Nevada is edging toward an unemployment cliff

By: - December 2, 2020 6:40 am
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(Photo: Bridget Bennett)

More than 200,000 Nevada workers will lose federal unemployment benefits at the end of the year if Congress fails to pass new legislation, according to a new report from the Century Foundation that examines unemployment state by state.

Without a deal on new relief legislation in Congress, federal funding will lapse for two key unemployment programs created by the CARES Act. Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) will run out on Dec. 26, threatening what the report characterizes as the last “economic lifeline for millions of American families.”

The impact is likely to be disproportionately felt in Nevada, which went from having its lowest employment rate (3.6 percent) in February to having the highest unemployment rate recorded by any state since consistent data has been kept (30.1 percent in April). Representatives from the Department of Employment, Training and Rehabilitation have called it comparable to the national rate seen during the Great Depression.

Nevada currently has the second highest unemployment rate in the country — 12 percent. Only similarly tourism-dependent Hawaii is worse, at 14.3 percent. 

The national unemployment rate is 6.9 percent.

Congress has so far failed to agree on any new stimulus package for those who are unemployed. The cutoff of aid will sharply reduce income, making it harder for unemployed workers to pay rent and utility bills and buy food. Exacerbating matters, the federal moratorium on evictions, which Nevada is relying on to keep people in their homes, is scheduled to end on Dec. 31.

A bipartisan group of lawmakers, including Nevada Democratic Rep. Susie Lee, pushed again for a compromise relief package Tuesday that included additional money for unemployment benefits.

Also this week, Nevada Democratic Sens. Catherine Cortez Masto and Jacky Rosen joined a group of senators sending a letter to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, stressing the importance of extending the PUA and PUEC programs in relief legislation.

The pandemic “was the main impetus for the creation of these programs in March,” the senators wrote, “and, right now, we are averaging over five times the number of COVID-19 cases we had in the spring. It is clear that these programs are important lifelines for workers during this crisis and need to be extended with additional weeks of eligibility.”

But it’s not clear whether any legislative leaders or the White House can come to agreement on any relief proposals.

Meanwhile, as things stand under current law, even some employees who haven’t used all their benefits will be cut off the day after Christmas.

“One particularly problematic aspect of the CARES Act was the inclusion of a hard cutoff of benefits,” says the Century Foundation report. “Individuals who have received less than thirteen weeks of PEUC or less than thirty-nine weeks of PUA won’t be able to draw down that full set of weeks, but would instead see their benefit payments halt before their full benefit is exhausted.”

According to the study more than 105,000 Nevadans are on PUA, unemployment insurance for gig workers and others not eligible for regular benefits. Still, thousands more have filed claims in Nevada, according to DETR, a total of 649,615 initial claims have been filed since the program started.

Benefits for the program last 46 weeks in Nevada, payable from Feb. 9 to Dec. 26. However, most workers lost employment in the state due to the pandemic in March when widespread shutdowns started, and those on PUA can’t transfer their remaining benefits to PEUC or EB benefits, according to the study’s authors.

While most PUA recipients will exhaust their benefits before the end of December, PUA claims will likely still be extremely high at the end of December, according to the report. 

Thousands of Nevadans have already exhausted their regular unemployment benefits as the pandemic heads into its ninth month and many businesses continue to operate at reduced volumes due to the rise in COVID-19 cases. Economists have said it may take years for the tourism-driven economy in Southern Nevada to reach pre-pandemic levels.

According to DETR, 93,873 continued state unemployment claims were filed the week ending Nov. 21, down nearly 3,000 from the previous week. There were also more than 8,121 initial claims, up nearly 900 from last week.

From March to September, however, nearly 100,000 Nevada residents already exhausted their state unemployment benefits, according to the study, which lasts for 26 weeks.

At the same time, 43,700 Nevadans have also exhausted their Pandemic Emergency Unemployment Compensation (PEUC), which extends unemployment benefits an additional 13 weeks when regular benefits are exhausted.

Nearly 97,000 Nevadans are on PEUC, and would stop receiving benefits after Dec. 26,  however, Nevada is one of only 18 states projected to still have the Extended Benefits (EB) program in place at the end of December, meaning those 97,000 Nevadans will continue to collect benefits after the end of the month. 

Nevada’s State Extended Benefit offers up to 20 weeks of pay. However, the Century Foundation report notes that states will have to pay half the cost of the extended benefits, “a major financial stress at the time when state unemployment funds (and state budgets) are in distress due to the pandemic and decline in tax revenues.”

DETR has exhausted its unemployment trust, which typically funds the unemployment program. Nevada is now relying on a Social Security Act provision that allows states to borrow money to pay unemployment benefits.

DETR’s chief economist told the Economic Forum last month the department paid out between $7 and $8 billion in benefits since the pandemic began. That estimate includes the regular state program and the federal stimulus funds.

David Schmidt of DETR also suggested the economic shutdowns will have a compounding effect throughout the state’s unemployment program.

“As we move into 2021, there is a question mark in my mind about how many (people) will have wages, will have base periods, will have eligibility to establish new regular unemployment claims if necessary in 2021 given the absolutely unprecedented number of people who have filed claims in 2020,” he said. “Because your eligibility depends on having sufficient wages to qualify for those benefits over the course of basically the prior year.”

He continued: “I think that’s an important question that really depends a lot on what sorts of stimulus may be coming out in the future and to what extent the unemployment insurance program will be involved.”

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Jeniffer Solis
Jeniffer Solis

Reporter | Jeniffer was born and raised in Las Vegas, Nevada where she attended the University of Nevada, Las Vegas before graduating in 2017 with a B.A in Journalism and Media Studies. While at UNLV she was a senior staff writer for the student newspaper, the UNLV Scarlet and Gray Free Press, and a news reporter for KUNV 91.5 FM, covering everything from the Route 91 shooting to UNLV housing. She has also contributed to the UNLV News Center and worked as a production engineer for several KUNV broadcasts before joining the Nevada Current. She’s an Aries.