Things have not been going well for the Golden State recently. Among rolling blackouts, wildfires, and a Bay Area exodus the state also boasts exceptionally high unemployment. Over 6.3M Californians collected unemployment benefits based on the Department of Labor’s most recent weekly data – representing over 35% of the state’s covered employment*. Over half of these unemployment claimants are receiving benefits from the newly created Federal pandemic programs intend to provide benefits for “gig economy” workers and extend additional benefits to those that had exhausted traditional unemployment.
The Pandemic Unemployment Assistance (PUA) program was created to provide 39 weeks of unemployment benefits to “gig economy” workers and others who are unable to work due to COVID, but who are not eligible for traditional unemployment benefits. The smaller Pandemic Emergency Unemployment Compensation (PEUC) program provides 13 weeks of additional benefits for workers who have exhausted their rights to traditional unemployment benefits.
A few takeaways from this data:
- The threat of an Uber/Lyft shutdown in California comes at the worst time. If those services do cease to operate, the PUA rolls may balloon even further in the near-term, and if rideshare drivers are classified as traditional employees, there may be fewer jobs for them to return to once economic activity begins to return to pre-pandemic levels.
- Several key election states (Ohio, Pennsylvania, and Michigan) have more claimants on PUA than traditional unemployment. As the PUA and PEUC programs are set to expire on December 31st, an extension of these programs into 2021 may be a valuable campaign promise from the candidates.
- Hawaii’s high unemployment is unsurprising given it’s large tourism industry and it’s mandatory 14-day quarantine for new arrivals, which deters all but the most dedicated visitors. Given the dependence of Hawaii’s economy on tourists arriving by plane (or cruise?), the recovery in that state’s labor market will be much slower.
*Covered employment only considers employees who are eligible for traditional state and federal unemployment programs, so 35% is not California’s unemployment rate. The large share of potential PUA claimants (the corresponding denominator of “gig economy” workers) is not accounted for in traditional covered employment.