End of PUC program could cause ripple effects across local economy
STEAMBOAT SPRINGS — Jessica Valand expects phones at the Colorado Workforce Center offices to be ringing Monday as unemployed workers deal with the end of the Pandemic Unemployment Compensation program.
“What I anticipate is that a lot of unemployment insurance customers do not realize that this cliff is coming,” said Valand, who serves as regional director for workforce development in Northwest Colorado. “Whatever the reason behind being aware or not aware that their unemployment has been padded with this federal compensation, we’re anticipating a lot of people who will be surprised and panicked when they file their unemployment claim that first week of August and realize that it’s dropped by more than half.”
The PUC program was scheduled to run through the end of the month, but because benefits are paid in full weeks, it ends July 25. In Colorado, those benefits run Sunday through Saturday, so the last extra $600 payment will be paid for the week of July 19 to 25.
The state provides regular unemployment benefits, which vary by individual based on how much money they were making when they lost their job. The federal government started adding $600 a week to that amount as part of the Coronavirus Aid, Relief and Economic Security —CARES — Act in March. The economic shutdown brought on by the COVID-19 pandemic created a dire situation where workers were unable to find work, and regular unemployment benefits would only cover about half of the employees’ former salary. To address the shortfall, the federal government offered the additional $600.
“I can tell you statewide the average unemployment payment during the last few months of the COVID crisis has been about $330 a week, so that added $600 is huge and is more than two-thirds of the total benefit amount that most people have been receiving,” Valand said.
The problem, which has become a heated political debate, is that many employees’ unemployment benefits, with the additional $600, resulted in wages that were higher than what they were earning before the pandemic.
Valand said she is concerned because on Friday those who have been relying on unemployment benefits will have their weekly income cut significantly, and there will be far more people on unemployment than there are jobs.
“We have far more folks receiving unemployment than we do have open and available jobs,” Valand said. “It will have financial impacts for sure in the community, and it will most certainly result in increased demand on the (Routt County) Department of Human Services, LiftUp of Routt County and other community-based organizations that are helping to bridge that gap for folks.”
John Bristol, the Steamboat Springs Chamber’s director of economic development serving both Steamboat Springs and Routt County, said the end of the program will not only impact individuals and families but may well have a ripple effect.
“Folks that are receiving it, that are unemployed, they’re using it to cover rent, food and other basics,” Bristol said. “That’s where you’ll start to see the impact that, in turn, will show potentially through sales tax and other areas.”
He said it could also impact consumer confidence and result in people holding off on making additional purchases above and beyond the minimum.
“Maybe they will not go out to eat or make that additional purchase at a store downtown,” Bristol said. “They may not be confident in what the future looks like, and they may not be confident in their job prospects, so they hold back and save their money.”
That consumer behavior could result in a slowing of the economy and spread through the business community, causing employers to hold back on hiring. According to Bristol, the PUC program reinforces the importance of these type of stimulus programs.
“These additional unemployment benefits, as well as, the PPP (Paycheck Protection Program) and other outside federal resources and state resources that are flowing into the valley are really important,” Bristol said. “This is just one of those outside resources that’s really important for us to maintain and hold on to through the pandemic.”
Both Bristol and Valand are hoping the federal legislators will be able to find a middle ground and address unemployment in their next stimulus plan, but neither of them believe a political rescue can be reached before Friday.
“It’s evolving,” Bristol said. “The Republicans are kind of leaning toward $200 to $400 a week. I think the Democrats are saying $600 is still what we need, so they’ll probably fall in the middle there and come to a compromise.
“But I think the big picture is sustaining these benefits at some level,” Bristol continued. “It is really important for our community and also other communities across the nation.”
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