Initial claims within California rose 5.0% during the week of October 9, while claims in the rest of the country rose 6.5%. The seasonally adjusted number of claims dropped 10.9% for the US. In all, California contained 24.2% of all initial claims filed during the week. PUA initial claims—which are still being processed for claims covering the previously eligible period—rose to 15,209.

California claims remained at levels previously seen in late April through early June.

Revised backlog numbers awaiting EDD action dropped 8.3% the week of October 2, while the backlog due to all sources dropped 8.2%.

In the related call center activity, overall activity levels continued their decline, including a 1.8% dip in the number of calls answered. The average number of calls required to reach EDD dropped to 7.2, the best level since February.

In the most recent data from the EDD, California paid out a total of $176.9 billion in benefits under all the UI programs since the week of March 7, 2020, and through the week of October 2, 2021. The most current estimate from EDD is that 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. While much of this fraud was driven by the federal pandemic enhancements, the sharp rise in fraudulent payments under the regular UI program included the components paid through the state fund, further increasing the debt that in the absence of budget action will be paid off by sharply higher taxes on the businesses that are now trying to recover jobs in the state.

The most recent data from the US Department of Labor indicates California’s outstanding loans as of October 12 from the Federal Unemployment Account were $19.8 billion. Combining EDD’s May projections with the cash flow results to date, total debt is likely to reach around $30 billion by the end of 2022, although the rise in debt has slowed over the past month. This amount is far 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 by both the state and federal governments.

The latest federal debt data, however, also illustrates the high degree to which this soaring debt was the result of pandemic policies followed in California and at best in a few other states. Only 11 states and one territory (the Virgin Islands) now have a debt to the federal fund. California constitutes 43% of the total.

As discussed in a prior report, a recent Tax Foundation analysis indicates that 31 states have used $15.4 billion of their federal pandemic relief funds under the CARES Act and ARPA to support their unemployment funds. California is listed as allocating a total of only $6 million for this purpose, in spite of receiving the largest share of the federal funds and running up by far the largest state UI fund debt.