Fewer Workers, More Claims

I’ve written a couple of times about the sorry (i.e., bankrupt) state of Colorado’s Unemployment Insurance program.  Well, here’s why:


Source: Department of Labor, Weekly UI Claims Report

This is a chart of the number of employed workers divided by the number of continuing and new UI claims, as reported weekly, through May 21 of this year. This represents, in some sense, the coverage of UI payments by the cash flowing into the fund.  If you’ve read a paper anytime in the last two years, this doesn’t tell you much new about our immediate situation.

First, the caveats.  Unemployment insurance claims are incredibly seasonal, and reported weekly.  The number of employed used in that report appears to change only quarterly.  So I’ve taken the bumps and ridges out of the data by using a 6-month backward-looking/6-month forward-looking moving average.  This is not for predictive purposes, it’s just to smooth the data out for graphing, and by doing it that way, I avoid the time lag of a trailing moving average.

And, of course, the leading part of the average goes away inside of 6 months from the end.   That’s important, since the seasonal downtick in claims (or uptick in ratio) may not be done yet, making it look as though the ratio is cresting again when it’s not.

A couple of interesting facts emerge, aside from the record torpor.

We forget just how great – and how anomalous – the late 90s were for Colorado.  Look at the slope of that line beginning in mid-1996, and look at the plunge it takes starting in 2000.  As fondly as we remember the job market here through 2006, the ratio of workers to recipients never got back to 1997 levels, never mind early 2000.  Still, the UI fund was taking in more than it was paying out, even as it was levying annual solvency increases on Colorado businesses.

The seasonal variation is also much less over the last several years, indication the sense of stasis the economy has had.  Layoffs are down, but so is hiring:

The right-hand axis is total employment; the left-hand unemployment claims.

As in the rest of the country, we’re at an inflection point on the graph.  Also, like the rest of the country, our unemployment insurance program is likely to stay broke for a while, no matter which way things go.

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