Mounting unemployment claims in Rhode Island are unprecedented in recent history, representing an additional cost that will complicate the state’s effort to eventually recover from the economic fallout of the coronavirus.
More than 6,000 people have filed for unemployment for each of the three first days of this work week, with the high (8,408) coming on Tuesday.
Scott Jensen, director of the state Department of Labor and Training, said each of these single-day figures is greater than the previous weekly apex.
“We did a quick scan of recent Rhode Island history to find out when the record claims numbers were,” Jensen said in an interview with The Public’s Radio. “The closest example was 5,800 cases in one week – I want to repeat that, in one week – during the Rhode Island banking crisis. We got more claims in one day than we got in a week back then. That’s how unprecedented this situation is.”
The state banking crisis involved the closing of a series of state-chartered credit unions in 1991, leaving Rhode Islanders temporarily unable to have access to their deposits.
More than 26,000 unemployment claims have been filed with the state since March 9, with almost 24,000 of them being COVID-specific claims.
Jensen said there’s no danger that the state will be unable to pay unemployment claims since it will be able to borrow from the federal government if local funds run out.
“It’s the paying back part we’ll all have to be careful about,” he added. “If this crisis is anything, it’s atypical. The governor is working very closely and carefully with the Rhode Island delegation and other members of the federal government to raise the alarm about [how] we have to work together for a national response for all of the [unemployment insurance] activities that we’re experiencing.”
Jensen said an unemployment benefit for gig and freelance workers could become available through a federal designation.
On a national basis, The New York Times reported, “The government reported that the number of initial unemployment claims rose to 281,000 last week, a sharp rise from 211,000 the previous week. This rise in initial claims of 70,000 is larger than any week-to-week movement that occurred during (or since) the 2008 financial crisis.”
On Wednesday, Gov. Gina Raimondo said she was still assessing the fiscal impact of the coronavirus and trying to line up short-term cash for the state.
Rhode Island was already facing about a $200 million budget deficit before the coronavirus became a crisis.
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TRANSCRIPT:
Donnis
Director Jensen, Rhode Island is obviously facing skyrocketing unemployment claims. You say, there’s a limited amount in its Unemployment Insurance Fund. So will it be able to pay all these claims?
Larsen
Yes, it will. You know, during the Great Recession, Rhode Island and 30 other states around the country, had their trust funds wiped out. And when that happens, there is a procedure where we will borrow from the federal government and over time, pay it back. We will be able to pay benefits for sure. It’s the paying back part that will we’ll all have to be careful about.
Donnis
If the state runs up a big tab that has to be paid back, will that be a burden for the state down the road?
Larsen
Yes, it would. It would be paid back by employer taxes, essentially. That’s under a typical circumstance. And I think that if this crisis is anything, it’s a typical. The governor is where working very closely and carefully with Rhode Island delegation and other members of the federal government to raise the alarm about, you know, we have to work together for a national response for all of the UI activity that we’re experiencing.
Donnis
What can the state do to help freelancers, gig workers and other people who might not be eligible for unemployment?
Larsen
You’ve heard about DUA, probably, – the Disaster Unemployment Assistance Fund. What a declaration from FEMA about that invoking DUA would do would be allow the unemployment insurance apparatus to pay gig workers, 1099 folks, independent contractors. Currently, the law doesn’t allow us to do that. And that’s why that DUA designation is so important. Hopefully the feds will do that soon.
Donnis
As this situation is unfolding. How did the available resources compare with the economic need in Rhode Island on the issues under your jurisdiction?
Larsen
We did a quick scan of recent Rhode Island history to find out when the record claims numbers were. The closest example was 5800 claims in one week, when we repeat that in one week, during the Rhode Island banking crisis. We got more claims in one day than we got in a week back then. That’s how unprecedented this situation is. We’re running numbers and working closely with the governor’s office and the Department of Administration to really get a handle on exactly where we think projections will go. And we’ll be tracking payments, as well as, you know, kind of initial claims, but it’s clear that we’re going to need help. That’s true of every state. We’ve been in contact with others and they’re experiencing similar volume.
