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SC unemployment claims skyrocket by 400 percent with job losses caused by coronavirus

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From job fair to jobs lost

In 2017, restaurants and hotels were having a hard time filling positions and relied on job fairs to help fill spots. Now, due to the coronavirus pandemic, they are having a hard time staying open and hundreds of workers have been laid off. File/Grace Beahm/Staff

New unemployment claims in South Carolina skyrocketed by more than 400 percent this week, according to state officials, as cooks, dishwashers, tour guides and other workers were forced out of their jobs by the coronavirus pandemic.

The South Carolina Department of Employment and Workforce, which fields unemployment claims from laid off workers, said the agency could not yet release exact numbers on how many people filed for benefits so far this week.

But if the 400 percent increase holds true, it means roughly 10,000 South Carolinians filed for unemployment between Sunday and Wednesday of this week. 

And more could apply between now and Saturday at midnight, when the weekly total is finalized and sent to the federal government.  

For perspective, South Carolina has posted on average roughly 2,300 initial unemployment claims per week over the past year. And in February of this year, South Carolina recorded just over 10,000 initial claims for the entire month. 

The new information offers a glimpse, for the first time, into how hard the pandemic and the public health crackdown are hitting South Carolina businesses and the state's workforce. 

Joseph Von Nessen, a research economist at the University of South Carolina, cautioned people not to read too far into the numbers just yet. 

It will take more time, he said, to determine whether this is a temporary blemish on the state's strong labor market or something that could become the "new normal."

He noted that during the height of the Great Recession, South Carolina averaged more than 10,000 new unemployment claims per week for over a year. 

"I think the real question is how long this lasts," Von Nessen said, referring to the pandemic and public health response. "We just don't know at this point." 

It's unclear how much of the current increase in unemployment claims can be attributed to the coronavirus and the historic steps that are being taken to combat the virus. 

But the spike in claims does coincide with the state's decisions this week to close schools, disband large public gatherings and prohibit dine-in services at restaurants.

Those measures, which are meant to ensure the state's healthcare system isn't overrun with sick patients, played into several restaurants and tourism-related businesses ceasing operations this week. 

According to data released by the U.S. Department of Labor on Thursday, South Carolina's unemployment claims remained relatively low through this Sunday. Only 1,991 people filed a new unemployment claim between March 8 and March 14. 

That data also showed that other states saw their economies contract far earlier than South Carolina's. Washington and California, some of the first states to report cases of coronavirus, saw their unemployment rolls tick up dramatically last week. 

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As the number of applications grows in South Carolina, officials are relaxing some of the unemployment programs' rules for displaced workers.

Applicants usually need to prove they are attempting to find work in order to continue to qualify for up to $326 in unemployment benefits every week. But the state announced Thursday that it was waiving those requirements for anyone applying between March 15 and April 18. 

That will create one less hurdle for people seeking to access the unemployment insurance program in order to help cover the cost of groceries, rent, car payments, mortgages and student loans during the public health crisis. 

Gov. Henry McMaster also said on Thursday he was waiving the one-week waiting period that people seeking unemployment usually need to struggle through.  

"We are trying to speed it up as fast as we can," McMaster said in an afternoon news conference. 

McMaster also announced that businesses in South Carolina will get a break on paying unemployment insurance taxes until June 1. Those taxes go to the South Carolina Unemployment Insurance Trust Fund. 

That fund had far too little cash on hand when the state entered the great recession. As a result, the state ended up borrowing more than $1 billion from the federal government to cover the flood of unemployment claims from South Carolinians at that time. 

South Carolina ended up paying the federal government back for those loans in 2015. And last year, a state report announced the trust fund was finally considered solvent. 

As of June 2019, the trust fund had more than $1 billion in it.

Dan Ellzey, the executive director of DEW, said the state has a solid unemployment trust fund. But he told the Post and Courier he was somewhat concerned about everyone rushing to file for unemployment at once. 

If the faces an unprecedented number of claims all at once, rather than over two years like in the Great Recession, the state could be borrowing from the federal government again, he said.

It all depends on three variables that are unknowns right now: how many weeks employees will be off, how many people file and how quickly employers will start paying again and replenish the fund.

In recent months, Ellzey said some employers in the state looked at the $1 billion trust fund and complained that the unemployment taxes they were paying were too high.

But nobody's thinking that anymore, he said. 

Seanna Adcox contributed to this report. 

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

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