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States are choosing employers over workers by using COVID relief funds to pay off unemployment insurance debt: Policymakers shouldn’t be afraid to increase taxes on employers to improve unemployment insurance

Because the COVID-19 pandemic and ensuing recession led to skyrocketing unemployment rates in early 2020, 23 states were forced to take out federal loans to continue paying out unemployment insurance (UI) benefits.



Because the COVID-19 pandemic and ensuing recession led to skyrocketing unemployment rates in early 2020, 23 states were forced to take out federal loans to continue paying out unemployment insurance (UI) benefits. While interest was initially waived on these loans, these debts started to collect interest after Labor Day of 2021. In recent months, many states have chosen to use federal fiscal relief funds given to state and local governments by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the 2021 American Rescue Plan (ARP) to pay off accumulated UI trust fund debt.

This blog will detail why this is a poor use of federal recovery funds. Our main arguments are:

  • Paying off UI trust fund debt accumulated in the past with fiscal relief funds means that these funds are not being used to support current investment or employment,
    • Several key areas of state and local government investment have been deprived of funding for over a decade—using ARP relief funds to make up for this past investment deficit would spread the benefits of the fiscal aid much more broadly.
    • State and local government employment remains steeply depressed from the COVID-19 economic shock. Restoring these jobs—and the full value of services these workers provided—should be a much higher priority for these governments than paying off UI debt.
  • Paying down accumulated trust fund debts should be done by collecting more revenues from the employer payroll taxes earmarked for the UI system. These taxes have been kept far too low for too long and the result has been a dysfunctional UI system in many states.


The expanded UI programs created in the CARES Act were crucial in providing relief to millions of people and creating a foundation for economic recovery. With unemployment rates in April 2020 reaching levels unseen since the Great Depression, the new and expanded UI programs propped up the inadequate preexisting state UI system and kept millions afloat by boosting household income. After being continued (albeit at less-generous levels) by the American Rescue Plan (ARP) in March 2021, the last of the federal UI programs expired at the beginning of September this year. This expiration cut off 7.5 million benefit recipients instantly and is projected to lower annual incomes by $144 billion.

Besides the temporary continuation of the pandemic UI programs, the ARP also allocated $350 billion in federal fiscal relief to state and local governments. The stated aims of this tranche of relief was to help stimulate demand to boost economic recovery and to make up for past public investment deficits (i.e., to help “build back better”). While many states are using ARP funds to support employment and expanded investments in areas like access to justice, arts and tourism, broadband, education, housing, workforce development, and more, other states have used ARP funds for less-useful purposes.

Given the huge value provided to workers by a well-functioning UI system, earmarking ARP fiscal relief to UI trust funds may seem like a useful way to spend these funds. However, paying down past debts does not support current employment or investment—and this support will be crucial for state and local governments in the coming years.

Further, history clearly shows that using federal relief funds to pay down accumulated UI trust fund debts is primarily a way to avoid raising employer-side taxes that finance state UI systems. Eventually, if we want a robust UI system that protects workers, we need to collect more money from employers through UI taxes—and doing it now is a much better way to pay down trust fund debts accumulated in the past 18 months than using federal relief funds.

Figure A

So far, 16 states (shown below) have collectively allocated $15.7 billion of ARP dollars toward their state UI trust funds. This comes after 23 states already used CARES Act funding to supplement their UI trust funds.

Table 1
Table 1

If a healthy UI system is a progressive good, why isn’t paying down accumulated UI trust fund debt a progressive use of American Rescue Plan funds?

It has been repeatedly argued that our current compounding crises necessitate an equitable recovery, where funds should be centered on the needs of working people and people marginalized and subordinated in our society. Using ARP funds to temporarily boost UI generosity in the face of continued pandemic conditions, or to modernize state UI systems to allow benefits to be paid in a timely and fair way, or to make a down payment on structural UI reform to make the system more protective of jobless workers, would all be admirable uses of ARP fiscal relief. However, using these funds to pay down accumulated debt provides no help to today’s workers relying on UI, and is instead just an insurance policy against employers having to pay higher taxes to finance UI in coming years. Given that these taxes are trivially low in dozens of states, protecting employers from any rise is hence not a progressive priority.

