Leisure sector loses 7.7M jobs as Bennet proposes extension of $600 unemployment bonus
Vail Resorts announced another round of employee furloughs in late April
The number of unemployed persons in the United States jumped another 15.9 million in April, bringing the total to 23.1 million, according to Friday’s release from the U.S. Bureau of Labor Statistics.
The report also confirmed something Eagle County residents were likely suspecting: The largest unemployment surge occurred in the leisure and hospitality sector.
“In April, employment in leisure and hospitality plummeted by 7.7 million, or 47%,” according to the report. “Almost three-quarters of the decrease occurred in food services and drinking places (-5.5 million). Employment also fell in the arts, entertainment, and recreation industry (-1.3 million) and in the accommodation industry (-839,000).”
Locally in Eagle County, many of the jobs shed in April came from the region’s largest employer, Vail Resorts, which earns a significant portion of its revenue from leisure and hospitality.
On April 29, many Vail Resorts workers who were spared during the company’s first round of layoffs and furloughs announced April 1, also were informed they would be moving into furloughed status.
“We did make the difficult decision to undertake additional furloughs of employees, most of whom have not been able to do their job as a result of our closures,” Vail Resorts announced in a statement to the Vail Daily on May 6. “These furloughs will last at least through May and likely into June or beyond, depending on our ability to resume normal operations. For impacted employees who are currently enrolled in our healthcare plans, we will pay their portion of the premium for the period of the furlough. We are constantly evaluating the situation, with the goal to get our employees back to work as soon as possible.”
With more Americans now collecting unemployment insurance payments than ever seen in the program’s history, more eyes than ever are now examining the program, as well.
Heading into the crisis, however, few were as familiar with the unemployment compensation program as Colorado Sen. Michael Bennet, who had been working on a plan to reform the program before the COVID-19 pandemic hit. Bennet’s latest effort is a new bill to extend benefits.
Bennet, along with Rep. Don Beyer and Sen. Jack Reed, introduced the Worker Relief and Security Act last week, which would tie ongoing expanded unemployment benefits to public health and economic conditions.
And Bennet gets credit for some of the work on the unemployment booster in the coronavirus relief bill passed in March, as well, which is being touted for providing relief to average Americans who are in desperate need of, and will promptly spend, the money provided by the legislation. The coronavirus relief bill’s unemployment program enhancements add an extra $600 per week to the payments of everyone who is receiving unemployment compensation, and extend benefits to 1099 or “gig” workers through a program called Pandemic Unemployment Assistance or PUA.
Sen. Ron Wyden, of Oregon, developed the proposal to extend the benefits to gig workers while Bennet helped create the $600 bonus.
Legislation to extend $600 payments
Among Bennet’s constituents benefitting from the unemployment booster is former Vail Shakedown Bar musician Mark Levy, who now lives in Arvada.
While Levy is working through some frustrations with the program, he was surprised and grateful that it could be extended to someone like a musician.
“I was fully aware, when I got into this life path, that there would be no unemployment insurance for me, if I was fired from a gig … I’d be on my own,” he said. “That would have been the case here, except the government actually did stand up.”
But Levy is frustrated with the complications stemming from the CARES act’s 1099 versus W2 restrictions. He says he’s currently collecting unemployment payments from a W2 position from which he should not qualify for benefits because he wasn’t fired or let go unexpectedly from the W2 gig.
The seemingly improper payments that he’s currently receiving are also much less than he would qualify for under the new 1099 inclusion. Instead of receiving $300 per week or more, he’s receiving $40. Thanks to the $600 per week bonus, though, he’s still managing, receiving $640 per week through July.
He says the $600 has made all the difference in his situation, but if it goes away as scheduled on July 25, he’ll be in trouble.
The draft framework for the Worker Relief and Security Act, which would extend the $600 per week benefit, was published May 5.
The Worker Relief and Security Act would allow both 1099 and W2 workers who exhaust their unemployment compensation benefits to be able to receive additional unemployment benefits fully financed by the federal government without limit until 26 weeks after the end of the public health emergency, and workers receiving the extra $600 in weekly benefits will continue to receive it until 30 days after the end of the president’s emergency declaration, after which it will begin to phase down over 13 weeks.
“We are going to be climbing out of a deep economic hole, and we need to maintain support for workers and families until the economy is back to full strength,” Bennet said. “Our plan will strengthen unemployment benefits to sustain people whose lives have been upended through no fault of their own until they can safely go back to work.”
While the extra $600 weekly payment has allowed Levy to avoid financial ruin, it has also added to his frustration as he sees other 1099 musicians now receiving regular payments of approximately $1,000 per week, while he collects $640 per week waiting for his W2 claim to be exhausted.
