For a substantial share of Wisconsin workers, jobs have disappeared. As jobs have gone, so does income and the health insurance that these jobs provided. For workers in hard hit industries, there is little hiring and skills may not transfer well to other industries. This is especially true for restaurant and hotel workers who were employed in an industry that has lost half its jobs in the early months of this crisis. For those in music and entertainment jobs, venues are closing through the end of 2020 and perhaps beyond. There is a sense that these jobs may simply be gone, at least for the duration of the health crisis.
Unemployment in February was relatively low at 3.5% and spiked during the crisis to a high of over 14%. Unemployment has fallen, down to 12% in May and further to 8.5% in June, the highest rate of unemployment experienced in decades. That 8.5% accounts for 260,000 people in Wisconsin who are seeking work, unable to find it, and are without income from work. Many are juggling bills, worrying about getting food on the table with the threat of eviction looming.
We do not yet have a perfect demographic profile of the unemployed in the state. Given that job losses were concentrated in leisure and hospitality, the frontline workforce in those jobs has experienced a disproportionate share of unemployment. Frontline leisure and hospitality workers are more likely to be women than men and are disproportionately people of color as well.
COVID-19 Challenges of Unemployment
The CARES Act enhanced and expanded Unemployment Insurance (UI), ensuring that more workers qualified for unemployment and that benefits levels were higher. These have been critical supports to hundreds of thousands of working Wisconsinites, keeping a flow of income to pay rent and keep food on the table.
This absolutely essential resource has had three serious limitations:
- Benefits can be hard to secure: Thousands of Wisconsin workers are in limbo, having filed for UI awaiting determinations and payment. The deluge of claims overwhelmed administration of the program. As of June 20, there were some 151,000 workers that had not received a final determination for claims filed over the course of the pandemic. (Wisconsin Public Radio, 6/29/20)
- Enhancements are ending soon: The CARES Act provided an enhancement in UI checks, increasing them by $600 per week. This enhancement will end at the end of July. This extra income was critical to the workers as the struggle to cover their basic needs as they search for work in the toughest labor market in generations.
- Some are left out: Workers without formal immigration status are not eligible for UI, in spite of the fact that their wages are garnished for UI taxes, just as all other workers. Estimates suggest that there are some 55,000 workers without legal status in the state and that these workers have contributed $112 million to Wisconsin’s UI trust fund. In spite of these contributions, none of these workers are getting UI. (Wisconsin Budget Project, 5/19/20). Not only are these workers excluded from UI, but they are also excluded from all federal safety net programs leaving them in a dire situation when they are unemployed.
Long Standing Challenge: Employer-Based Health Care When Work Disappears
“Nothing illuminates the problems with an employer-based health care system quite like massive unemployment in the middle of a highly contagious and potentially deadly disease outbreak.” – Jeneen Interlandi, New York Times
Among developed nations, the US is unique for employers’ essential role in delivering health insurance to the population. The system has long been problematic – it is expensive and produces lower health outcomes than many other systems across the globe. COVID-19 puts these limitations on full display. In a global health crisis, workers have lost access to health insurance as they’ve lost jobs. A recent report from the consumer advocacy group Families USA estimates that nationally 5.4 million workers have lost health insurance due to job losses during this crisis; 62,000 of those losing health insurance were in Wisconsin.
By extending and enhancing the nation’s Unemployment Insurance system, the CARES Act provided desperately needed income for millions of workers who lost jobs early in the pandemic. This income covered food, rent, and utilities, providing a sense of security in a time of chaotic change for workers who lost jobs. These payments also circulate throughout the economy, keeping others in business which is critical in this time of economic contraction.
At the end of July, the CARES Act UI enhancement of $600 will come to an end. For many unemployed workers these dollars were absolutely essential to maintaining a basic standard of living. If the national government does not find a way to extend this money, many of the unemployed will begin facing more desperate choices.
Further state and local governments are facing massive budget shortfalls. Without federal support, these governments will begin cutting budgets and laying workers off.
With COVID-19 cases rising throughout the nation and these problems on the horizon, the unemployed will face increasing financial stress, their ranks could grow substantially, and the economic downturn may get worse.