Normally, UI is funded by a mixture of state and federal taxes levied on most employers, where employers pay a federal UI tax authorized by the Federal Unemployment Tax Act (FUTA) and a state unemployment tax as determined by individual state law. The FUTA tax rate is 6.0% on the first $7,000 of wages each employee is paid. However, employers are offered a tax reduction of up to 5.4 percentage points off this FUTA rate for paying their taxes on time (employers in states that have outstanding federal loans often do not qualify for this FUTA reduction). This means that some employers pay a meager $42 per year per employee in FUTA taxes.

Although states can borrow from the federal Unemployment Trust Fund (UTF) if their state unemployment taxes do not cover current benefits, they must repay their debts within a few years, which they have historically done by increasing the state unemployment tax rate for employers. States often face shortfalls because state unemployment taxes are often very low and many employers pay very little to finance UI. In 2020, employers paid on average $267 per employee, a 4% decrease from 2019. Moreover, an astonishing 75% of employers paid no more than $0.50 per every $100 they paid in employee wages.

Given how low UI taxes are on employers, using ARP funds to pay down UI trust fund balances simply to avoid increasing today’s often-trivial employer contributions is not a high-value or equitable use of ARP fiscal relief. The allegedly onerous cost of UI taxes for employers, particularly on small businesses, is the primary reason given for diverting ARP funds to state UI funds. This claim clearly exaggerates the burden on employers and is particularly harmful for progressive reforms because adequate UI taxes are vital for creating a healthy UI system.

Lessons from the Great Recession

We only have to look back to the Great Recession to see workers being hurt from the reluctance to increase UI taxes, when states had to take on federal loans to pay unemployment insurance. Between 2007 and 2012, 36 states borrowed federal dollars to pay unemployment benefits, more than during any previous recession. The downturn, with its historically high unemployment levels for extended periods of time, pulled the rug from underneath highly ill-prepared state UI systems. In 2007, only 19 state UI systems had achieved financial solvency, compared to 37 before the 2000 recession.

Having incurred debt to cover benefits during the worst of the recession, many states took drastic steps to avoid increasing UI taxes to pay back federal loans, at the expense of workers and the long-run health of their UI systems. To refill their UI coffers more quickly, nine states reduced the length of their unemployment benefits package below 26 weeks while 14 states froze or reduced their maximum weekly unemployment benefits. The decision to cut UI during an economic recovery was unprecedented.

Tellingly, states that cut UI duration were not particularly better off in their trust fund solvency during the recession but did have histories of cutting safety net programs. Cutting UI duration caused unemployed workers to lose an average of $252 a week, while also undermining the macroeconomic benefits associated with strong UI benefits. States also lowered enrollment by reducing eligibility and adding additional barriers for UI applicants.

In 2017—eight years into the recovery—UI taxes were at their fourth lowest levels in the history of the UI system, and despite cruel and unprecedented cuts to benefits, aggregate trust fund balances were only half of what they had been in June 2000. State lawmakers’ unwillingness to place higher UI taxes on employers not only contributed to the ill-prepared state of UI before the Great Recession but also failed to adequately strengthen UI systems before the pandemic recession, all while making decisions that harmed workers and dragged down the recovery.

Better uses for American Rescue Plan funds

Using federal recovery funds to top up UI trust funds does not actually fix any of the well-documented, long-run problems with UI. The expanded UI programs created in the CARES Act propped up the inadequate preexisting state UI system with federal funds and kept millions afloat by boosting household income. The three federal pandemic UI programs were created to meet three very specific shortcomings in the existing UI architecture: eligibility (too few people were eligible, especially gig workers and independent contractors), duration (UI benefits didn’t last long enough), and generosity (the small benefit amount was barely enough to cover costs). If states really want to equitably use ARP funds on UI, they should spend the funds addressing these problems in their UI programs, as well as upgrading outdated UI technology and boosting administrative staffing capacity. Using ARP funds to pay down UI debts simply kicks the can down the road for redesigning these systems and ensuring they’re adequately financed.

