Initial claims within California soared 27.8% during the week of October 16, while claims in the rest of the country plunged 19.3%.  The seasonally adjusted number of claims dropped 2.0% for the US. In all, California contained nearly a third of all initial claims filed during the week. PUA initial claims—which are still being processed for claims covering the previously eligible period—fell sharply to 491.

Nationally, claims reached a new low in the pandemic period and were only 19% above the 2019 average prior to the pandemic. California’s total in stark contrast was the highest since the first week of April 2021.

Revised backlog numbers awaiting EDD action dropped 22.4% the week of October 2, while the backlog due to all sources dropped 11.4%.

In the related call center activity, overall activity levels again dropped, but including a 3.3% dip in the number of calls answered. The average number of calls required to reach EDD dropped to 6.7.

Other backlogs within the department also remain elevated. Sacramento Bee recently reported that claimants are now waiting up to 26 weeks if a phone interview is required to determine their eligibility.

In the most recent data from the EDD, California paid out a total of $177.3 billion in benefits under all the UI programs since the week of March 7, 2020 and through the week of October 9, 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 continues to show how this growing debt is an issue generated by policies followed in California and at best a few other states. Only 11 states and one territory (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 shows that the issue has been handled differently elsewhere, with 31 states using $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.