Can states finally fix their unemployment systems?
Last week’s jobs report was full of good news, with 916,000 Americans finding work in March. But weekly jobless claims were also higher than expected, with 719,000 new jobless claims.
The economy is rebounding, but there are still several sectors that will take time to recover. This means that millions of Americans will continue to need help. They will get it, at least until September 6. Just days before the enhanced federal benefits expired, they were extended by the latest stimulus package. The cost of the extension was $ 260 billion.
At this point, the majority of unemployment beneficiaries are receiving their checks either through enhanced federal benefits or through Pandemic Unemployment Assistance (PUA), a program created by Congress last year to provide allowances for workers who were not previously covered, such as concert workers or the self-employed.
No matter how generous the benefit levels are, however, the money is only useful if it reaches the beneficiaries in need. Over the past year, too many states have failed this test, with their systems overwhelmed both by the sheer volume of applications and the challenges created by adding new types of benefits and qualifications.
“It is crucial that we have an effective unemployment insurance program,” says Del. Lorig Charkoudian, State of Maryland. “People are suffering and need the money they put into the system. It’s also a really crucial macroeconomic counter-cyclical tool, pumping money into the economy as quickly as possible. “
Millions of the unemployed have faced severe frustration in 2020 and this year, unable to log into systems or having to wait weeks and months for responses on the status of their claim. “At this point, most states are not meeting federal standards for paying benefits within 14 to 21 days,” says Nzingha Hooker, a lawyer with the National Employment Law Project, a progressive research and advocacy group.
Charkoudian sponsored a bill that would speed up turnaround times, raise standards of service to consumers, and require the Maryland Department of Labor to maintain sufficient staff to ensure applicants can speak to a human being. This would require 92% of requests to be processed within 21 days and establish a single point of contact for requesters whose requests are not resolved within eight weeks. In addition, the bill would link job seekers to the state health insurance stock exchange.
“Structurally, the ministry has not done it right,” says Charkoudian. “The department needs to put in place the right structures to maximize its ability to deliver resources to people. “
Unemployment is a mixed federal-state program. Most of the burden of paying for administration falls on the federal authorities. This is one of the reasons states have been unwilling to pay for updates to their squeaky computer systems. The other is that, until last year, they didn’t see the need for it. It made no sense for lawmakers to spend $ 45 million to upgrade a system that, before the pandemic, could have processed 250 requests per week.
Hooker says states are now taking action to modernize their information systemslike opening 24-hour access to call centers or taking the simple step of allowing people to leave messages. “A lot of these delays are not due to outdated computer systems,” she says. “Some of the states that were among the first to obtain benefits used old COBOL programs”, Referring to the archaic programming language on which many systems still rely.
New federal benefit levels and programs have added complexity to the process, she notes. States have also failed to fully protect themselves against fraud. Last week the Government Accountability Office reported that states made more than $ 3.6 billion in PUA overpayments from March 2020 to February, plus an additional $ 2.6 billion in traditional unemployment insurance overpayments. Other estimates of the amount lost due to fraud are much higher, rising in the 40 billion dollars range and beyond.
Cash-strapped, a total of 20 states borrowed $ 50 billion from the federal government to pay for benefits. Despite the influx of federal aid to the states included in the stimulus package, paying down that debt is unlikely to be the first order of the day. These loans are, at least for the time being, interest free.