Using ARP funds to pay down UI trust fund debt accrued in the past also takes away money that could be used in the present to support public employment and strengthen public goods and services. State and local government employment is still down almost a million jobs from before the pandemic, with the majority of those missing jobs in K-12 education. These funds could also be used to eliminate barriers to accessing both UI and other social services, and increase direct cash transfers. In the end, not only does direct spending on public services and aid to households offer financial relief and recovery, they have also been shown to have a stronger macroeconomic stimulus effect than aid to businesses like tax cuts. Using ARP funds on public services and people, rather than giving an employer tax cut through paying off UI funds, is good economics and the right thing to do.

In its role both as social insurance when people lose their jobs and as a macroeconomic stabilizer to boost aggregate demand, UI has never been more successful than during the 2020-2021 downturn. Compared to the 2007-2009 recession, UI as a share of personal income was four times as high in 2020-2021. Given its success and widespread usage, especially by workers previously excluded from the UI system, allowing these programs to expire with no replacement was a harmful decision.

Using critical ARP funds meant to stimulate the economy and foster longer-term economic growth in order to replenish UI trust funds is also a mistake. States shouldn’t be afraid to increase taxes on employers or simply have more employers pay the full existing tax rates in order to create sustainable UI systems. Workers deserve genuine social protection, including a robust unemployment insurance system.

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TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory..



TV Show Mysteriously Deletes Poll After Vast Majority Oppose Mandatory Vaccination

Authored by Paul Joseph Watson via Summit News,

A major morning television show in the UK deleted a Twitter poll asking if vaccines should be made mandatory after the results showed that 89% of respondents oppose compulsory shots.

Yes, really.

Good Morning Britain, which often tries to set the news agenda, posted the poll which asked the public, “With Omicron cases doubling every two days, is it time to make vaccines mandatory?”

The last screenshots Twitter users were able to obtain before the poll was wiped showed 89% oppose mandatory vaccinations, with just 11% in favor after a total of over 42,000 votes.

People demanded to know why the poll had been pulled, although it wasn’t exactly hard to guess.

Why did you delete this poll, is it because you were asked? Or because it shows the people don’t support this s**t, this tyrannical future your colleagues seem to want. We see you,” commented one respondent.

“Guess that wasn’t the answer they were looking for,” remarked another.

Good Morning Britain has failed to explain why it removed the poll.

However, it’s unsurprising given that the broadcast has been a vehicle for pushing pro-lockdown messaging since the start of the pandemic.

For most of that time, it was hosted by Piers Morgan, an aggressive proponent of lockdowns, mandatory vaccines and face masks.

The show also regularly features Dr. Hillary Jones, someone who at the start of the pandemic warned that face masks could make the spread of the virus worse, before getting the memo and doing a complete 180.

*  *  *

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Tyler Durden Thu, 12/09/2021 - 03:30

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UK PM announces tougher measures amid more Covid cases

In total, the UK recorded 51,342 new COVID-19 cases in the last 24 hours…
The post UK PM announces tougher measures amid more Covid cases first appeared on Trading and Investment News.



In total, the UK recorded 51,342 new COVID-19 cases in the last 24 hours on Wednesday and a further 161 people have died within 28 days of testing positive for the novel coronavirus

UK Prime Minister Boris Johnson on Wednesday announced tougher measures such as work from home where possible, expanded face mask rules and use of COVID-19 vaccination certificates for entry to venues, as another 131 cases of the new Omicron variant were recorded, taking the total to 568.

The UK government’s Plan B winter strategy comes in force in stages starting this Friday, in an effort to slow the spread of the highly transmissible variant, which Johnson said shows a doubling time of two or three days.

Addressing a Downing Street media briefing, he said all signs indicate that Omicron transmits more rapidly than the previously dominant Delta variant of COVID-19.

From this Friday, we will further extend the legal requirement to wear face masks in public indoor venues, including theatres and cinemas. We will reintroduce guidance to work from home from Monday work from home if you can, go to work if you must but work from home if you can, said Johnson.

