DENVER – Around 87,000 Coloradans stand to lose all unemployment benefits after Sept. 4 when the federal extended unemployment benefits expire, officials with the Colorado Department of Labor and Employment said Friday.
Those roughly 87,000 people are all receiving unemployment through either the Pandemic Unemployment Assistance (PUA) program for gig workers and the self-employed or the Pandemic Emergency Unemployment Compensation (PEUC) program that extended benefits to people who had exhausted their regular state unemployment benefits.
Additionally, about 116,000 people – including the aforementioned 87,000 – will lose the $300 a week Federal Pandemic Unemployment Compensation (FPUC) benefit after Sept. 4 – a benefit that goes to all people receiving unemployment benefits of any type.
Those figures are according to CDLE Senior Economist Ryan Gedney based on data for who was receiving those various benefits last week. Gedney said there are also about 7,200 people whose regular state benefits will be exhausted in the next five weeks and who will not have a federal program to move over to after then.
In June, 22 U.S. states decided to end the federal unemployment benefit programs early, but Colorado was not one of them and decided to stick with the deadline set by Congress when it passed the American Rescue Plan – which extended the federal unemployment programs created at the beginning of the pandemic into September.
A new study from a team of researchers from Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto released Friday found the states that did end the benefits early saw little job creation as a result and an overall drop in spending compared to states that did not end the benefits early.
The study, which analyzed anonymous real-time banking data, found that for every eight workers who lost their benefits when their states ended them early, one worker found a job. Thirty-five percent of people lost their benefits entirely, and only 4.4% of the study group, who were receiving unemployment benefits in April, found new work, according to the report. It also found that for every dollar benefits were reduced, spending fell by $0.52. Seven cents of new income were created for each dollar of lost benefits.
“These states (that ended benefits early) therefore saw a much larger drop in federal transfers than gains from job creation,” the authors wrote in a summary.
“Through the first week of August, average UI benefits for these workers fell by $278 per week and earnings rose by $14 per week, offsetting only 5% of the loss in income,” the authors wrote in their abstract. “Spending fell by $145 per week, as the loss of benefits led to a large immediate decline in consumption.”
Another study of states that ended federal extended benefits early done by the JPMorgan Chase & Co. Institute released last month found “unemployment supplements have not been the key driver of the job-finding rate through mid-May 2021 and that U.S. policy was therefore successful in insuring income losses from unemployment with minimal impacts on employment.”
It also found the PUA program “is successfully helping marginalized workers who experienced income losses similar to those suffered by traditional UI recipients” and suggested a similar program that works more smoothly in delivering benefits could help stabilize the economy in a future recession.
Those new reports showing the efficacy of the extended federal unemployment programs come as some have continued to clamor for Colorado to end the programs early, though Gov. Jared Polis has said repeatedly he will not.
Colorado’s seasonally adjusted unemployment rate fell a tenth of a point to 6.1% in July, the CDLE said Friday. That’s compared to the U.S. rate of 5.4%, which fell half a percentage point in July.
Gedney said part of the reason it has not declined faster is because the labor force participation rate has been among the quickest in the nation to recover. The state’s labor force participation rate was 68.3% in July – just under the pre-pandemic rate of 68.7% from February 2020.
Pueblo (8.6%), Huerfano (8.4%), Las Animas (7%), Adams (6.8%) and Gilpin (6.8%) had the highest non-seasonally adjusted unemployment rates – compared to the state non-seasonally adjusted rate of 5.9%.
The largest job gains seen in July came in the professional and business services and leisure and hospitality industries, which each gained more than 4,300 jobs last month. Year-over-year, nonfarm payroll jobs increased by 140,500 — 53,100 of which came in the leisure and hospitality industry.
The CDLE is urging people on the verge of losing their benefits to connect with the state workforce centers and Connecting Colorado, where there were more than 122,000 jobs open as of Friday.
The state also rolled out the myUI+ multifactor authentication for users this week, which people will have to complete before they can receive further benefits.