread of coronavirus will receive an additional $600 per week from the federal government automatically. They don’t need to reply unless their claim was denied. The $600 payment will be retroactive to March 29, when the federal plan was approved. 

“Anyone determined eligible for any level of benefits will get the $600,” said Jeff Fitzgerald, director of the state’s Division of Unemployment Insurance, in an email.

More than three weeks into the first COVID-19-related business closures that left thousands without a job, approximately 127,393 Coloradans have filed for unemployment and been vetted by agency employees. More are still applying.

After two weeks of staggering increases, the number of people making initial claims for unemployment declined 25% last week to 46,065, according to the latest data. That’s still a lot though — it’s almost six-times the 7,749 claims filed during the week ending Jan. 9, 2010, the peak week of the Great Recession. 

Fitzgerald estimated that applications coming in online or through the call center “remain high but are about 10% lower than last week thus far.”

And more claims are expected, said Ryan Gedney, senior economist with the state labor department. 

“There could be a number of reasons we saw a drop in initial claims numbers on a week to week basis,” Gedney explained, adding that some people were waiting on their last paycheck before applying, and gig workers were waiting for the program to take their application. “However, I do want to emphasize that 46,000 is still a very elevated number of claims.”

He pointed to national unemployment numbers released Thursday. Those, too, showed a dip in claims, for a total of 6.6 million for the week of April 4, which was down about 261,000 from the prior week.

“There were close to 20 states that saw a decrease week over week, so Colorado wasn’t unique,” he said.

The types of workers applying match Gov. Jared Polis’ executive orders that devastated whole industries, like ski resorts, restaurants, hair salons and dental offices. 

For the week ended March 21 — when many of Polis’ orders were  issued — more than half of the claims came from the hotel and restaurant industry. Health care and social services, which had the second highest number of industry claims that week, included dental offices primarily, but also optometrists and chiropractors.

Other services, which include hair salons, ranked third, followed by the arts, entertainment and recreation industry; and then retail. 

“Those sectors combined to represent nearly 80% of all industry level claims,” Gedney said. “Accommodation and food services which is primarily hotels and restaurants, made up over 50% of industry level claims. In 2009, that industry typically made up around 8% of weekly initial claims.”

Colorado paid out $29.4 million in unemployment benefits for the week ending April 4. Before that week, the average weekly payment for 2020 was $8.7 million, according to the labor department. By comparison, unemployment benefits paid during the Great Recession during 2009-10 averaged $19 million a week. The peak month was May 2009, when the state paid out $102.8 million.

The money comes from the state’s unemployment trust, which employers statewide pay into to keep it funded. Before the coronavirus began impacting the economy, the fund had $1.1 billion.  

The fund was depleted during the Great Recession, and Colorado, like the 49 other states, received federal loans to pay unemployment claims.

Back then, individual employers wound up paying higher insurance premiums if they laid off workers. But Polis’ state emergency order prevents that future penalty this time around, allowing workers to tap into the general trust fund. 

However, when the fund is reviewed on June 30, which is done each year, the new rates would be determined and impact all employers, including the ones who had no layoffs, according to state officials.