We’ll also make the NHS COVID pass mandatory for entry into nightclubs and venues where large crowds gather, including unseated indoor venues with more than 500 people, and seated outdoor venues with more than 4,000 people and any venue with more than 10,000 people, he said, adding that this will come into effect from next week.

Johnson once again called on everyone to come forward for their COVID vaccinations, including all adults now eligible for a third top-up booster dose.

We must be humbled in the face of this virus. As soon as it becomes clear that the boosters are capable of holding this Omicron variant and we have boosted enough people to do that job of keeping Omicron in equilibrium, we will be able to move forward as before. Please everybody play your part and get boosted, he said.

The government had so far stopped short of enforcing Plan B and issued guidelines for compulsory face masks on transport and some indoor settings, such as shops.

We now have, in the Omicron variant, a variant that is spreading much faster than any that we have seen before. That is why I ask everybody to go to get their booster jab as soon as they are called to come forward, said Johnson, when asked about Plan B in Parliament on Wednesday.

In total, the UK recorded 51,342 new COVID-19 cases in the last 24 hours on Wednesday and a further 161 people have died within 28 days of testing positive for the novel coronavirus.

Since the first jab was delivered one year ago today, our phenomenal vaccine rollout has saved hundreds of thousands of lives and given us the best possible protection against COVID-19, said Johnson.

Our fight against the virus is not over yet, but vaccines remain our first and best line of defence against the virus so the best way to continue to protect yourself and your loved ones is to get behind the vaccine programme and get boosted as soon as you’re eligible, he said.

The post UK PM announces tougher measures amid more Covid cases first appeared on Trading and Investment News.

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Canada’s Top Renewable & Clean Energy Stocks for December 2021

There’s no questioning the fact that as a population we’re moving towards cleaner, greener forms of energy. Fossil fuels will be a thing of the past, and the world will benefit immensely from it.How long will it take before Canadian renewable companies…



There's no questioning the fact that as a population we're moving towards cleaner, greener forms of energy. Fossil fuels will be a thing of the past, and the world will benefit immensely from it.

How long will it take before Canadian renewable companies dominate the energy scene? It's difficult to say. But if I were to guess, not long at all. That's why you need to have a look at these Canadian stocks before it's too late.

The renewable energy vs fossil fuel debate is a heated one

The effects of fossil fuels on the climate and climate change in general is an extremely touchy subject, and arguments from both sides tend to pack a sizable punch in terms of support. Plus, much like Canadian gold stocks, fossil fuel companies rely heavily on a commodity and can be quite cyclical.

But all while this is happening, green energy companies here in Canada are quietly amassing large asset bases and production capacities. It's an investment gold mine.

Your best bet as an investor is to funnel out the noise and instead take a position in a strong TSX listed renewable energy stock.

Because it's a matter of when, not if these companies take over as the primary method of energy generation

And while people sit on the sidelines, squabbling over if swapping to renewables is worth it, you can be making boatloads of money off of it.

Don't believe me? These clean energy companies have crushed the returns of the TSX Index.

So if you're new to buying stocks here in Canada, you may want to know what exactly these Canadian renewable energy companies do. Lets go over it.

What exactly do Canadian renewable energy companies do?

Renewable energy is defined as such:

"energy from natural resources that can be naturally replenished within a human lifespan." - Natural Resources Canada

Renewable energy companies provide sources of power that are often considered cleaner and more sustainable including but not limited to:

  • Hydroelectric
  • Wind
  • Solar
  • Biomass
  • Hydrogen

Renewable energy provides nearly 20% of Canada's energy supply, with hydroelectricity accounting for over half of that.

A common misconception with Canadian green energy companies? 

Renewable companies aren't the new kids on the block, despite many thinking so.

In fact, they have been around for quite some time now, and as a result clean energy stocks provide stable and reliable cash flows, much like regulated utility giants Fortis, Canadian Utilities and Emera.

The end result?

Clean energy companies are able to provide strong dividends to go along with upside potential in an ever growing industry.

