Losing jobs and health access

As Iowa’s unemployment rate climbs towards numbers not seen since the Great Depression of the 1930s, we are shedding health coverage — in the midst of a sustained public health crisis — almost as fast as we are shedding jobs.

One of the cruelest ironies of the COVID-19 unemployment crisis is that, alongside the job losses, many workers and their families are also losing health coverage.

In Iowa, almost two-thirds (64 percent) of the nonelderly population rely on employment-based health insurance. As Iowa’s unemployment rate climbs towards numbers not seen since the Great Depression of the 1930s, we are shedding health coverage — in the midst of a sustained public health crisis — almost as fast as we are shedding jobs.

Even in good times, our crazy patchwork of health coverage — job-based care for most, Medicare for the elderly, Medicaid for low-income families, the ACA “marketplace” for others, and no coverage at all for the rest — is an engine of inequality. The better the job, as a rule, the better the health coverage. And in bad times, that coverage can easily disappear. Our reliance on job-based coverage, as one health policy expert famously put it, is like an umbrella that melts in the rain.

By one estimate (through May 14), about half of the 300,000 Iowans who lost their jobs in the COVID-19 recession also lost their health insurance. And this is a conservative estimate, as it does not count family members who might have relied on the same coverage and it is based only on those who lost their jobs and filed an unemployment claim.

These workers have some options — although the interruption of coverage alone is a frightening prospect in these troubled times. A lucky few might be able to pick up coverage through another family member who remains employed (and insured). Those losing job-based coverage have the “COBRA” option of continuing coverage by paying the full premiums themselves. But this is a costly option (the annual premium for job-based family coverage in Iowa is over $18,000) that few can afford.

Most displaced workers will turn to public programs. Iowa’s Medicaid program offers coverage to adults earning less than 138 percent of the federal poverty level ($16,791 for an individual, $28,888 for a family of three), and Medicaid and CHIP cover children in families with incomes up to 302 percent of the federal poverty level ($65,594 for a family of three). Unemployment benefits count towards this threshold, but the supplemental $600/week in Pandemic Unemployment Compensation (available through the end of July) does not.

Those whose family incomes fall above the Medicaid or CHIP thresholds have the last option of the Affordable Care Act “marketplace” insurance. Iowa’s health insurance exchange is a “federally facilitated” marketplace, which means it cannot allow open enrollment outside the conventional enrollment window in November.

But loss of a job (and job-based insurance) does qualify for off-cycle enrollment, and the premium assistance available for those purchasing at least a bronze plan on the exchange can substantially reduce costs for those with income under three to four times the poverty level. But here again there is a catch: Unemployment benefits count as income in determining both eligibility for ACA assistance and the amount of the assistance.

All this underscores the inequity and inefficiency of our job-based health care system. It is uneven and unreliable. And it fails at its most elemental goal: to protect working Iowans from risks that are beyond their control.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project (IPP) and a professor of history at the University of Iowa. He has led IPP’s State of Working Iowa analyses since 2001, and is author of Dead on Arrival: The Politics of Health Care in Twentieth Century America, and Citizen Brown: Race, Democracy, and Inequality in the St. Louis Suburbs.

Historically high: Jobless claims vs Great Recession

New unemployment claims are trending down, but still rising and in the latest week were still nearly as high as the worst week of the Great Recession.

The pace of new unemployment claims slowed in Iowa to 13,040 for the week ending May 16, but still nearly as high as new claims in the worst week of the Great Recession. Meanwhile, the running total of new claims since mid-March — at 313,150 — is about 18 percent of Iowa’s entire labor force.

On top of that, Iowa has slowly begun to process claims for Pandemic Unemployment Assistance (PUA), the federally funded benefits for those ineligible for regular UI. In the week ending May 9, there were 15,219 Iowans on continuing PUA claims and 4,552 new applications.

The PUA has enormous potential for the self-employed, independent contractors, platform or “gig” workers, and new entrants to the labor force. It pays a weekly benefit of between $200 and $590 (depending on earnings and dependents). Once approved, recipients can received up to 39 weeks of benefits — retroactive to early February and running through December. Receipt of PUA benefits brings with it another $600 month in Pandemic Unemployment Compensation (PUC), the federal top-off that runs through the last week of July.

