New Analysis Finds Federal Pandemic Unemployment Compensation Program is Needed Financial Boost for California Workers

Sacramento, May 21, 2020— A new analysis of Unemployment Insurance (UI) claims in California by the California Policy Lab at UCLA and the Labor Market Information Division at the California Employment Development Department finds that the extra $600 benefit from the Federal Pandemic Unemployment Compensation (FPUC) program is making a significant difference in supporting the roughly one in four Californian workers who have filed for Unemployment Insurance since the start of the crisis.

“By all measures, the workers in California who are least able to afford it have been hit the hardest by lay-offs due to the COVID-19 pandemic,” explains Till von Wachter, a co-author of the analysis, UCLA economics professor and faculty director at the California Policy Lab. “The $600 a week (provided by FPUC) is a life preserver for lower-wage workers while policymakers begin efforts to safely re-open California’s economy.”

New in this analysis: Building on the previous two analyses, this policy brief focuses on the impact of the Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation (FPUC) program and also highlights how California’s Work Sharing Program could be used to support workers, employers, and the state economy as it slowly re-opens.

Key research findings:
• On April 28th, EDD began processing Pandemic Unemployment Assistance claims, which led to a spike in total claims during the week ending on May 2nd. Including PUA claims, one in four Californian workers has filed a UI claim since the start of the crisis, reaching levels of the Great Depression.

• Lower-educated and younger workers continue to be harder-hit by the crisis. One in three workers from Generation Z (age 16-23), one in four Millennials (Age 24-39), and a staggering one in two lower-educated workers have filed for benefits since the start of the crisis.

• The added $600 per week from the FPUC program has played a substantial role in preventing near-poverty income levels among UI claimants. Without FPUC, the estimated median weekly benefit amounts for regular UI benefits during the crisis was $334, and as low as $230 for Accommodation and Food Services workers.

• Average rates of income replacement for those eligible for regular UI have been 40-45% during the crisis. Payments of $600 under FPUC raised the median replacement rate to close to 140%, and close to 170% for lower wage industries. This reflects the fact that many low-income workers filed for benefits for whom FPUC is an important lifeline.

• At 69%, the share of claimants expecting to be recalled to their employer is still substantially higher than an average of 40% before the crisis, but has continued to decline from a peak of 91% at the beginning of the crisis.

• We find 20% among all self-employed workers in California have applied for Pandemic Unemployment Assistance. Relative to workers filing for regular UI benefits, individuals filing PUA are more likely to be White and Asian, are older, and more concentrated in large urban counties.

This analysis will be updated on a bi-weekly basis with new data on initial Unemployment Insurance claims to provide a timely and detailed analysis of the impacts of COVID-19 on California’s labor market.

The analysis is based on comparing initial unemployment insurance claims in February 2020 (before the COVID-19 crisis impacted the labor markets); the start of the employment crisis in mid-March (when initial UI claims increased dramatically); and more recently the first 25 days of April.

The analysis complements traditional survey-based indicators on the labor market, which have detailed information but large time lags and lower frequently, and to weekly publications of the number of total UI claims, which have minimal time lags but which lack the detail available in this analysis

The California Policy Lab creates data-driven insights for the public good. Our mission is to partner with California’s state and local governments to generate scientific evidence that solves California’s most urgent problems, including homelessness, poverty, crime, and education inequality. We facilitate close working partnerships between policymakers and researchers at the University of California to help evaluate and improve public programs through empirical research and technical assistance.

The Labor Market Information Division (LMID) is the official source for California Labor Market Information. The LMID promotes California’s economic health by providing information to help people understand California’s economy and make informed labor market choices. We collect, analyze, and publish statistical data and reports on California’s labor force, industries, occupations, employment projections, wages and other important labor market and economic data.

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