To be eligible for unemployment insurance (UI) benefits an individual has to be separated from their last job due to lack of available work.
Since many workers voluntarily leave jobs or are terminated for poor performance or fail to file for unemployment benefits, the number of individuals in Delaware filing for unemployment at any one time is about one-third of the total unemployed recorded by the BLS.
For example, at the worst point in the 2007-08 recession BLS estimated the unemployed population in Delaware to be 36,076. Simultaneously, there were 11,499 individuals actively collecting UI benefits in the state and weekly new initial claims for UI averaged 918.
COVID-19 is a whole new ball game. For March of 2020, BLS reports total unemployment in Delaware of 24,466 while the total claims for UI benefits averaged 14,624….60% of the BLS number.
Initial weekly UI claims in Delaware have gone from an average of 599 in February, to 7,726 in March, and to 12,376 in April. All Delaware UI claims in March totaled 45,488.
What has happened? The UI eligibility rules have been radically loosened under the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
Under the CARES Act, individuals are eligible for UI benefits if: their employer closed because of COVID-19, if they are quarantined due to COVID-19, and if a child’s school has been closed and they must stay home with the child. Workers experiencing a reduction in hours or part-time workers may also be eligible.
The maximum weekly UI benefit is $400 and should be received within 10-14 days of filing. Payments will be retroactive.
What does this mean for Delaware’s economy? As of the last week in April total UI claims in Delaware were approaching 53,000. This will provide much needed relief to hourly and contract workers and the self-employed, hopefully helping to cover daily costs. Rent and credit card payments, however, may still be delayed.
The CARES Act may also mean a more modest drop in Delaware personal income and a more rapid return to normal consumer spending by June.
The CARES Act UI benefits are exactly the kind of counter-cyclical policy in which the Federal government should be engaged and it recognizes the economic circumstances of workers who have limited wages and assets.