Suburban businesses worry if they will reopen at all
Unemployment filings across the country have grown, and in Illinois, many enterprises question if they’ll reopen at all. Last year, 39,000 people reported unemployment, according to the Illinois Department of Employment Security. On a single day in March, 34,000 people filed claims, as their main means of survival was unemployment. Many people were still awaiting their government stimulus checks. Business in Illinois, like the rest of the country, has dried up.
With stay-at-home orders and social distancing measures in place, it’s difficult for small and large companies to operate. The current business cycle of unemployment may become less drastic as states reopen, but the industry will unlikely get back to “normal” in the distant future.
In Skokie, many organizations and institutions — that have been as early as the 1950s — have had to shut down due to the pandemic.
How Does Unemployment Affect a Business?
Unemployment is bad for the industry because it means that the business must contract their operations to some extent. Business output suffers from a lower workforce, which can also make it difficult for enterprises to meet market demand.
When unemployment is high, particularly because of a pandemic, the trade suffers.
Right now, businesses that are not essential have reduced staff and reduced to no retail sales.
Operations are in limbo for many companies, and this is definitely not good. For a business, there’s also the consideration of an increased tax due to unemployment. Illinois businesses pay for the unemployment insurance. Moreover, the costs can be $12,000 or higher when there’s a claim filing.
Since the unemployment assessment cost is through the actual employer’s account, unemployment insurance in the subsequent years may rise.
A single case can cost a business $4,000 to $7,000 more per year spread over the course of three years. Small entrepreneurs in the state consider job loss to be part of the business cycle unemployment.
Illinois has paid out over $700 million on joblessness since March, with 750,000 claims processed during the pandemic. Over 102,000 claim filings have been made during the week ending April 18. The number for the week alone is twelve times higher than the entire years’ worth of claims in 2019. The Illinois Department of Employment Security paid a total of $500 million in April.
The state has provided assistance for employees through their primary treasure chest — the Federal Pandemic Emergency Unemployment Compensation program. It allows for federally funded aid for up to 13 weeks after state unemployment benefits have run their course. It’s uncertain how the handling of business unemployment insurance increases will be due to the Coronavirus.
What Is Being Done to Support Businesses?
The enlargement of call center capability and securing a contract with a third-party vendor did help streamline and handle the unemployment insurance claims surge. The new processing power will allow for enhanced filing capacity and capabilities, as many states struggle to process requests in a timely manner. Illinois is also setting up a virtual call center that will enhance business further and nearly double the number of calls that can be processed.
Claimants normally have to wait a week after they’re laid off or lost their job by a business before filing a claim. Since the latter is not related to regular business activity, the waiting period has been waived. The federal funding provides an additional $600 per week for residents of Illinois that meet eligibility requirements.
Illinois Gov. Pritzker announced that returning to normal activity will not occur until at least the end of May. The Governor has extended the stay-at-home order until June 1. A prior modified order signing did allow some nonessential business operations to resume their work on May 1.
Do you think small enterprises will ever recover from this epidemic?
Thomas Quarry is a data scientist and a small business owner that has been impacted by the economic downturn and the stay-at-home orders issued in his state. He also writes as a hobby and is working to help other small companies make sense of the economic crisis.