With nearly 200,000 in Washington set to lose jobless benefits, state has no Plan B

SEATTLE – Amid a surge in COVID-19 cases and new concerns about Washington’s economic recovery, the state faces another looming crisis: roughly 200,000 Washingtonians will likely lose all unemployment benefits as key federal pandemic programs end next month.

Unlike last December, when Gov. Jay Inslee stepped in with $550 payments to workers after federal pandemic assistance lapsed, the state won’t try to cover those lost federal dollars this time.

After Sept. 4, unemployed Washingtonians can’t claim the extra $300 a week the federal government pays on top of regular state unemployment benefits as part of this spring’s American Rescue Plan.

But the more serious impacts come from the expiration of two other federal programs: one that pays benefits to contractors, the self-employed and others who are ineligible for regular state benefits; and one that pays workers who’ve exhausted their 26 weeks of regular state unemployment benefits.

Those two groups represent roughly 200,000 individuals “who are most likely to run out of state and federal unemployment benefits after Sept. 4,” said Scott Michael, legal services coordination manager with the state Employment Security Department (ESD) in a presentation earlier this week.

“This is just awful timing,” said state Sen. Karen Keiser, D-Des Moines, chair of the Labor, Commerce & Tribal Affairs committee, referring to the surge in COVID-19 cases from the highly infectious delta variant.

When Congress extended the pandemic programs this spring, Keiser said, lawmakers included a Sept. 4 end date “on the hope and prayer that the COVID pandemic would be over. But it isn’t over.”

The expiring federal programs also mean less emergency funding for employer programs, such as SharedWork, and pose a huge potential impact to the state economy. Last week alone, Washingtonians received $151 million via the various federal pandemic programs, according to the ESD.

“It’s sure a lot of money to a hell of a lot of people,” said Sage Wilson, spokesperson for Working Washington, a labor-affiliated workers advocacy group.

Like many of the pandemic’s other economic impacts, the end of federal unemployment benefits will fall disproportionately on many Washingtonians least able to endure the loss.

Many of those receiving extended federal benefits were laid off from industries that were hit hard early in the pandemic and haven’t recovered.

For example, manufacturing, which represented around 8.5% of Washington’s pre-COVID workforce, saw some of the heaviest layoffs last year and accounts for 11.4% of federal extended unemployment claims, as of last month.

Similarly, many of those now receiving so-called Pandemic Unemployment Assistance (PUA), which covers workers not eligible for regular state benefits, can’t look for work due to health problems or because they’re taking care of children or others, Wilson said.

“The scale of what’s about to happen is appalling,” Wilson said … “But it’s also (about) who in particular we’re talking about” losing benefits.

Despite potential losses, however, it’s uncertain whether policymakers can soften the blow.

Congressional officials said they doubted Congress would extend the federal pandemic benefits, as has happened twice before.

“We’re pushing very hard for (an extension),” Rep. Pramila Jayapal, D-Seattle, said. And “the argument that we’re making is exactly that: We are not through this pandemic yet and people need assistance.”

But other lawmakers have resisted an extension of pandemic benefits, which some blame for rising inflation and, more controversially, for discouraging jobless workers from seeking work.

Some lawmakers also doubt there are enough votes in either the House or Senate for an extension.

U.S. Sen. Patty Murray, D-Wash., said she was trying instead to make permanent another pandemic relief program, the Child Tax Credit, as a way help affected workers.

Murray also encouraged Washington officials to dip into the federal funds they received under the American Rescue Plan.

“In the immediate term, I encourage local governments to consider every option to provide additional support to those who are still working to get back on their feet, particularly as localities consider how best to use existing funds from the American Rescue Plan,” Murray said.

But Inslee’s office quickly nixed any suggestion the state could use its America Rescue Plan funds to replace lapsed federal benefits.

Much of that money was already appropriated for other uses in the recently passed budget, and the state lacks “interim appropriation authority” to use the rest, Inslee spokesperson Tara Lee said.

More to the point, the remaining America Rescue Plan funds wouldn’t cover the expired federal unemployment benefits for more than a few weeks, Lee said.

“We can’t sustain a program replacement of that magnitude,” Lee said.

(The governor’s office was trying to confirm the amount of remaining ARA funds but was unable to do so by late Thursday afternoon.)

Instead, Inslee is focused on helping unemployed workers get back to work.

“Our attention is focused on supporting Washingtonians with re-employment and increasing vaccination to ensure our economic recovery continues,” Lee said in a statement.

Lee also noted that ESD’s current estimate of Washingtonians at risk of losing federal assistance is based on current numbers of claimants, which should decline as more people return to work.

Inslee’s stance on the loss of federal benefits irked some worker advocates, who noted that Washington stepped in earlier this year to help employers whose unemployment taxes were set to rise due to pandemic-related layoffs.

“The state has repeatedly managed to identify hundreds of millions of dollars to provide relief to businesses,” Working Washington said in a statement Friday morning. “It’s hard to understand why a similar effort isn’t in order to provide relief to unemployed people who have no other source of income – many of them for COVID-related reasons.”

ESD officials noted that federal pandemic benefits can continue to be paid after Sept. 4 in some instances, such as for people whose claims have been held up for review. More details can be found on the ESD website.

The debate over pandemic assistance comes as the state saw the second consecutive weekly increase in new jobless claims.

Washingtonians filed 5,420 new, or “initial,” claims for unemployment benefits last week, a 10.2% increase from the prior week, the ESD reported Thursday.

It was the second increase in claims after more than a month of declines, even as total U.S. claims dropped 3.1%, to 375,000, over the prior week, the U.S. Labor Department reported Thursday.

ESD spokesperson Nick Demerice said the recent increases weren’t significant.

“When the total number of initial claims are this low, shifts of a relatively small number of claims creates a larger percentage increase,” he said.

The state’s four-week moving average for initial claims is 4,989, 5.3% lower than it was at this point in 2019, ESD said. The four-week moving average has declined for nine consecutive weeks.

The bulk of the increase in claims in Washington last week came from workers in construction and health care, ESD said.

Last week, the ESD paid benefits on 227,689 individual claims, down around 1% from the prior week. Because individuals can have multiple claims, the number of those claims is often slightly higher than the number of individual claimants.

Since March 2020, more than 1.1 million Washingtonians have received more than $20.6 billion in jobless benefits, with about two-thirds of the money coming from the federal government.

By comparison, in each of the previous 10 years, the ESD’s annual payout averaged just over $1 billion, the ESD said.