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Illinois unemployment claims jump by 64K as COVID-19 closes businesses

Their View

By Brad Weisenstein, Illinois Policy Institute | Mar 25, 2020

Unemployment

Business closures to contain the coronavirus had a quick impact on unemployment in Illinois, with more than 64,000 new unemployment benefits claims from March 16-18, about 10 times the amount on the same three days a year earlier.

March 17 was the first day bars and restaurants in Illinois were ordered closed to dine-in service for at least two weeks by Gov. J.B. Pritzker. Event and travel cancellations are adding to the unemployment.

“We’ve all been readying for really bad news. This is bad news,” Todd Maisch, CEO of the Illinois Chamber of Commerce, told Crain’s Chicago Business.

He said a 6% to 12% drop in national activity is projected by economists at the U.S. Chamber of Commerce. He also said he suspects some of the unemployment claims are from people without paid sick leave, who Pritzker encouraged to apply.

The unemployment claim figures do not necessarily reflect permanent job loss, as they include furloughed workers. Illinoisans can be eligible for the benefits even if their job will still be there for them later.

On March 11 the Pritzker administration announced it was filing emergency rules so those unemployed as a result of the COVID-19 outbreak could receive benefits.

The Illinois Department of Employment Security has a guide to COVID-19 and unemployment benefits, including answers to frequently asked questions. IDES offices closed to the public on March 19 to prevent the virus from spreading, but services are available online or by phone. To file an unemployment claim, click here. IDES staff can answer questions by calling 800-244-5631.

Since the order banning dine-in service was issued, coronavirus cases in Illinois have grown to 422 and four deaths across 22 counties on March 19 from 105 cases and no deaths in 15 counties on March 16. Some restaurants are still offering take-out service, but the business disruptions have ranged widely across malls, airlines, hotels, banks and service industries.

Chicago labor leaders on March 19 held a press conference to plead for help.

“I cannot overstate how dramatic this crisis has been,” Karen Kent, president of the hotel workers union Unite Here Local 1, told the Chicago Sun-Times. She said because of reduced demand for rooms and hotel shutdowns, only 4,000 of its 16,000 members are working. “None of them know what they or their families will do next.”

On March 18 a federal law took effect mandating minimum sick leave but excludes workers in companies with 500 or more employees as well as some businesses with fewer than 50 workers. Kristan Vaughan, whose family operates seven Irish pubs and restaurants in the Chicago area with between 150 and 200 employees, said being closed stops the income needed to continue paying workers.

“With the insurance carriers, would I be better to terminate the staff so they can go on COBRA so they have healthcare? I just don’t know,” she said.

Vaughan and the labor leaders were both looking to policymakers for relief, but the question is who to help and how best to help them. The Illinois Policy Institute proposes the following immediate policy responses:

1. Targeted tax relief to save jobs: In order to help businesses cope with lost revenue and prevent layoffs, the state of Illinois should mandate that all local governments delay the collection of one installment of this year’s business property tax payments until at least Oct. 1. State officials can make use of emergency borrowing authority granted in the state constitutionto issue short term bonds of about $6 billion – equal to 15% of this year’s appropriations as the constitution allows – to cover the temporary loss to local governments.

2. Remove barriers to maximizing the supply of medical care:

  • Illinois should consider suspending “certificate of need” laws that impose restrictions on acquiring new medical equipment, expanding the number of beds available, and changing the scope or function of existing medical facilitie
  • Evaluate nurse and medical licensing reciprocity with other states to make it as easy as possible for out-of-state medical practitioners to operate in Illinois during the outbreak.
  • Evaluate scope of practice regulations to ensure that non-physician medical professionals, such as nurse practitioners, are able to provide as many services as possible.
3. Reform state pensions to help cover budget holes without economic harm: The Illinois Policy Institute’s pension reform planwould enable the state to save $2.4 billion on this year’s pension payment by reducing the growth in unearned future pension benefits, without taking away a single dollar earned by retirees or current workers. This is the only major budgetary response that would not reduce aggregate demand in the economy because outlays from the pension funds, or checks going to retirees, are made independently of state contributions to the funds. No retiree checks would be reduced, so there would be no harm to consumption expenditures during the crisis.

Neither the virus’ spread nor the impacts on businesses and workers have peaked, but Illinois leaders can take decisive steps to flatten the bell curves on both.

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