Oahu’s alarming month-long spike in COVID-19 cases is about to be followed by another kind of spike: unemployment.
The new local government order that went into effect Thursday forcing all sorts of businesses on the island to cease or curtail business is expected to dislodge thousands of workers from jobs.
Estimates based on data analysis weren’t available so soon after the order from Mayor Kirk Caldwell with Gov. David Ige’s approval was announced Tuesday, but it will be traumatic.
“It’s not minor,” said Sumner La Croix, research fellow at the University of Hawaii Economic Research Organization. “We’re clearly talking several thousand people.”
At one Oahu shopping center, Kahala Mall, a little over half of all tenants are temporarily closed because of the restrictions. Another roughly 30 tenants remain open, including 19 take-out food merchants, three home supply stores, nine financial and telecommunications service providers, Longs Drugs and Whole Foods Market.
Caldwell’s restrictions run two weeks, but could be extended depending on coronavirus case factors.
The impending new wave of displaced workers will descend on state Department of Labor and Industrial Relations operations that have struggled to process unemployment insurance claims since March, when unprecedented demand was triggered by COVID-19.
Though greatly improved after computer system changes along with the addition of a call center and 49 new employees, DLIR’s system still cannot handle many inquiries in a timely manner, and 10,372 claims were pending action as of Wednesday.
Last week, the agency said it was in the process of interviewing and hiring 41 more employees to process claims that still must be submitted online.
DLIR is bracing for more of an uptick in both new initial claims and weekly benefit claim certifications.
Anne Eustaquio, the agency’s acting director, said the best way for the newly unemployed to navigate the system is to carefully review guidance and avoid mistakes on applications.
“The most important thing for new unemployment insurance filers is filling out the application as accurately as possible to avoid unnecessary delays,” she said in a statement. “We have posted videos and slide shows on our website (labor.hawaii.gov) to assist all claimants in filing and certifying their claims.”
Eustaquio added that one growing issue is workers who previously filed claims for temporary wage losses filing new claims after permanent job loss without reporting the separation from their employer, which creates claims processing delays.
“These individuals will need to report the separation when filing a weekly claim certification,” she said.
Through Wednesday, DLIR had paid out $2.9 billion in unemployment benefits for roughly 170,000 claims funded by the state and federal governments.
A lot of the payments included $600 federal supplements to the state’s weekly benefit that can be as much as $648. Those supplements ended in July.
DLIR applied on Wednesday to tap into a new federal program offering $300 weekly supplements, but the agency has no estimate when that money, which can supplement wage losses dating to Aug. 1, might begin flowing to those who qualify.
The impending increase in unemployment claims is not expected to rival the magnitude earlier this year when the number of weekly claims jumped from around 1,000 through mid-March to 8,823 the next week, followed by about 50,000 claims in each of the next two weeks at the end of March and beginning of April.
Much of that earlier spike correlated with the freeze-up in tourism that has not been undone, along with Caldwell’s initial order restricting nonessential business activities that included entertainment attractions, dine-in restaurant service, apparel retailing, hair salons, gyms, automobile dealerships and more.
Employment dramatically improved in late May and June when Caldwell’s first “stay-at-home” order was relaxed. Also, the federal Paycheck Protection Program paid wages for thousands of employees and kept them off unemployment rolls.
With those changes, initial unemployment claims fell to between 5,000 and 8,000 per week since June.
Now, claims are sure to rise given that PPP is over and nonessential businesses again cannot operate.
Still, the increase isn’t expected to be as bad as before because the new business restrictions don’t apply to the neighbor islands, and some nonessential businesses that closed earlier this year did not reopen when restrictions were lifted.
At the same time, discouragement among business owners facing so much uncertainty could lead to permanent company shutdowns.
“We’re going to see more businesses throwing in the towel,” La Croix said. “And more businesses throwing in the towel means more unemployment.”