All of this is funded entirely with federal dollars — making it an important source of economic stimulus for the state as well.

But the rollout of the PUA has been slow. Initial applicants were summarily rejected by Iowa Workforce Development and the first payments did not trickle out until almost two months after the program was put in place. And the number of new and continuing PUA claims in Iowa (just under 20,000) as of this morning is very low given the number of Iowans that could benefit from this program (taken together, those reporting some form of self-employment income and new entrants probably account for about 20 percent of the labor force). Under normal conditions, Iowa pays unemployment claims to only about 41 percent of the unemployed. The PUA could and should extend that coverage dramatically.

Colin Gordon is senior research consultant for the Iowa Policy Project and a professor of history at the University of Iowa.

Another 25K Iowans file unemployment claims

At a moment when going back to work poses grave public health risks, it is in our best interests to be generous in determining eligibility for benefits.

In the week ending May 2, another 24,693 Iowans applied for unemployment insurance. That brings the total new claims for unemployment insurance, over the last seven weeks, to 285,741.

Iowa’s insured unemployment rate (the share of the labor force receiving unemployment benefits, which does not include this week’s new claims) is now 11 percent. Since mid-March almost 1 in 5 Iowa workers (more than 18 percent of the non-farm labor force) have filed an unemployment claim.

This total does not include those who have dropped out of the labor force. It does not include those unable to access our overwhelmed unemployment insurance application system.

And it does not include those discouraged from even applying by Iowa Workforce Development’s chilling “get back to work” directive. The outcry against that directive — so clearly at odds with both Iowa law and the unemployment crisis at hand — has forced IWD to soften its tone. The “FAQ” for workers on IWD’s website now acknowledges that unsafe working conditions, and the failure of employers to provide adequate protection, constitute valid reasons for leaving a job and claiming benefits.

As the jobs crisis deepens, we need to remember that unemployment insurance is intended as a safety net, as a means of sustaining incomes through periods of both personal misfortune and broader economic troubles.

We are at a moment when going back to work poses grave public health risks, and when the federal government has stepped up to cover most of the costs. Under these conditions, it is in our best interests to be generous in the determination of eligibility for benefits — and to let Iowa workers displaced by this crisis make the right decision for themselves, for their families, and for their communities.

Colin Gordon is senior reearch consultant for the Iowa Policy Project, and a professor of history at the University of Iowa.

Demanding a healthy way to go back to work

The state’s “back to work” directive sends the wrong public health message at exactly the wrong time. And in clear defiance of Iowa and federal standards, it puts economic and physical security of workers at unnecessary risk.

Iowans want to get back to work. But — much more importantly — they want to get back to work under conditions that protect their health and safety, and the health and safety of their families and communities.

Over the past few weeks, we have questioned both the metrics and the lack of transparency behind the state’s decision — virtually alone among its peers — to stop short of a “shelter in place” order. Those concerns are now magnified by announcement this week that Governor is lifting social distancing measures in 77 of Iowa’s 99 counties — this despite the fact that the caseload in Iowa continues to grow, that two of Iowa’s metros (Sioux Falls and Waterloo-Cedar Falls) are currently among the worst “hot spots” in the entire country, and that a sudden influx in social interactions, as the Iowa Medical Society warned earlier this week, “is all but certain to cause a spike in new COVID-19 patients and potentially overwhelm our health care system.”

Even more troubling is the clear evidence that public health policy is being driven by largely economic concerns. At the same moment as the Governor’s office announced the relaxation of restrictions, Iowa Workforce Development (IWD) chimed in with a chilling directive for unemployed Iowans — warning not only that “Iowans who refuse to return to work without good reason when recalled will lose eligibility to unemployment benefits,” but that those who continued to draw benefits in defiance of this directive faced “serious consequences for fraud, including fines, confinement and ineligibility for future unemployment benefits.” IWD even created a webform where employers are encouraged to “report employees who refuse to return to work without good reason or who quit their jobs.”

The IWD directive goes on to list a narrow range of “good cause” reasons for remaining unemployed — including a positive COVID test (for the worker or a member of her or his household), and the loss of child care or transportation to work because of COVID-19.

