State labor officials say unemployment trust-fund insolvency is coming within months

DENVER — An additional 31,608 people filed for unemployment benefits in the week ending May 9, the Colorado Department of Labor and Employment said, with officials now saying the state’s unemployment benefit trust fund could become insolvent as soon as late June.

The state saw 22,483 regular initial claims and 9,125 claims from self-employed and contract workers between May 3 and May 9, according to weekly figures released Thursday morning. That places the number of claims in the past eight weeks at 451,155. 

State labor officials last estimated Colorado’s labor force to be around 3.14 million in March. When compared to the past several weeks, the figures suggest approximately 13% of state residents have claimed some form of unemployment benefits.

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The department also reported paying out $96 million in benefits in the period, with state officials saying it is now inevitable that Colorado’s unemployment trust fund will be drained. CDLE spokeswoman Cher Haavind said the state expects to remain solvent until late June or early July. At that point, the state will likely tap interest-free federal funds meant to shore up unemployment payments.

Labor officials have paid out $432.8 million in benefits since the beginning of April, which accounts for a little over 40% of the $1.1 billion it had in the state unemployment trust fund at the start of the year.

CDLE Senior Economist Ryan Gedney said if the fund becomes insolvent by June 30, the state will shift to a higher range of premiums and implement a solvency surcharge, both based on other factors that determine a company’s premium. Combined, those factors could add an additional $42.80 to $865.40 per employee on their payroll tax bill in 2021.

Based on current projections, that hike will go into place.

“It’s pretty much a certainty,” he said.

The U.S. Department of Labor said initial claims across the country last week hit 2.98 million, a decrease of 195,000 new filings from the week prior. More than 36 million Americans have filed for unemployment since the World Health Organization declared COVID-19 a global pandemic, with the insured unemployment rate now standing at 15.7% nationwide.