(The Center Square) – The Louisiana Workforce Commission has begun the process of borrowing money from the federal government to replenish the state’s unemployment trust fund, LWC Secretary Ava Dejoie said Friday.
The fund currently stands at about $245 million, compared to more than $1 billion before the COVID-19 pandemic began. The unemployment fund is on pace to be insolvent in about four weeks, and federal law requires the states to continue paying benefits.
To pay back the loan, the state will have to impose a “solvency tax” on businesses of up to 30 percent of their quarterly unemployment tax rate. Companies also face higher taxes when the fund balance is low because more of their wage base becomes taxable.
Dejoie is “still holding out hope” Congress will approve more aid that states can use to replenish their funds to avoid raising taxes on businesses.
New unemployment claims for last week dropped to 11,131 from the previous week’s total of 13,402. For a pre-pandemic comparison, during the week ending August 10, 2019, 2,081 initial claims were filed.
The four-week moving average of initial claims decreased to 18,781 from the previous week’s average of 22,586.
Continued claims for unemployment benefits fell to 299,974, compared to the prior week’s total of 327,467. The continued claims were above the comparable figure of 17,513 for the week ending August 10, 2019.
However, those numbers do not include about 150,000 self-employed and gig workers who are not eligible for state unemployment benefits (because they don’t have employers paying into the system) but are receiving federal pandemic unemployment assistance, economist Stephen Barnes said. So Louisiana still has about 450,000 people getting unemployment benefits, he said.
The leisure and hospitality sector has been hit hardest, economist Loren Scott said. That sector has faced closures and restrictions meant to control the spread of COVID-19 along with a general reluctance to travel amid the pandemic.
Scott said construction in Louisiana has experienced the second-most losses. Plants and refineries have laid off contractors, and planned investments in the petrochemical sector have been delayed, he said.
New Orleans has seen the greatest number of job losses relative to its overall workforce and in absolute terms, he said, which is not surprising since tourism and hospitality are so important to the city.
Scott said the Lake Charles area has had the second-most job losses by percentage. That’s partly because of the heavy petrochemical presence, he said, but also because it is the state’s largest gaming market. Louisiana’s casinos were shut down during the early stages of the pandemic and now are operating at half capacity.
Scott is predicting a recovery during the second half of this year and estimates job losses for the year will be about 105,000, or about 5.3 percent of the workforce. That would represent the state’s worst recession since the 1980s, he said.
During the 1980s, the losses happened over six years, Scott said. This time, it only took two quarters.