Let’s take a closer look at four renewable energy companies we think are the cream of the crop here in Canada for 2021.

As requested by many readers, we've also added a solar energy company to the list in this most recent update. Solar stocks in Canada have been around for a while, but have remained relatively unknown due to high costs, and investors are starting to gain interest

What are the best Canadian renewable energy stocks?

4. Canadian Solar Inc (NASDAQ:CSIQ)

One of the primary reasons we've never included a Canadian solar company on this list of renewable energy stocks is the fact that the best of the best trades down south on the NASDAQ.

However, due to increasing demand we figure we'd start talking about Canadian Solar Inc (NASDAQ:CSIQ).

Solar stocks in general have surged as of late, but since its lows in March 2020 Canadian Solar has shot up over 81%.

The stock has dipped significantly from all time highs however as renewable energy companies have gone through a significant correction. But, there is still a bullish attitude.

We think investors, and analysts for that matter, are finally starting to see the potential in the once small cap Canadian (but U.S. traded) company.

Canadian Solar benefits from a fairly low cost of production and has a decent amount of projects planned for the future.

Initially, solar power faced a lot of criticism. Production costs were extremely high, and it wasn't looked at as a permanent solution to dirtier forms of power.

But the fact is, we wouldn't even need to capture one-hundredth of a percent of the energy hitting the earth in a year to be able to scrap every other form of energy generation. And as costs of production come down, it's becoming a more feasible clean energy generation method.

Canadian Solar has been a very frustrating stock for those buying it as a value investment.

But interestingly enough, even with a 81% run up, Canadian Solar is still fairly valued considering the future of solar energy.

Trading at only 0.38 times 2021 expected sales and 14.23 times 2021 expected earnings, valuations are not outrageous. The company has been fairly inconsistent with its growth, which is why the market isn't really willing to pay a high earnings multiple. But again, most of its inconsistencies have been as a result of what we've stated above.

Growth is expected to pick back up in 2022 and 2023, and 2023 expected revenue of $7B USD would mark a 100% increase from 2020 revenue of $3.47B. There is promise in the industry, and at current valuations the company is certainly worth a look.

Keep in mind however, this is the only renewable energy stock on this list that doesn't currently pay a dividend, and we would classify this stock as the highest risk of the bunch as well.

CSIQ 5 year performance vs the NASDAQ:


3. Northland Power (TSX:NPI)

Northland Power Logo

Northland Power (TSX:NPI) is a pure-play renewable energy company, and one that has been in business for a long period of time. The company was established in 1987, and operates nearly 2.8 GW of electricity, with potential future capacity in excess of 5 GW.

Northland has witnessed some incredible growth in terms of earnings over the last 3 years with a compound annual growth rate (CAGR) in excess of 30%. The company has also managed to more than double revenue since 2015.

The bulk of the company's renewable operations are located in Eastern Canada.

In fact, the farthest the company reaches out west are two facilities in Saskatchewan - its Spy Hill facility with 86 MW of production and its North Battleford facility, with 260 MW of production. Both of these facilities generate power by burning natural gas and full contracts are established until 2036 and 2033 respectively.

The company has a total of 27 assets, 2 of which we've already talked about. With 19 facilities in the province, Northland has a high percentage of its assets in Ontario. Quebec has 2 wind farms, while the Netherlands and Germany have one wind farm each, Netherlands being offshore.

The renewable company closed on its acquisition of EBSA back in September of 2019, a Colombian regulated utility company for around $1.05 billion. EBSA serves nearly half a million customers, and its revenue is highly regulated, thus highly reliable. It also provides Northland Power with strong revenue outside of North America.

In terms of performance, Northland Power, at least over the last year and a half, has not disappointed. Much like other Canadian renewable energy stocks, it was hit hard in the correction at the start of 2021. However, it held on better than most and didn't witness the volatility that many small/micro cap renewable companies did.

The company currently has a yield in the high 2% range and a payout ratio in terms of earnings of 104%. This payout ratio looks high, however the dividend is well covered by cash flow at 16.09%.

