Labor chief estimates permanent job losses at 250,000
Photo | Courtesy of Commonwealth of Massachusetts
Massachusetts State House
The Baker administration is hopeful that a new identification process for unemployment claimants will help the state clear out a backlog of hundreds of thousands of workers seeking jobless aid.
Thanks to a contract with security vendor id.ME that will implement digital verification steps in the unemployment system, the state Department of Unemployment Assistance will be able to shift about 300 people from physically confirming identities to adjudication and other steps.
"That's really going to help us get through this backlog quicker," Labor Secretary Rosalin Acosta told lawmakers at a budget hearing on Tuesday, describing identification as one of the biggest factors that can delay unemployment benefits from reaching qualified claimants.
Massachusetts and other states during the pandemic have faced a wave of unemployment fraud, in some cases linked to national schemes, that has slowed down the process, leading to frustration for legitimate applicants.
The Executive Office of Labor and Workforce Development estimated that, as of Jan. 30, there were more than 266,000 individuals seeking standard unemployment benefits and 41,000 applying for the expanded-eligibility Pandemic Unemployment Assistance program who faced at least one issue holding up payments.
Demand for support has skyrocketed over the past year, with businesses facing enormous pressure from changes to consumer behavior and public health restrictions that for many included periods of forced closures.
In 2019, Acosta said Tuesday, the state paid $1.4 billion in unemployment benefits. That amount increased more than fifteenfold to $22 billion in 2020 when taking into account new programs the federal government launched, which Acosta described as "staggering numbers."
Legislative leaders on Monday announced they will advance a relief bill that includes a freeze on the unemployment insurance rate schedule for 2021 and 2022. Without action, businesses face an average increase of $327 per employee in the taxes they pay to fund the system, and the administration's proposed freeze would limit that increase to an average of $96 per employee.
Labor officials plan to release January 2021 unemployment rate, labor force and jobs estimates on Friday as well as revised figures for calendar year 2020. The state's unemployment rate spiked from 2.8 percent in March to 17.7 percent in June. The rate for December, the most recent month with data available, sat at 7.4 percent.
Acosta described Massachusetts as experiencing the third-highest job losses out of all states. The Bay State shed about 690,500 jobs between February 2020 and April 2020, according to estimates based on employer surveys. In the ensuing eight months, the state added back about 340,900 of those positions.
The COVID-fueled crisis has hit Massachusetts populations "differently than previous recessions," Acosta told the Joint Ways and Means Committee, carrying increased impacts on women and people of color.
About 54 percent of those claiming unemployment benefits in Massachusetts today are women, Acosta said, a shift from previous cycles in which the gender split was even or featured a majority of men.
"There are a lot of different reasons for that, and one is the sectors that were hit hardest. In this recession, health care is an industry where there are a lot of women, and the health care sector got hit very hard this recession versus 2008, where health care really was not hit hard," she said. "Another is everything related to child care. Everything related to child care -- early child care, school-faced learning -- has been very, very hard for women."
For claimants accessing extended benefits after their typical state benefits expired, about 20 percent are Latino and 16 percent are Black, Acosta said. More so than any other group, Latino women have been hit the hardest, according to Acosta.
She also attributed those trends in large part to industry-level impacts, noting that leisure and hospitality and retail have significant percentages of Black and brown employees.
"That's where our focus needs to be coming out of this," Acosta said.
About a quarter million of Massachusetts job losses are permanent, Acosta said, referring to workers who are terminated and are not poised to return to the jobs they lost.
"It's imperative upon us that as we bring folks into these training programs, we do that very intentionally and we do that with accountability to make sure that we are helping folks that probably will not be able to go back to work that they had previously," Acosta said. "We're estimating probably about 250,000 or so permanent job losses, and that's significant. That is a significant number. Those are the people that we're going to have to find, and our MassHire system has its work cut out for themselves for this year."
That impact, she said, underscores the importance of state workforce development and training programs such as the Career Technical Initiative, a program the administration launched in January 2020 using vocational and technical schools to prepare existing students and retrain adult learners for the workforce.
Gov. Charlie Baker's $45.6 billion fiscal year 2022 budget, the subject of Tuesday's hearing, would increase funding to vocational technical schools for the CTI program from $4 million this year to $15 million.
"In the economy that we're in, the training piece is so necessary," Acosta said. "When we were at that wonderful 2.8 percent unemployment rate back last March, before things really shifted and changed, I was hearing a lot from employers that they really needed skilled workers. Here we are, at over 7 percent unemployment, and I'm still hearing the same thing: we still really need skilled workers. This is a direct answer to that need."
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