Tens of thousands of newly idled Minnesota workers slammed the state with unemployment requests Tuesday seeking early benefits following Gov. Tim Walz's emergency order closing bars, restaurants and other public places to slow the spread of COVID-19.
As businesses closed or scaled back operations, officials said Tuesday afternoon that more than 31,000 people had applied for unemployment insurance over the past two days. In addition to establishments with dine-in services, Walz's order covered gyms, theaters, coffeehouses and other businesses where people congregate.
Laid-off or furloughed workers seeking unemployment insurance typically must wait a week before applying for the aid, but Walz issued an executive order eliminating the waiting period — something workers said is critical, particularly for those living paycheck to paycheck.
"Having it effective immediately instead of having to wait is definitely going to be a huge load off, especially since bills are due right at the beginning of the month," said Erica Pieske, who works at the Caribou Coffee in the Thomson Reuters offices and has seen her hours cut from more than 30 a week to 12. She applied for unemployment Tuesday, which is allowed for workers reduced to part time.
Minnesota is in a comparatively strong position to handle the onslaught of requests, which in the first 24 hours of Walz's order spiked to nearly 10 times the number recorded during the entirety of the same week last year, according to Department of Employment and Economic Development Commissioner Steve Grove.
At the same time, it's unclear if the closure of public eateries and other spaces might be extended significantly beyond the March 27 end date set by Walz. Unemployment insurance benefits are covered by a $1.5 billion trust fund, which could be stretched thin if significant numbers remain out of work.
"We're very sober about the road ahead," Grove said.
Though unemployment insurance is a federal program, it is administered by the state. Grove said that during past recessions the federal government provided loans to states when the trust fund ran dry. The U.S. House passed an emergency coronavirus bill Saturday that included $1 billion in 2020 to help states handle unemployment insurance requests. The Senate could take up the measure this week.
Minnesota workers who have paid leave through their employer should use that first, Grove said. Those who don't and need to apply for unemployment insurance should do so through the state website, uimn.org, rather than via phone. The typical wait time for callers is 30 seconds, Grove said, but on Tuesday the wait jumped to 25 minutes. "You will be very frustrated if you call into our call center," he said.
Walz made a number of changes to the unemployment insurance program to protect people affected by the coronavirus. Workers who have been told to avoid contact with others or not to come to their workplace because of the outbreak can get unemployment benefits, as can those who have to care for a child due to school or day care being canceled.
Taxes on employers are used to fund unemployment benefits. In an attempt to help businesses burdened by the outbreak, the executive order also temporarily changes how unemployment tax rates will be calculated.
Grove said officials are looking at other state and federal resources to help workers and businesses, including the federal Small Business Administration disaster loan program. He said funding could be available in the next couple weeks from the disaster program, which provides low-interest loans to businesses.
Businesses in the Twin Cities also are struggling financially with the cities' requirement that they provide earned sick time to workers, Minneapolis Chamber of Commerce President Jonathan Weinhagen said. He said businesses might opt to lay off staff and urge them to file for unemployment instead.
"Layoffs are drastic, but it may be the best course of action for a company that has no cash flow coming but has a liability through earned sick and safe time," Weinhagen said. If a Minneapolis restaurant employs 100 people and each person has accrued 80 hours of paid leave, "It's a high five-, low six-figure liability," he estimated.
Meanwhile, Weinhagen said labor and business leaders will likely start pushing to extend the time idled workers can qualify for unemployment insurance, as well as an increase in the cap on how much individuals can receive. A worker can currently get half of their pay, up to $740 a week.
Walter Newbury of Shakopee was one of the many people trying to get unemployment aid Tuesday. He worked 20 hours a week at Chanhassen Dinner Theatres, but he said those hours were cut as the theater called off shows due to coronavirus. He has another job, but he said he is worried about the "irreparable harm" that could be caused by losing the money from Chanhassen — even if he does secure half of that amount through unemployment insurance.
"I have a car loan. I have insurance. I have bills to pay that I don't know that I am going to be able to pay," said Newbury, who planned to start house hunting and doesn't want his credit score dinged.
Other workers, including many who are self-employed, don't qualify for unemployment. Kara Lovemelt of Minneapolis works with her husband on a small business that produces interactive videos and photography. They had six events lined up over the next two months, all of which were canceled, she said.
"We went from thriving to diving in a matter of a day," said Lovemelt. She said her family can survive for a while, but if cancellations and closures drag on, the state should also consider ways to help people who are in the creative economy and are self-employed.
Jessie Van Berkel • 651-925-5044