According to last week’s data release, 46,251 initial unemployment claims were filed in West Virginia during the week ending April 18, by far the highest number in state history. Prior to the current crisis, the highest number of initial claims in a week was 5,877, back in 1999.
With 104,904 continued claims from the previous week, and 46,251 new claims, there were over 151,000 West Virginians collecting unemployment insurance that week, or over 22% of covered employment. In comparison, the rate peaked at 4.9% during the Great Recession.
The unprecedented number of workers collecting unemployment benefits is rapidly depleting the state unemployment insurance trust fund. The state’s trust fund has already dropped dramatically during the crisis, even as the bulk of unemployment claim have just been processed in the past week, falling from $177.9 million at the end of January to $113.9 million as of April 16th.
The Department of Labor has several measures it uses to assess the health of state unemployment insurance trust funds. One measure, the High Cost Multiple (HCM), measures how long a state could pay benefits at its historically highest level of benefit payments out of its trust fund without relying upon UI payroll tax revenues. A HCM of 1.0 is equal to 12 months of payments.
Before the crisis, West Virginia’s HCM was 0.52, meaning its trust fund would last roughly 6 months making claim payments at the state’s previous highest level of claims. But in the current crisis, West Virginia’s claim levels are far beyond anything the state has seen before, which means the trust fund would be depleted at a far greater rate than the HCM would suggest.
West Virginia pays an average of $323/week in unemployment benefits per worker claiming benefits. With 151,000 workers claiming benefits, that means the state is paying out $48.8 million/week in total claims. To put that in perspective, in 2019, the state averaged only $3.5 million/week in total claims.
At $48.8 million/week, West Virginia’s unemployment trust fund would run out in less than three weeks. Accounting for payments coming in to the system only pushes out the insolvency date by a week or two. In March, the state deposited less than $1 million into the unemployment insurance trust fund and only $5 million so far in April.
While the CARES ACT provides an additional $600 a week to each state unemployment insurance beneficiary, and fully funds extra weeks of benefits once state benefits run out, West Virginia must still come up with the funding for regular benefits. The CARES Act also has a “non-reduction rule” which means that as long as West Virginia is participating in these programs, it may not do anything to decrease the maximum number of weeks of UI or the weekly benefits available under state law.
That means keeping funding to keep the state’s unemployment system solvent will either have to come from the state budget or loans from the federal government. The Families First Coronavirus Response Act provides for interest free loans for state unemployment insurance systems through the end of the year.
