Signs of economic recovery are not always easy to locate these days. But at least one indicator seems to suggest Louisiana’s harshest economic days may be behind it.
The state’s unemployment trust fund has begun to, if not increase, at least level off as more workers head back to work.
“We are seeing some definitive trends that the recession is over, employment is back up in the aggregate now,” said Jay Augustine, deputy director of the Louisiana Workforce Commission. “So more people are working again, and consequently, more employers are paying more money into the UI trust fund. So that’s a very, very good thing.”
There are two forces at work behind this trend. First, more workers with a paycheck translates to more workers paying into the fund through payroll taxes. Second, the fund improves when there are fewer unemployed workers drawing down on the trust fund through unemployment checks.
Louisiana’s unemployment trust fund — a substantial nest-egg built up through workers’ unemployment insurance payroll taxes — topped nearly $1.5 billion in the early days of 2008 before the national economy nose-dived into recession. As more Louisiana workers found themselves jobless, the fund’s balance began to fall with each round of unemployment checks put in the mail. By April 26 of this year, the fund had been reduced to $814.5 million, its lowest mark since the recession began, Augustine noted. By Aug. 1 the fund had crept up to $856.5 million, the first upward trend in three years.
In the grand scheme of the millions of dollars paid out weekly in benefits and taken in through payroll taxes this increase could be little more than an erratic blip, say officials. However, this has not diminished their optimism.
“We do anticipate that trend will continue,” Augustine said. “And hopefully, at some point we will reach a stabilizing level where we’re breaking even rather than paying out more than we’re taking in.”
A look at the monthly payouts of jobless benefits has not been a straight line heading down. Instead, that line is a zigzag of increases and decreases, though the trend generally seems to be heading downward. In January 2010 the state paid out $50.2 million in benefits. By June the monthly payout had fallen to $28.3 million.
“In terms of trying to put any rhyme or reason into why one month payments are a little higher than the next month, I really don’t think there’s any scientific answer to that — or any social scientific answer,” Augustine said. “It’s just sort of par for the course and it’s the nature of the beast.”
Louisiana’s unemployment trust fund is the third-healthiest in the country, due in part to policy changes enacted in 2010 to help maintain a healthy balance. Louisiana increased the amount it taxed paychecks to $7,700 from $7,000 to help cushion the trust fund. In addition, the state lowered the maximum weekly payout in benefits to $247 from $284. The tax base and payout limits remain in place for 2011.
Closely examining the fiduciary health of the unemployment trust fund may not always be the best barometer of the state’s overall economic health, said Loren Scott, a retired LSU economist, and a longtime observer of economic benchmarks like unemployment.
“You could actually have this thing leveling off, but the economy really stinking because there is a time limit on how long you can claim unemployment,” Scott explained.
In Louisiana, workers are entitled to 26 weeks of state benefits. During the first quarter of 2011, the average weekly amount was $196, according to records kept by the U.S. Department of Labor. If the person is still without work when these benefits run out, federal benefits kick in.
“So in Louisiana, I want to say it’s up to 73 weeks total that somebody could get unemployment benefits,” said Curt Eysink, executive director of the Louisiana Workforce Commission.
Other indicators related to unemployment are pointing to an improving jobs picture. At the height of the recession, the average number of weeks a person collected state benefits had risen to just more than 20 weeks, Eysink pointed out.
“And now it’s down to 15 or 16 (weeks,)” he added. “And really, before we felt the recession at all, back in ’08, it was around 15 weeks also.”
Another statistic known as the “exhaustion rate” — the number of recipients who have exhausted their state benefits — is also trending downward. In the first quarter of 2010, 19,013 unemployed workers had exhausted their state benefits. By the first quarter of this year, that number had dropped to 13,658.
“In terms of any definitive trend, we can say our state is definitely on the move in terms of recovery,” Augustine reiterated.