Northland Power's lack of dividend growth is one of the primary reasons it falls short on this list. Especially considering the company has ample room to grow it.

But, don't let that fool you, this is still a very strong renewable energy stock, one that has actually faced some recent weakness due to seasonal and temporary issues with its windfarms.

NPI.TO 5 year performance vs the TSX:

TSE:NPI vs TSX Index

2. Brookfield Renewable Energy Partners (TSX:BEP.UN)

Brookfield Renewable Partners

Brookfield Renewable Energy Partners (TSX:BEP.UN) is another pure-play renewable company and is one of the fastest growing by a landslide. The company is expected to grow earnings at a rate of nearly 40% over the next 5 years.

To add to this, the company is already the fastest growing pure-play renewable energy company in the country with a compound annual growth rate of 10.71%.

The company has over 20,000 MW of capacity and just shy of 6000 facilities in North America, Europe, Asia and South America.

The company's goal is to deliver shareholders annual returns in the 12-15% range. Thus far, it has more than accomplished its objective.

The company's portfolio consists of wind, solar, storage facilities and distributed generation and most importantly, hydroelectric, which makes up over 62% of its portfolio. An interesting note, this is down from the 75% that was noted last time we updated this article, a sign the company is diversifying its asset base.

Back in March of 2020, the company entered an agreement to buy Terraform Energy in an all stock deal. Why are we still mentioning this year later? Well, this purchase made Brookfield Renewable Partners the biggest pure-play renewable energy company in the world.

The company pays a generous dividend, north of 3%, and the dividend accounts for only 80%~ of funds from operations.

Management has stated they want its dividend to grow by 5-9% annually over the next 5 years. This would be an increase over its past results, so it will be interesting to see how the company performs.

Renewable companies faced a significant correction in 2021, which will be evident in the performance chart below. In our eyes, all this did was make Brookfield Renewables more attractive.

In our last update of this piece, we had stated that valuation was one of the main reasons it was number 3 on this list. Well, we've bumped it up to number 2 now due to its recent correction.

The company also set up a Canadian corporation, BEPC, to be the "equivalent" to the partnership BEP.UN. This is primarily a tax consideration, one that you'll need to figure out on your own which one is best for you.

Brookfield Renewables 5 year performance vs the TSX:


1. Algonquin Power (TSX:AQN)


Algonquin Power & Utilities (TSX:AQN) is a diversified generation, transmission and distribution utility company. The company provides rate regulated natural gas, water, and electricity generation, transmission, and distribution utility services to over 1 million customers in the United States and Canada.

The company is engaged in the generation of clean energy through its portfolio of long term contracted wind, solar and hydroelectric generating facilities representing more than 1,600 megawatts (MW) of installed capacity.

There are a few things we really like about the company, but there's one thing that stands out with Algonquin, and that is its growth rates.

Algonquin is one of the fastest growing utility companies on the TSX Index. In fact, the company grew earnings by 33% in 2020, and prior to a very unfortunate one-off event in Texas that ended up costing the company $55 million, analysts expected strong growth in 2021 as well.

They've changed their tune now, and overall it will be a flat or even shrinking year for Algonquin. But, it's important to understand that this is very temporary, and we'd expect the company to get back to growth in 2022. In fact, the company expects to inject $9.4B USD into capital projects through 2025, adding more than 1.6 GW of capacity.

2021 aside, you're not going to find many utility companies on the index that provide this kind of growth, especially one that offers a rock solid dividend to go along with it.

Algonquin, at the time of writing, yields north of 4%. In terms of earnings this works out to be a payout ratio of around 40%.

With a dividend growth streak of 10 years, the company has proven to be capable of consistently raising its dividend. In fact, Algonquin is one of the few Canadian Dividend Aristocrats that raised the dividend during the COVID-19 pandemic.

Algonquin is a top 5 holding in one of Canada's biggest utility ETFs, and pays its dividend in US dollars, providing an even more attractive proposition to Canadian investors.

AQN.TO 5 year performance vs the TSX

TSE:AQN vs TSX Index

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