This directive — and the message it sends to working Iowans — is bad public health policy in a state where the most severe COVID outbreaks have occurred at workplaces. But, just as importantly, it offers a fundamentally flawed misreading of both Iowa law and the terms of the federal Families First and CARES Acts.

Iowa Code (871-Chapter 24.26 [96]) is crystal clear on this point, and offers a much broader set of conditions and options. A person who leaves a job due to “unsafe working conditions” or “intolerable or detrimental working conditions” cannot be considered to have voluntarily quit the position, which would make the worker ineligible for unemployment benefits. The determination of what is “unsafe” or “intolerable” depends upon both the workplace and the worker. A reasonable standard of safety, under these conditions, might be the guidance offered by the Centers for Disease Control or the Occupational Health and Safety Administration for best practices — regarding social distancing and protective equipment — for workplaces. Yet, while IWD is directed to discourage claims and applications, there is no accompanying expectation that such safety guidelines are mandatory in Iowa workplaces.

Federal law offers the same basic assurance. For workers collecting regular UI, the federal “prevailing conditions of work” provision prohibits a state from denying UI to a worker who refuses work if the “the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality.” This provision covers “work rules, including health and safety rules” and situations where there has been a change in the existing conditions of work. According to the legislative history of the provision, it “requires a liberal construction in order to carry out the Congressional intent and the public policy embodied therein,” and the “the claimant should be given the benefit of the doubt.”

In turn, IWD’s directive flies in the face of the federal programs (and money) designed to both prop up Iowa’s unemployment system through the crisis and offer a more generous approach to eligibility. The Families First Act (passed in mid-March) offered emergency grants to states (including Iowa) for the administration of unemployment under the condition that states streamline their application process and “demonstrate policies to increase access to unemployment compensation.” The Act also requires a report, due at this time next year, detailing how progress on increased access.

The CARES Act (passed in late March) established three new unemployment programs: Pandemic Unemployment Assistance (PUA) for those workers (self-employed, gig workers) not conventionally eligible for unemployment insurance; Pandemic Unemployment Compensation (PUC), which adds $600 per week (through the end of July) to all unemployment claims paid under either regular UI or the PUA; and Pandemic Emergency Unemployment Compensation (PEUC), a 13-week extension of state UI benefits.

The programs extended the logic of the Families First Act: States were expected to be expansive and generous in their approach to eligibility for unemployment insurance, making it both possible and economically-feasible for workers to shelter in place and avoid the risks posed in many settings by continued employment. Importantly, the CARES Act attached a list of COVID-related conditions (similar to that in the IWD directive) to the PUA program, but not to the expansion or extension of regular UI benefits.

The IWD’s “Back to Work” directive is bad public policy. On public health grounds, it sends exactly the wrong message at exactly the wrong time. And, in clear defiance of Iowa and federal standards for unemployment insurance eligibility, it puts the economic security and physical health of Iowa workers at dire and unnecessary risk. The Governor and Iowa Workforce Development should reverse course and protect our workers and their families.

Colin Gordon, senior research consultant for the Iowa Policy Project, is a professor of history at the University of Iowa.

Iowa unemployment claims keep rising

New unemployment claims continued to climb in the week ending April 11. Nationally, 5,245,000 workers filed new claims, bring the total to 22,634,000 new claims since March 21 (when the first COVID-19 layoffs starting hitting the books). As this week’s release concludes glumly: “This marks the highest level of seasonally adjusted insured unemployment in the history of the seasonally adjusted series.” In Iowa, we added 46,356 new claims, for a four-week total of 207,468.

We can now also begin to see the impact on national and state unemployment rates. The weekly claims data allows us to calculate the “insured unemployment rate” or the share of the labor force receiving unemployment benefits. In Iowa, the insured unemployment rate rose to 10.2 percent for the week ending April 4.

200416-IA_insured_unemployed

It is important to point out that this represents a fraction of the actual unemployment rate, which is the share of the labor force unemployed but looking for work (in Iowa, only about 40 percent of unemployed workers receive unemployment benefits).

The rates of insured unemployed in the states for the week ending April 4 range from 3.8 percent in South Dakota to 17.8 percent in Rhode Island. For a conservative estimate of the actual unemployment rates by state, double these numbers. Those estimates — putting most states in the range from 20 to 30 percent — are steeper than the unemployment rates of the Great Depression.