“A lot of people I know that are musicians that didn’t have W2 income are about to start making more money than they ever have,” Levy said.
It’s a situation which Sen. Lindsey Graham says he will not allow to continue past July 25.
“I got (a phone call) from a coastal hotel owner, very prominent facility, saying they’re going to end the furloughs soon,” Graham said April 29. “They’ve already had some people leave, and they’re having a lot of tension about bringing people back because the disparity in wages is real.”
Graham was one of the loudest voices against the $600 weekly unemployment boost when the coronavirus relief bill was before Congress, which led to the viral moment from Sen. Bernie Sanders, mocking Graham and others who were threatening to vote against the bill based on that provision.
“Some of my Republican colleagues are very distressed. They’re very upset that somebody who’s making $10 to $12 an hour might end up with a paycheck … more than they received last week,” Sanders said March 25 during a speech before the U.S. Senate. “Oh my god, the universe is collapsing. Imagine that. Somebody’s making $12 an hour … might be making a few bucks more for four months.”
Supporters, however, say Levy is a prime example of the program helping people that would have been otherwise left out.
Because the PUA program called attention to the fact that Levy may indeed qualify for benefits, he signed up, and also learned that he qualified under the existing W2 program, as his former W2 employer was unable to successfully protest the awarding of these benefits. After exhausting the $833 in unemployment compensation he will receive from the W2 program, he will then qualify for the 1099 program. He will be able to exhaust that claim, as well, so he will come out of it collecting $833 more than he would have collected under the PUA program alone.
And while Levy says the fact that his W2 is being considered before his 1099 is a mean-spirited twist, it may very well turn out to be the exact opposite when unemployment extensions are granted.
The Federal-State Extended Unemployment Compensation Act of 1970 allows for 13- and 20-week extensions of payments if the unemployment level in their state has been at 5% (for the 13-week extension) and 8% (for the 20-week extension) or higher for a sustained period of time.
In Colorado, federal extensions were granted in the years following the 2009 Economic recession, allowing some individuals to collect for as long as 18 months if they were not yet restored to full-time status.
If new legislation like the Worker Relief and Security Act is not passed, Levy may — based on his W2 wages — still be able to qualify for a federal extension under the 1970 laws.
In need of attention
Much of that was well thought out, says Bennet’s staff, but they acknowledge it’s far from perfect.
Bennet’s impetus for working on the program was not the prediction of the current unemployment surge, but rather the lessons learned from the last one, in 2009.
If the reforms of the coronavirus relief bill had been implemented sooner, some of the kinks would have been identified a long time ago and the system would have been running much smoother heading into the 2020 crisis.
“By investing in the systems of government — the ability of government to interact with its citizens in an effective manner, information technology infrastructure, human capital training and development, things that have been under-resourced for decades — you could more dynamically adjust the programs to these kinds of things,” a staffer with Bennet’s office told the Vail Daily on Friday.
In identifying problems and people who have been looked over, the worst scenario appears to be the worker who earns a small income from an essential W2 position, while earning the majority of their income from non-essential 1099 services.
If no separation of employment ever occurs from the part-time W2 job, current systems will not allow a 1099 claim to be triggered.
In Avon, this exactly describes Town Councilman Jake Wolf.
While Wolf’s primary income comes from music gigs and music lessons, he is also paid about $250 per month for his service on the Avon Town Council. Wolf says the $250 per month payment is a nice thank you from the town but not enough to survive on, nor should it be. But because it’s a recurring payment from a W2 income, it prevents him from being able to open an unemployment claim on his 1099 income, on which he survives.
“As the only renter on the town council, I’ve always felt like I was representing the many people in Avon who are young and struggling,” he said. “That, I’ve always felt, is my main constituency. And now more than ever, I really know how these people are feeling. They don’t know how they’re going to make rent.”
Nevertheless, Wolf says he can see that the unemployment booster from the coronavirus relief bill has made a major difference for those not squeezed out due to unforeseen circumstances, like himself.
“It’s the best benefit program I’ve ever seen for artists, musicians and gig workers who play an important role in the American workforce,” he said. “It’s the first time I’ve seen action from politicians which says these people really are a part of this economy that we’ve built.”
Bennet’s people say Wolf is an example of someone who would not have been overlooked if the system would have been in place sooner.
“The challenge is we’re bringing all these people into the unemployment system at once, saying we got to cover them,” a staffer with Bennet’s office told the Vail Daily on Friday. “So you find cases like this one, where this person probably should have been covered.”