As record numbers of workers across the United States are forced to apply for unemployment benefits as a result of the COVID-19 outbreak, workers in Wyoming can rest somewhat reassured that the state’s unemployment fund is among the nation’s strongest.
According to a report released by the Tax Foundation on Thursday, Wyoming’s unemployment insurance fund was flush enough to fund current levels of unemployment claims for 321 weeks — the longest such duration in the country.
That time estimate, based off of unemployment claims as of April 4, was later highlighted by officials such as Gov. Mark Gordon, who touted the number on his social media pages later that day.
“Wyoming’s unemployment compensation fund is the healthiest in the country,” he wrote on his Facebook page. “Our tradition of fiscal responsibility means we will be able to continue to provide assistance to our workers when they need it most.”
But in the face of unprecedented levels of unemployment — and the unpredictable ripple effect from a prolonged shutdown of the economy — just how resilient is the fund?
With a balance of just under $432 million at the end of February, Wyoming’s Unemployment Insurance Trust Fund, which is financed by taxes on employers, has long been one of the country’s strongest, boasting one of the nation’s best solvency rates. Wyoming’s unemployment trust fund is also stronger than it appears at face value, with roughly $51.5 million backing it up should the fund ever reach zero.
It’s unlikely that will ever happen, according to Department of Workforce Services officials. Wyoming has enjoyed a positive fund balance since the mid-1980s, and following the Great Recession, Wyoming was one of few states across the country that didn’t need to borrow any money to replenish its fund, recovering its starting balance just over five years after the crisis’ start.
Even then, there are other controls in place that, if relied upon, would likely do little damage to the state.
“If in the unlikely event these funds dip below 0, Wyoming would immediately borrow money from the national UI trust fund, which is held in reserve for that purpose,” Tyler Stockton, a workforce services spokesperson, wrote in an email. “Most of the states that had to borrow during the Great Recession were able to pay the federal fund back fairly quickly, with minimal to moderate effects on future tax rates.”
While too early to gauge the overall impacts of COVID-19 on the economy — or on the state’s unemployment insurance fund — unemployment claims have already far eclipsed the record numbers of job losses seen during the Great Recession, when the stresses on the state’s trust fund reached their peak. According to DWS numbers, the overall hit equaled roughly $161.5 million in 2009 and $120 million in 2010.
At the same time, some economists are predicting a substantial rebound in the third and fourth quarters. But it’s too early to know whether those estimates will come to pass.
If economic conditions during the pandemic mirror those of the last recession, then Wyoming’s current trust fund balance would cover a little more than two and a half years of unemployment insurance benefit expenses.
But that’s at recession levels: According to the Department of Workforce Services, Wyoming has experienced significant increases in initial claims in the past two weeks, equaling out to roughly seven to eight times more than regular weeks. And while the average beneficiary, according to DWS numbers, typically received benefits for a period of 14 weeks in 2018 and 13 weeks in 2019, it is still unknown what the state’s unemployment numbers could look like in the long-term, particularly given recent downturns in industries like coal, oil and natural gas.
“Initial claims have really spiked in the last couple of weeks,” Stockton said on a conference call with business owners and policymakers sponsored by the Wyoming Business Alliance earlier this week. “The week ending the 14th of March, we had 509 initial claims, which is right around normal for this time of year. The very next week, we had 3,743 claimants. The following week, that ended the 28th, we had 4,652. That number will go up.”
And go up they did. As of this week, more than 5,000 Wyomingites have filed unemployment claims – nearly nine times what it was at the start of March, according to numbers released by DWS Thursday morning.
How long those stresses on the state’s economy will be sustained are still up in the air, said William Glasgall, the senior vice president and director for state and local initiatives at the Volcker Alliance, a New York City-based public policy think tank.
“This is just a really tough thing to measure,” he said. “Nobody’s seen an economic shutdown like this ever, where one day the governor is just saying ‘All right, don’t eat out. Don’t shop. Don’t travel.’ 9/11 might have been like that – maybe for travel – but then that ended, and life came back.
“If it’s a fairly quick recovery the next few months will be the worst of it,” he added. “We just don’t know.”
In this Series
- 249 updates
Concerned about COVID-19?
Sign up now to get the most recent coronavirus headlines and other important local and national news sent to your email inbox daily.