Home Budget, Economy Virginia’s Huge Unemployment Numbers Likely to Get “Huger” (Gig Economy Edition)

Virginia’s Huge Unemployment Numbers Likely to Get “Huger” (Gig Economy Edition)

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by A Siegel

For the week ending April 4, “seasonally unadjusted initial [unemployment] claims in Virginia was 147,369” and “67.4 times higher than the comparable 2019 week—an increase of 145,182 claims.” Nationwide, there were 6.6 million claims and over 13 million in a two-week period.  Back to the Commonwealth, the previous three-week’s initial claims totaled 306,143 — out of what was about a 4.4 million workforce total prior to the coronavirus pandemic.

These huge numbers are going to get even “huger” as the economic impacts flow through traditional employers and more people get furloughed or laid off.  That “huger” could be explosive in the coming week(s) as the Virginia Employment Commission (VEC) determines how to handle and starts to process non-traditional workers who became eligible for unemployment insurance under the CARES Act.

Tuesday, a VEC press release highlighted CARES Act changes to unemployment, including a $600-per-week increase in unemployment benefits and “new benefits for previously uncovered workers” — think gig economy (whether Uber drivers, nannies, youth sports referees, independent consultants or otherwise).

Affected workers, like the self-employed, who are not eligible under traditional unemployment insurance may be eligible under a brand new federal program called Pandemic Unemployment Assistance (PUA).  To be eligible for this new program, workers must first apply through traditional unemployment by visiting www.vec.virginia.gov or www.vawc.virginia.gov. The state is required to verify eligibility under traditional unemployment before allowing claimants to be considered for the new PUA program.  If you are determined to be ineligible for traditional unemployment, you will be contacted by phone (text or voice message) on how to file the supplemental information to complete your claim under the new PUA program.  VEC will be announcing more details on the start date for this new program later this week.

The VEC’s CARES Act page provides some additional information for gig workers. The key point for gig and other workers eligible under the PUA but not traditional unemployment: go through the traditional process and get denied.  That denial will take PUA-eligible people one step closer to securing benefits when VEC has prepared and issued guidance for PUA.

From a Virginian-Pilot interview with William Walton, the Virginia Employment Commission’s director of unemployment insurance:

Q: Can those newly eligible workers (independent contractors, the self-employed and “gig” workers) apply now for benefits?

A: “In my opinion, there’s no downside to filing now,” Walton said. His advice for anyone, gig worker or traditional worker, “is to file a claim the first day after your last day,” he said. “And let us work out the eligibility piece.” To make an initial claim visit www.vec.virginia.gov or call 866-832-2363. Those workers who were uneligible until now, though, should know that the current system is designed for traditional employees. When those workers file an application, they’ll be told they’re eligible for $0.00. Don’t worry. Walton said the application gets workers on the Virginia Employment Commission’s radar for when the Pandemic Unemployment Assistance program will be ready to be rolled out. When that system is ready, those workers will still have to apply through the current program anyway to prove that they weren’t eligible under the prior state rules, so that’s why Walton sees no harm in filing now, ahead of time. Whether the worker appeals the eligibility determination or not (which they can), Walton said the Virginia Employment Commission will be advertising the new assistance program to those workers when it’s ready and laying out the next steps they’ll need to take.

Walton made clear that payments will be retroactive … thus, apply now even if payments won’t occur for weeks or more from now.  And, while clearly incredibly frustrating (and, well, damaging) to PUA-eligible people that their benefits are not immediately available, return to the opening paragraph of this post: the VEC is dealing with a claim level some 50 times higher than 2019 for traditional unemployment, while working to develop the procedures to deal with the not fully formalized Federal Government PUA regulations and procudures.

As to “huger,” there is legitimate uncertainty just how many Virginians will be PUA eligible.

  • In 2015, there were 576,000 “non-employer” businesses in Virginia which reported more than $1,000 in 1099 income. These included everything from physicians to ‘bloggers’, total income to minor side income. Thus, not all would be PUA eligible even as many would.
  • A gig-focused group concludes that about 1/4th to 1/3rd of workers ‘participate’ in the gig economy and perhaps 10-15 percent rely on it for their primary income. (For perspective, prior to COVID-19’s impacts, there were 4.4 million Virginians in the workforce. If (IF) that figure includes gig, that would mean perhaps 440,000-600,000 are essentially full-time gig workers.)

If there are 600,000 Virginians who relied primarily on gig income, might half be PUA eligible?  In other words, is Virginia going to experience a 300,000 surge in unemployment numbers once gig workers begin to be processed?  Will gig make Virginia’s huge unemployment even “huger?”