Donnis
As you say, Director Jensen, this is an unprecedented situation. And it’s unclear how long it will be going on for, given those caveats, how long will it take for the state to recover from this?
Larsen
That’s a really good question. Congress is actually stepping up and looking at different ways that they can help the country recover from this whole endeavor. And I think that one of the things that nobody can forget about are the unemployment insurance trust funds around the country, because UI has been and is, and is supposed to be on the front line to help people in situations where, you know, they’re going to get wiped out if they don’t get some immediate assistance. We want to make sure that those funds remain stable and solid, and we don’t want businesses to have to pay back these giant loans that really weren’t their fault. This is a virus and it’s an unprecedent circumstance and it isn’t what regular UI was meant to do. I’m glad we have UI. But you know, we’re going to need to work together with our federal partners to figure out how to get us all back to go.
Donnis
You are obviously one of the department directors for Governor Raimondo’s administration, what has it been like for you to be on the inside of responding to this unfolding crisis?
Larsen
You know, it has been a lot of work. And, you know, we’re here at the Labor Department, there’s really two parts to it. One part is we have to deal with, all the folks that are calling us and needing information and getting them benefits and on the other hand, being able to make sure we’re working in concert with the rest of the administration and the governor herself, to give her the information she needs to make decisions to make sure we understand what Dr. Alexander-Scott, what path she’s trailblazing for the whole state. And I gotta say, that has been going beautifully for both ends. We’re getting really clear direction from the governor and really clear direction from Dr. Alexander-Scott in this crisis, it’s very helpful from the DLT perspective.
Donnis
Dr. Alexander-Scott is clearly the state health director.
Larsen
You know, I have to say, Pete Gaynor, who is running FEMA right now for the United States, ran emergency response for the Raimondo administration for the first few years. Pete is a terrific guy, and he, I’m glad he’s where he is. And I’m glad that he was so forceful about getting us ready for unforeseen circumstances like this one.
Donnis
I’ve heard some frustration from state workers who feel like they should be working at home to protect themselves and their loved ones, but who say they’re still being told to work at state offices, what would you say to them?
Larsen
They should advocate strongly with their supervisors and and bring that up the chain. We’re in a tough circumstance here because we’re trying to make the distinction between who’s essential and who is not essential. And the governor was, I think, as eloquent as possible, where she’s describing the difference between going grocery shopping and eating out at restaurants. It’s essential to eat. It isn’t essential, right now to eat at restaurants. Similarly, in state government here at DLT, for example, we’re encouraging as much teleworking as possible for people who don’t have to be here. Right now, we have a call center set up for unemployment insurance, that’s an essential service at the moment, We should be able, in the coming days to do that remotely. That’s a technological lift that we’re working on. And we’re also working on using expediting claims, using technology more and more, but we’re asking people to telework from our agency, but yet some are coming in. And I have to say, Ian, some really want to be here. Right now we’re closed to the public. But we’ve set up a second phone bank where we’re answering questions for Rhode Islanders who are trying to figure out what to do.
Donnis
What is the capacity of the State Department of Labor and Training to get information out to Rhode Islanders who do not speak English?
Larsen
We have people available to translate in Spanish and we have Spanish speakers on the telephone. It’s tough, because we don’t have as many as we need, and certainly as we would like, but we do have that capacity. So far, our most vital documents are in Spanish as well as English. And we’re continuing to improve that capacity every day.
Donnis
Finally, you studied philosophy as part of your academic work when you were a little younger. How did that prepare you for responding to this situation.
Larsen
I saw that question on Twitter. And I was so excited to answer it because actually, I’ve done a lot since I was teaching philosophy — on City Council for eight years and, you know, started working in government and Labor Department — but it is very important in a crisis not to get confused about what’s important and what’s not important. Critical thinking – I’m using my philosophic education more in the last 48 hours than I ever had. And it’s helpful because it allows you to make a decision a little bit faster, and give people direction so that they can go get to work and solve problems for folks. I would recommend studying Heidegger and Wittgenstein for everybody, and I don’t think anybody will take me up on that.
Donnis
[laughs] Scott Jensen, director of the Rhode Island Department of Labor and Training, thank you for taking some time to speak with us.
Larsen
Absolute pleasure Ian.