Colin Gordon is a professor of history at the University of Iowa and senior research consultant at the nonpartisan Iowa Policy Project.

 

Iowa’s employment apocalypse

As daunting as we may find the new unemployment claims numbers, they understate the true scale of the damage to the economy.

This morning, the Department of Labor released the count of new weekly claims for unemployment insurance, marking the second week of claims reflecting the employment impact of the COVID-19 crisis. The numbers are staggering, not just for their scope but for their suddenness. Most downturns in the business cycle occur gradually over a number of months; this spike has occurred in just a couple of weeks. These numbers are also the best metric we have in this unfolding crisis, providing us a near real-time measure that the April jobs report (with a March 12 reference point) will largely miss.

Nationally, new claims for the week ending March 21 were 3.28 million; last week we added another 6.65 million new claims — a total fully 10 times the previous weekly peak. In the week ending March 21, Iowa fielded 40,952 claims for unemployment insurance; in the week ending March 28, we added another 58,453. The total over the last two weeks — almost 100,000 new claims — is about the same number of new claims filed in the first four months of the Great Recession. The graph below plots weekly claims since 2007, the Great Recession indicated by the grey shading.

These numbers, of course, understate the true scale of the damage. Those ineligible for regular unemployment insurance — including the self-employed, gig workers, independent contractors, and new entrants to the labor market) do not show up in the claims data — although this will change once the federal Pandemic Unemployment Assistance Program kicks in. And the underemployed, those who are hanging on to whatever hours they can get, are also uncounted here.

And Iowa is not alone. In a longer post at Dissent, I plot all the state numbers: Off-the-charts rates of new claims over the past two weeks are evident in almost all states — but especially in those with a high share of leisure and hospitality workers, and those hard hit by the pandemic itself. California logged 186,000 new claims in the week ending March 21; and added almost five times as many (878,000) this week. New claims in Louisiana, as a telling measure of the mess many states are in, spiked on March 21 to the same level (over 70,000) as those made in the immediate wake of Hurricane Katrina — and this past week added another 97,000 claims.

The best numbers we have show that Iowa and the nation will see a lot of economic harm. It is essential to help all workers now.

Colin Gordon is a professor of history at the University of Iowa, and senior research consultant at the Iowa Policy Project. He has authored or co-authored IPP’s State of Working Iowa series and several other IPP reports on issues affecting working families, jobs, pay and benefits.

New solutions needed long term

Federal emergency legislation will make important unemployment insurance reforms on a temporary basis. Iowa — like other states — should make secure and equitable changes permanent.

Current estimates of job losses in the COVID-19 recession are hard to fathom. Even with a sizable stimulus, the national economy would shed nearly 14 million jobs by mid-summer; Iowa is projected to lose more than 140,000.

To make matters worse, as Josh Bivens of the Economic Policy Institute underscores, this recession is “laser-targeted at low-wage, low-productivity, and low-hours jobs in service industries.”[1]

Our most vulnerable workers, in other words, will bear much of the burden: They do not have the option of working from home — a luxury enjoyed by two-thirds of workers in the top quarter of the earning distribution and by one-third of white workers, but by fewer than 1 in 10 workers in the bottom quarter of the distribution, 1 in 5 African-American workers and 1 in 6 Latinx workers. These vulnerable workers face both a much greater risk of unemployment as the service economy shuts down and a heightened risk of exposure to the virus if they keep working.

This is a scale of unemployment and social and economic dislocation that our existing programs are ill-equipped to handle. This demands a policy response — state and federal — unprecedented in its scale, and innovative in its efforts to reach those most affected. At the forefront of that policy response is both a dramatic expansion and a fundamental rethinking of unemployment insurance.

The first step here has already been taken by the federal government. The Families First Coronavirus Response Act (passed March 18) pumped $1 billion into the administration of state unemployment insurance (UI) programs, in exchange for new state standards and conditions. In order to draw down these funds, states must improve their methods of notifying workers of their eligibility for benefits, provide multiple (not just online) methods of filing, provide prompt notice of the receipt of a claim, waive waiting periods for benefits, waive the requirement that recipients be actively searching for work, and ensure that employers are held blameless for COVID-19 layoffs. (Conventionally, UI is “experience-rated” so that employers with histories of layoffs are taxed at a higher rates).

