As a special unemployment benefit ended abruptly over the weekend, the state legislature this week took a stab at bringing it back.
The problem was the expiration of the extra 13 weeks of State Extended Benefits, which turn on when the jobless rate goes over 5% and turn off when it falls below 5%. The program ended Saturday in Colorado because the state’s insured unemployment rate hit 4.9% in early November. Had the rate not fallen, SEB would have ended Dec. 26.
But on Wednesday, the General Assembly approved a bill that changes how the state’s eligibility for SEB is calculated and sent it to Gov. Jared Polis, who is expected to sign the legislation. As part of a late amendment to the Senate Bill 2, which dealt with housing and direct COVID emergency assistance, lawmakers adopted a second trigger to calculate unemployment rates differently.
Instead of just counting the roughly 130,000 people receiving regular unemployment benefits, the second trigger also counts those who’ve exhausted their benefits and moved on to federal benefits covered by the CARES Act. That’s about 75,000 more people who will now be counted in the total unemployment rate, or TUR.
“If we had had this trigger in place on Nov. 28, we would have not gone into the situation that we’re in right now,” said Rep. Cathy Kipp, a Democrat from Fort Collins who helped research the amendment.
These state extended benefits existed before the pandemic. In the past, states split the cost with the federal government. But with the CARES Act, the federal government covers 100% of the extended benefits program until the end of the year.
“This legislation ensures that it will only trigger on if the federal government continues (100% coverage),” Kipp said. “What we’re hoping this will do, and there’s precedent for it, is that this will retroactively go back to the 28th to make everybody whole for those extra four weeks of unemployment. And that’s going to affect a lot of people.”
The hope is that Congress will pass a new coronavirus relief package to provide additional benefits to unemployed workers. On Tuesday, a new $908 billion coronavirus relief package was proposed in Congress that would include an extra $300 in benefits for 18 weeks for jobless Americans, including gig workers.
Adopting the new trigger is a more immediate solution. It would reinstate benefits for the 16,000 people cut off Saturday from the SEB program. The extension would also be available to any of the 59,000 people, as of Nov. 7, who were nearing the end of the Pandemic Emergency Unemployment Compensation (PEUC) for the rest of the year.
For some reason, Colorado never opted for the second trigger. That’s likely because the first trigger — the IUR, or insured unemployment rate — is required, while the total unemployment rate calculation is optional. It might also have been strategic. If the state had adopted TUR before, it could have been on the hook for 50% of the extended benefit to workers after federal help ended.
In recent months, Illinois, California, Kentucky, Michigan, Virginia, Nevada, Ohio and Washington, D.C. and possibly others have adopted this second trigger.
But there’s a unanswered question about whether Colorado will be allowed to return to the extended benefits program since it already dropped off, said Michele Evermore, a policy analyst who tracks extended benefits at the National Employment Law Project, a progressive organization supporting worker rights.
When Colorado dropped off after its insured unemployment rate fell below 5% on Nov. 7, the policy requires states to wait 13 weeks before rejoining — even if their unemployment rate goes back up.
Evermore said that D.C. adopted the second trigger even though its unemployment was well above the 5% threshold. There’s never been a recession like this where a state could fall off extended benefits and get back on in such a short time so she wasn’t sure if Colorado could rejoin the program. That could have been avoided had Colorado adopted the second trigger earlier, she said.
“People don’t pay attention to unemployment insurance when there’s not a recession,” Evermore said. “But also usually, extended benefits are half state-funded and half federally funded. During this particular pandemic, extended benefits are fully federally funded through the end of December, and if there’s ever any extension we expect that to continue to be the case.”
TUR is based on seasonally adjusted unemployment rates for the average past three months. As long as Colorado’s TUR rate stays at 6.5% or higher and federal aid is covering the payment, these additional unemployment benefits will continue.
From August to October, the most recent data available, Colorado’s total unemployment rate was 6.5%.
And here’s the rub. Colorado’s unemployment rate may go down in November. The monthly rate is counted on the 12th of each month and the November rate, which will be available Dec. 18, won’t include the job losses that resulted from the Nov. 18 COVID-related health orders in more than 20 counties. Restaurants stopped indoor dining and bars closed at 8 p.m. Social-distancing restrictions on businesses caused more layoffs.
If the November unemployment rate drops below 6.5%, it will turn off the extended benefits program again.
And to top it off, several unemployment benefit programs end on Dec. 26, unless Congress passes new relief that would extend them. That includes the end of PEUC and Pandemic Unemployment Assistance.
PUA, which provided federal unemployment benefits to gig workers and the self employed, is not counted in the new or old method. On Nov. 7, there were about 79,000 people receiving PUA benefits.
“If the TUR drops below 6.5%, the program would end three weeks later,” said Cher Haavind, deputy director of the Department of Labor, in an email. But, she added, “without congressional action, Dec. 26 is the last payable week (for extended benefits) even if the rate does not drop.”
In a Dec. 1 memo Kipp shared from the Governor’s office, the state is waiting on guidance from the U.S. Department of Labor about whether the state must wait out the 13 weeks before rejoining the extended benefits program again.
“If we pass this amendment and the DOL gives us guidance that SEB needs to remain off for 13 weeks, we’ve at least added the second trigger in our statute for the future,” said the memo from the Governor’s office.
This story was updated at 9:20 p.m. to add details of a 13-week waiting period for states who leave the extended benefits program before rejoining.