California’s unemployment rate fell to a pandemic low of 8.5% in February, the Employment Development Department announced Friday — even as its jobless benefits fund sank deeper into the red, imperiling economic recovery.
The Golden State recovered nearly 91% of the jobs it lost in December and January, with leisure and hospitality gaining 102,200 jobs as restaurants and hotels reopened. But its unemployment rate, which is still more than double what it was in February 2020, is the third-highest in the country. And the state has borrowed a staggering 40% of the $53 billion the federal government has loaned to cash-strapped states and territories to pay jobless benefits. California’s unemployment insurance debt amounts to $21.2 billion — a deficit EDD officials expect to hit $48 billion by the end of the year.
Likely picking up the tab: California businesses, which pay taxes financing the state’s unemployment insurance fund. They’re already paying a 15% emergency surcharge due to the fund’s insolvency, and many say higher unemployment taxes will make it harder for them to recover and rehire workers, CalMatters’ Lauren Hepler reports.
- Lance Hastings, CEO of the California Manufacturers and Technology Association: “These are just nails in the coffin that concern me greatly.”
Economists say the time is ripe to overhaul California’s unemployment insurance fund, which is the most unstable in the nation. Although paying jobless claims has been one of California’s most pervasive challenges amid the pandemic, Gov. Gavin Newsom has largely avoided mentioning the issue apart from forming and disbanding an EDD “strike team” last year. Critics noted the unemployment agency was conspicuously absent in his State of the State speech earlier this month.
But problems remain rampant. The department’s backlog has topped 1 million claims for eight straight weeks, though EDD said on Friday that 86% of the logjam is due to jobless Californians not certifying their eligibility as required. But the department’s own website has hindered certification, and EDD acknowledged in a Friday report to the state Legislature that hundreds of thousands of certified claims are still “pending Department resolution.”
EDD also answered just 10.5% of the 2.5 million calls it received from March 13 to 20, according to a dashboard the agency published Friday. Those 2.5 million calls came from about 311,000 unique callers — indicating that each person called EDD about eight times in an attempt to get through.