Recent trends continued for the week of May 15, with the number of total initial claims essentially level in California while continuing to drop since the week of February 27 in the rest of the US.

In California, initial claims processed in the regular program edged up 1.5% compared to the prior week, while PUA claims fell 8.3%. In the national totals, regular claims dropped 7.6%, while PUA claims also fell 8.3%. Combined, total claims processed were down only 0.6% in California but dropped 7.7% in the US numbers.

By industry, the pattern was little changed with the largest number of initial claims (all programs) again filed by workers in Accommodation & Food Service (16.7%), Retail Trade (11.5%), Health Care & Social Assistance (10.0%), Administrative & Support & Waste Management Services (8.7%), and Construction (7.4%).

The California numbers now have been essentially level for the past 6 weeks. The overall trend for total initial claims in the other states has been a decline over the past 11 weeks.

In the most recent results for March, California tied with Connecticut and New Mexico for the third-highest unemployment rate in the country, behind only Hawaii which is even more dependent on tourism-related employment and New York which adopted lock-down strategies comparable to California’s. Updated numbers for April will be released Friday.

These numbers only cover the officially unemployed and not workers who have left the labor force during the pandemic period including workers who have given up on trying to find a job, workers who are fearful of contracting the disease if they get a job, and parents who had to quit their jobs to take care of their children while the California public schools have remained closed and while substantial uncertainty remains in many districts over when and how they will reopen.

The most recent tier allocations for the week of May 17 from the Department of Public Health show continuing improvements in relieving restrictions to business activities and jobs. Counties in the second-lowest Tier 3 restrictions held 40.2% of March’s unemployment, 10.0% still remain within the second-highest Tier 2, but the lowest Tier 4 rose to 49.8%. All counties remain under some level of restrictions which present barriers to the state’s economic recovery and continued reliance of many workers on unemployment benefits, although the governor recently announced his intention to remove the tiered system by June 15.

In the most recent data from the Centers for Disease Control, California fell just below the US average in the share of vaccine doses being administered. Total additional vaccine supplies were essentially level at 2.5 million for the week (16.3% of the national gain), and the number of shots grew 4.2% to 2.2 million (14.9% of the national total). Consequently, in spite of continuing problems with the state’s MyTurn system, performance of the full vaccination response including local and private providers has been gaining relatively greater ground compared to the lagging outcomes at the beginning of the roll out. As of midday May 20, a total of 36.1 million shots have been administered in the state covering 21.4 million people, or 54.1% of the population and 63.5% of the population age 12 and over. In all, 39.8% of the population (US 38.1%) and 46.7% of population 12 and over (US 45.2%) have been fully vaccinated.

The most current EDD backlog data indicates that while the backlog awaiting EDD action rose, total backlogged claims was essentially level, down only 0.3% the week of May 15, with the total still exceeding 1 million. The number of claims backlogged awaiting EDD action rose 1.5% over the prior week. Backlogged claims are defined as those awaiting action for 21 days or longer.

The related call center data shows continuing deterioration in this indicator. Calls were up (6.5%), but the number answered was down (-1.1%) for the 4th week in row. On average—using total number of calls received and the number of calls answered by staff—the average caller put in 13.5 calls trying to reach EDD. Of the unique callers, up to 68% had their calls answered by staff (assuming one call answered per unique caller).

While the overall claims backlog remains largely due to applications awaiting claimant action, the extreme difficulty in reaching EDD for clarifications—as indicated by the call data—more accurately likely puts a substantial portion instead under the “pending EDD” category.

As an indicator of long-term unemployment in the state, payments for the extended benefit programs (PEUC and Fed Ed) rose to 30.2% of the total for the week of May 15. While the share has eased from its high of 50.3% in March, the overall trend indicates a substantial share of those receiving unemployment benefits still face the risks of lifetime wage and income effects similar to those that afflicted the long-term unemployed coming out of the previous recession that began in 2008.

In the most recent data from the EDD, California paid out a total of $145.0 billion in benefits under all the UI programs since the week of March 7, 2020.

The most current estimate is up to $31 billion of unemployment benefits was paid out to fraudulent claims, consisting of $11 billion in known fraud and up to $20 billion in suspected fraud.

The most recent data from the US Department of Labor indicates California’s outstanding loans as of May 18 from the Federal Unemployment Account rose to $20.5 billion. The most recent projections from EDD contained in the May Revise expect the total to reach $24.3 billion by the end of the year. This amount is more than twice the peak of about $11 billion reached during the previous recession that began in 2008. That debt took 10 years to pay off through higher employment taxes imposed on businesses. The May Revise proposes using only $1.1 billion ARPA funds to offset the current debt. Combined with rising minimum wage (along with associated effects through wage compaction) that will exhaust the state fund faster in future economic downturns, the remaining amount in the debt after this level of proposed payment means the state fund will be unlikely to return to a positive balance prior to the next downturn. At the same time, businesses will continue to be burdened with higher employment taxes that will make it more costly to return workers to their jobs, offsetting other proposals within the May Revise to accelerate job returns.

Accounting for 40% of the total amount owed by 18 states and 1 territory, the size of this debt is an issue focused on California and at best a few other large states. At least eight states as of last summer had already used a portion of their federal relief funds to shore up their UI funds, while others such as Ohio are now proposing relatively broader use of the ARPA funds for this purpose.