Editorial Staff

Report: MA Likely to See Sharp Spike in Unemployment Rate

/in , , , , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

State should join others in lobbying Congress for large block grants to avoid severe fiscal crisis 

BOSTON – The COVID-19 recession could cause Massachusetts’ unemployment rate to skyrocket to 25.4 percent by this June, according to a new policy brief published by Pioneer Institute.  The Commonwealth’s unemployment rate was 2.5 percent in February.

“Massachusetts should join with other states to lobby Congress for large block grants to assist state governments during this unprecedented time,” said Greg Sullivan, co-author with Charles Chieppo, of Unprecedented Massachusetts unemployment projections set the stage for a state budget crisis.  “The alternative is a state budget crisis of unprecedented severity.”

On April 2nd, the federal Bureau of Labor Statistics announced that 148,452 people in Massachusetts filed for unemployment insurance (UI) during the week ending on March 28, up from 4,712 during the first week of March.  At 8.6 percent, the Commonwealth ranked sixth in the country in terms of the percentage of its total civilian workforce making jobless claims.

Nationally, the April 2nd jobs report found that 6.65 million people filed for unemployment insurance during the same week, more than double what many economists expected.  As a result, the total number of Americans seeking unemployment benefits has increased by more than five-fold in just two weeks.

Even before the worse-than-expected jobs report, Federal Reserve Bank of St. Louis economist Miguel Faria-e-Castro estimated that national unemployment could rise to nearly 10 times the February 2020 rate of 3.5 percent.  This would be both the highest rate and the fastest rise in U.S. history.  Even during the Great Depression, it took four years for unemployment to increase from 3.2 percent before the 1929 stock market crash to 24.9 percent in 1933.

Faria-e-Castro predicts that the number of unemployed Americans will rise from 5.76 million in February to 52.8 million in June.  If Massachusetts experiences a similar eight-fold increase in that time, about 975,000 state residents would be unemployed, which translates to a 25.4 percent unemployment rate.

More than a quarter of the workforce being unemployed would trigger a severe state budget crisis.  In the Great Recession, during which Massachusetts unemployment rate peaked at 8.3 percent, the Commonwealth’s income tax revenue fell from $12.5 billion in fiscal 2008 to $10.1 billion in fiscal 2010.

Sales tax revenue declined by just 5 percent during that period, but the COVID-19 recession is fundamentally different because governments have effectively ordered non-essential businesses to close.

Massachusetts is expected to receive $2.67 billion from the recently enacted Coronavirus Aid, Relief and Economic Security Act.  The legislation will also temporarily increase the federal matching rate for Medicaid, provide an additional $600 a week for up to four months to everyone collecting UI benefits, expand the categories of workers eligible for UI and fund an additional 13 weeks of benefits beyond the normal unemployment time limit.

This would help state finances because UI benefits are taxable.  But the $1,200 rescue checks most adults will receive are not, and the law doesn’t help Massachusetts fund the usual 30 weeks of unemployment benefits.

“State block grants are a must,” said Pioneer Executive Director Jim Stergios.  “Spending the Commonwealth’s $1.7 billion UI reserve or digging too deeply into the recently restored $3.3 billion rainy day fund would undermine our fiscal health and weaken our ability to conduct the people’s business.”

About the Authors

Gregory Sullivan is Pioneer’s Research Director. Prior to joining Pioneer, Sullivan served two five-year terms as Inspector General of the Commonwealth of Massachusetts and was a 17-year member of the Massachusetts House of Representatives. Greg is a Certified Fraud Investigator, and holds degrees from Harvard College, The Kennedy School of Public Administration, and the Sloan School at MIT.

Charles Chieppo is a Pioneer senior fellow. Previously, he was policy director in Massachusetts’ Executive Office for Administration and Finance and directed Pioneer’s Shamie Center for Restructuring Government. While in state government, Charlie led the successful effort to reform the Commonwealth’s public construction laws, helped develop and enact a new charter school funding formula, and worked on state workforce issues such as pension reform and easing state restrictions against privatization.

About Pioneer

Pioneer Institute is an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.

Get Our COVID-19 News, Tips & Resources!

  • This field is for validation purposes and should be left unchanged.

