Unemployment claims skyrocket as coronavirus crisis deepens

With state unemployment claims skyrocketing to 25,000 in four-and-a-half days, the Department of Labor announced it’s begun at-home practice drills to ensure claims processing will continue amidst the coronavirus crisis.

After watching 2,000 claims arrive Friday, 8,000 over the weekend, 10,000 on Monday — and 5,000 through noon Tuesday — Deputy Labor Commissioner Daryle Dudzinski could not say the COVID-19-fueled press for benefits had peaked.

“I’ve been with the Labor Department since 1992 and this is unprecedented claim activity,” Dudzinski said, adding that even during the last recession — America’s worst economic downturn since The Great Depression — day-after-day of claims in the multiple thousands was not happening. “It exploded then over weeks and continued.”

Gov. Ned Lamont already has issued executive orders closing gyms, movie theaters and dine-in service at restaurants and bars, and has effectively scaled back many others businesses by limiting public gatherings to less than 50 people.

And amidst all of these actions, other state, federal and medical officials are pressing non-essential businesses, if at all possible, to close their doors and allow employees to work from home.

“I’ve been with the Labor Department since 1992 and this is unprecedented claim activity.”

Deputy Labor Commissioner Daryle Dudzinski

Just a few weeks ago, when Connecticut was enjoying a robust, 3.7% unemployment rate, the labor department would be processing roughly 3,000 new jobless claims per week, Dudzinski said.

To have 10,000 pour in on one day, with no guarantee that this is the peak, is unprecedented, the deputy commissioner said, adding the full impact can’t be assessed until the coronavirus crisis approaches something resembling stability.

“It’s difficult to gauge because of the seriousness of the pandemic, but as the hours go into the day, and with the analyses we’re having, it’s quite possible we’re looking at 10,000 per day being submitted” for some time to come, Dudzinksi said.

And even after the day-to-day growth of unemployment claims filings stabilizes, Connecticut’s job erosion almost certainly will continue long after that, said University of Connecticut economist Fred V. Carstensen, who heads the Connecticut Center for Economic Analysis.

“Consumer confidence, I would expect, has just collapsed,” Carstensen said, adding that President Trump’s proposed $850 billion stimulus package still won’t prompt consumers who are cloistered indoors — and wearing plastic gloves to collect their mail — to shop in stores online.

“I would expect that people are going to have an enormous preference to save any extra money they have,” Carstensen said.

And for restaurants and other small businesses being hit hardest with job losses, this consumer fear will continue to eat away at their bottom line. “The truth is we’re in for a lot of pain.”

Daniel Schwartz, an employment lawyer with the Hartford office of Shipman & Goodwin, told the CT Mirror Tuesday he and his colleagues have fielded dozens of calls in the past few days seeking guidance on handling layoffs, furloughs, and alternatives to these downsizing options.

“All of a sudden employers are having to think about worst-case scenarios,” he said, adding that many of the requests have come from restaurant and hospitality employers and event-related businesses.

And while manufacturing supply chains seem to be holding up for now, “I think there are very few industries that will be untouched by this,” before the crisis is over, Schwartz added.

Though unable to predict a pandemic, state labor officials began converting in 2016 to a “mobile-friendly,” Internet-based claims filing system, Dudzinski said.

“I think there are very few industries that will be untouched by this.”

Daniel Schwartz
Employment lawyer, Shipman & Goodwin

Most workers who are furloughed or laid off can file within 15 minutes by visiting the department’s claim site at fileCTui.com

“It’s very intuitive,” Dudzinski said, adding that users simply create a user name using their email address, add a password, and answer questions. As they shift from one page of questions to another, the system automatically saves the data. Once a claim is submitted, applicants receive confirmation both by email and by traditional mail.

That back-up savings component is key, Dudzinski said, because while the system remains healthy, it did slow down due to a data processing error for a five-hour period on Sunday night.

IT personnel were able to resolve the problem and no applicants’ data was lost, the deputy commissioner said. Those who could not submit their application Sunday night have been notified by email they don’t have to start over, but simply revisit the site, call up their existing application, and resubmit it — a process that should take just a few minutes, he said.

The Department of Labor normally assigns 20 staffers to process unemployment complaints, but already has reassigned 10 others from other departments to assist, Dudzinski said.

The Lamont administration also has authorized overtime and expanded the claims’ processors workday from eight to 10 hours, Dudzinksi said.

The department still is processing most complaints within parameters, an average of about three days. But he added it’s impossible to guarantee things won’t change if claim growth rates accelerate, or if staff become ill.

And while the department cannot shift all claims processing work from the Wethersfield and Hamden offices where it currently is done, it has the ability to shift some of that caseload to staffers working at home.

“We are having some work from home in a trial exercise,” Dudzinski said, adding this began last week to mitigate against a larger problem if state employees should become sick.”We want them to go home and practice. We want to make sure we’re not stranded. … We’re trying to extend a seemless process.”

Workers who have been displaced temporarily — if their employer guarantees a return to work within six weeks — don’t have to demonstrate they’re looking for work, under existing law.

But Dudzinski said businesses can ask the labor department to extend that six-week period — thereby extending workers’ options to receive benefits without demonstrating they’re pursuing new job possibilities. This can be handled by calling the department’s Merit Rating Unit at 860-263-6705, he said.

And for those who have permanently lost jobs, the deputy commissioner added, they can apply online for work — without visiting a potential new employer in person — and still qualify for benefits, Dudzinski said.

Dudzinski added that if the current, extreme pace of claims filings continues, Connecticut’s $610 million unemployment compensation trust fund could face insolvency issues in a matter of months.

“We just don’t know how far and deep this is going to go,” he said, noting the state sent out 40,000 payments worth a total of about $16 million last week. “If we’re going at the clip we’re going, we’re going to be in a deficit pretty fast.”

But he quickly noted that while this is serious, it sounds more ominous than it is.

Connecticut’s unemployment fund — and those of some other states — have gone into deficit in past recessions.

States’ unemployment funds are organized in conjunction with a federal trust, which states can borrow from to sustain the program. In other words, those approved for unemployment benefits are not at risk of losing a check if Connecticut’s fund falls into deficit.

But once the coronavirus crisis — and any associated economic downturn has passed — it could mean Connecticut businesses face a special assessment to help repay those borrowed funds. This is what happened after Connecticut borrowed money from the federal trust during the recession of 2008 and 2009.

Dudzinski added the department also is reminding employers they can take advantage of the Shared Work program.

As an alternate to layoffs, it allows employers to reduce work schedules by between 10% and 60% to deal with a temporary fiscal crisis. Those furloughed workers can replace a portion of their lost wages by drawing down on their unemployment benefits.