Initial claims within California rose 4.2% during the week of October 30, while claims in the rest of the country continued their longer-term decline, dropping 5.1%. The seasonally adjusted number of claims dropped 4.9% for the US as a whole. In all, California continued to perform below the rest of the US, with 25.9% of all initial claims processed during the week. This performance would indicate a continued slowing in California’s recovery pace compared to the rest of the nation as reflected in the recently released job and employment numbers for September.

California claims remained at levels previously seen in July and August 2021, with essentially level numbers over the past 5 weeks. The US number was again the lowest since the beginning of the pandemic period and only 12% above the average in 2019. California was 54% above the 2019 average.

As reported for the week of October 23, the revised EDD backlog dropped 21.7%, while the backlog due to all sources dropped 18.0%.

In the related call center data, overall activity levels continued to decline, except for the number of calls which saw the average number of calls required to reach EDD rising to 5.5.

In the most recent data from the EDD, California paid out a total of $177.9 billion in benefits under all the UI programs since the week of March 7, 2020, and through the week of October 23, 2021. The most current estimate from EDD is that $20 billion of unemployment benefits was paid out to fraudulent claims. While much of this fraud was driven by the federal pandemic enhancements, fraudulent payments also affected the base UI benefits funded through the state. In the absence of budget action, this amount will be added to the total debt that will be paid off through 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 November 2 from the Federal Unemployment Account were $19.6 billion. EDD’s May projections indicated a $24.3 billion deficit by the end of 2021 and $26.7 billion by the end of 2022. The regular October revision does not appear to have been released yet.

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. With Hawaii once again paying off its debt, only 10 states and one territory (Virgin Islands) now show a balance due 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 is 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. Instead, California employers remain faced with one of the largest tax increases in the state’s history even as they continue to provide the base for a continuing surge in state revenues that are resulting in historic state surpluses. As reported by the Department of Finance, general fund revenues through the end of September are already running $13.9 billion ahead of the levels projected in the current budget bill.