As Peter Fisher pointed out in recent days, Iowa has met all these conditions. There is still a lot of work to be done — not just to meet the current crisis, but to ensure that our unemployment insurance system is recast for the 21st century and ready for the next crisis.

The first task is to make unemployment insurance accessible and available to more workers.

In Iowa, just 41 percent of unemployed workers ever see a benefit check. This is better than the national rate (28 percent), but it is still a scandal that well over half of the jobless are left in the cold. We should sustain the “Families First” Act’s commitment to raising the recipiency rate by streamlining the claims process. Federal and state unemployment law should revise our definition of “employee” to better capture the diversity of employment (including the self-employed, gig workers, and the like) in the modern economy. Too often, workers — cleaners, homecare workers, delivery drivers — are misclassified as “independent contractors” and shut out of basic social insurance programs like UI. The Pandemic Unemployment Assistance Program embedded in the latest COVID-19 stimulus bill provides up to 39 weeks of benefits to those (like the self-employed) otherwise ineligible for UI. This is a start — but the real fix would be to recast the law so that such workers are eligible in good times and bad.

By the same token, we should make permanent the more generous standard for a “good cause” separation, allowing workers — not just in pandemic conditions — to qualify for UI when they leave their jobs for compelling personal reasons. Iowa should make better use of its work sharing program, which allows workers partial compensation for reduced hours, while retaining their attachment to the labor force and their access to job-based benefits such as pensions and health insurance. And we should make benefits available to new entrants to the labor force — students graduating into a recession, returning caregivers, the formerly incarcerated — who deserve support even in the absence of a recent work history.

Second, we need to bolster the size and the duration of the basic benefit. Iowa’s current “replacement rate” is less than 50 percent of current wages — higher than the national average (38 percent) but still woefully insufficient to maintain basic expenses.[2] The logic here, of course, is that a low replacement rate will compel the unemployed to look for work. But low replacement rates (and short benefit windows) create enormous economic burdens and, by pressing workers back into the labor force, actually worsen re-employment prospects. As a baseline, UI benefits should be closer to two-thirds wages. And, for the duration of this crisis, they should be 100 percent. After all, places of employment are under order to close down, and those displaced have few options. This is why the pending stimulus bill bumps UI benefits by $600/week through the end of June.

Finally, we need to improve the funding of state unemployment insurance programs. The $1 billion boost to administration in the “Families First” legislation does not come close to backfilling cuts in federal aid since the 1980s. During the last recession, 36 state UI trust funds went broke — and most of those entered the current crisis with insufficient reserves. Iowa’s trust fund is in better shape than most, but all state funds will be exhausted once this crisis lifts. Under current law, the state only taxes the first $7,000 in earnings. This should be increased dramatically (Social Security taxes the first $137,700), so that revenues are sufficient to sustain UI administration, and pay extended and disaster benefits when needed.

Federal emergency legislation — some in place, some in the pipeline — will install many of these reforms on a temporary basis. But many of the problems being addressed — the accessibility of benefits for deserving workers, the low percentage of the unemployed who receive benefits, the insufficient level and duration of benefits — are broader problems with the UI system itself. Iowa should, of course, do what it can to qualify its workers for extended and enhanced benefits paid for with federal dollars. But it should also follow the lead of other states in making its UI system more secure and equitable on a permanent basis.

[1] Josh Bivens, Economic Policy Institute, “Coronavirus shock will likely claim 3 million jobs by summer,” March 17, 2020. https://www.epi.org/blog/coronavirus-shock-will-likely-claim-3-million-jobs-by-summer/

[2] The inadequacy of this replacement level is compounded by the fact that the benefits are still taxable, and yet they do not count as earnings for purposes of the Earned Income Tax Credit, creating an additional income loss for low wage workers receiving that tax credit.

Colin Gordon is a University of Iowa professor of history and is senior research consultant for the nonpartisan Iowa Policy Project. He has authored several IPP reports since the organization began in 2001. Among these are the State of Working Iowa series, and the October 2019 report “Race in the Heartland: Equity, Opportunity and Public Policy in the Midwest,” for Economic Analysis and Research Network members IPP, Policy Matters Ohio and COWS.