Related Content

Ghost Dance – Native American Heritage Month – Resources for K-12 Education

In Pioneer’s ongoing series of blogs on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Introducing K-12 schoolchildren to Native Americans in U.S. history.

Targeted government help for small business is needed

0 Comments
/
Covid-19 will frame economic policy discussions for years to come, just as the Great Recession did a decade ago. The economic impact of the pandemic includes widespread job losses, and millions of Americans are at risk of falling into poverty. Covid-19 is also accelerating pre-existing market trends – such as automation and online shopping – and their potentially devastating impact on the thousands of small businesses vulnerable to these market shifts. Will these businesses be able to adapt?

MCAS testing essential to address falling test scores

0 Comments
/
Amid the chaos that was created by schools suddenly being shuttered in March as a result of the COVID-19 pandemic, it made sense to cancel administration of Massachusetts Comprehensive Assessment System (MCAS) tests. But supporters of pending legislation that would place a four-year moratorium on using MCAS as a high school graduation requirement and create a commission to study alternatives to the tests are no longer responding to a crisis; they are using it to advance their anti-reform agenda.

Wall Street Journal Columnist Jason Riley on the 2020 Election, School Choice, & Race in America

0 Comments
/
This week on “The Learning Curve,” Cara and Gerard are joined by Jason Riley, a senior fellow at the Manhattan Institute and columnist for The Wall Street Journal. Jason shares insights on the 2020 election, its implications for the next two years, and assuming Vice President Biden becomes president, how he may govern on K-12 education.

Disputing Democracy – 5 Contentious U.S. Presidential Elections – Resources for K-12 Education

In Pioneer’s ongoing series of blogs, on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Introducing K-12 schoolchildren to the great, contentious presidential elections in U.S. history.

Pioneer Institute Statement on Governor Baker’s New COVID Restrictions

Read Pioneer Institute's public statement about Gov. Charlie Baker's new executive orders related to the state’s reopening plan that will go into effect on Nov. 6, issued in response to a significant uptick in COVID infections in Massachusetts,

Voting for Health: Party Opinions, Election Results & the Healthcare Policy Implications of Election 2020

0 Comments
/
Join Host Joe Selvaggi as he discusses with Harvard Professor Bob Blendon his New England Journal of Medicine Special Report, "Implications of the 2020 Election for U.S. Health Policy," which covers broad differences in both party’s view of the role of government in health care and what the election results will mean for Americans.

Hockey Sidelined Again

0 Comments
/
After months on the sidelines, youth hockey players across the state eagerly laced up their skates in August. Under current youth and amateur sports guidelines, locker rooms operate at 50 percent capacity, only one spectator should attend per player, and players wear masks on the bench. Unlike in MIAA high school sports, players do not wear facemasks while they play, except during faceoffs. 

“Double, Double Toil and Trouble” – 15 Halloween Resources for K-12 Students

In Pioneer’s ongoing series of blogs here, on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Introducing K-12 students to the history behind Halloween.

Staving Off Disaster: Lessons from Covid Applied to the Epic Battle Against Drug Resistant Microbes

0 Comments
/
Join Hubwonk host Joe Selvaggi and Pioneer Institute’s Bill Smith as they discuss with inspirational public health advocate Gunnar Esiason the findings of his latest white paper, "Antimicrobial Resistance: Learning From the current health crisis to inform another."  The episode looks at the challenges to global health presented by evolving drug resistant diseases and how the lessons learned from COVID-19 could potentially save millions of lives.

The Commonwealth of Health -Massachusetts’s Great Medical Innovations – 15 Resources for High School Students

In Pioneer’s ongoing series of blogs here, on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Introducing high school students to great medical innovations from Massachusetts.

NCTQ’s Kate Walsh on the Crisis in K-12 Teacher Prep, Quality, & Evaluation

0 Comments
/
This week on “The Learning Curve,” Cara and Gerard are joined by Kate Walsh, president of the National Council on Teacher Quality. They discuss the qualifications of those who enter the teaching profession, explore teacher preparation, and key differences between teacher preparation, accreditation, and job prospects in the U.S. and other countries. They also speculate about what a Biden presidency might mean for K-12 education policymaking, and discuss how to diversify the teaching pipeline.