States Made It Harder to Get Jobless Benefits. Now That’s Hard to Undo.
Systems that were devised to treat each case as potentially fraudulent are now rushing to deal with millions of newly unemployed people.
(NYT) - The state unemployment systems that were supposed to help millions of jobless workers were full of boxes to check and mandates to meet that couldn’t possibly apply in a pandemic.
States required workers to document their job searches, weekly; to register with employment services, in person; to take a wait period before their first check, up to 10 days.
Such requirements increased in the years following the Great Recession, as many states moved to tighten access to or reduce unemployment benefits. With them, most states cut the share of jobless workers they helped.
Now these requirements have been getting in the way. Effectively, many states have been trying to scale up aid with systems built to keep claims low.
“In a time when pretty much everybody who’s applying should be eligible, we’re working with a system that got us to a 26 percent recipiency rate,” said Steve Gray, the director of Michigan’s Unemployment Insurance Agency. That means Michigan was giving aid to one in four unemployed workers in 2019, following restrictions adopted by the Michigan legislature after the Great Recession. That system, Mr. Gray said, was “built to assume that you’re guilty and make you prove that you’re innocent.”
The crush of claims has demanded of states not just more server capacity and call-center workers, but also an abrupt change in the premise of the safety net: Systems trained to treat each case as potentially fraudulent must now presume that millions have legitimately lost their jobs.
System crashes and website glitches are tied to this challenge, too. Requirements embedded in the architecture of unemployment must be turned off, worked around, or simply ignored.
“If after you submit your application, you receive a message that states you are not covered and your claim has been denied, please disregard,” Kentucky’s unemployment website reads.
“The Department of Economic Opportunity has suspended the requirement to provide work search contacts,” Florida’s system said, in red letters. But forms asking workers to document their job searches remained online for weeks.
The hitches have frustrated Congress’s intent to steer trillions of dollars to workers.
In Hawaii and Indiana, the number of workers who are receiving jobless benefits is relatively low compared with all the initial claims filed. Survey data from Gallup suggests that more workers in several states, including Oklahoma and Colorado, have lost work than are reflected in claims data through mid-April.
And while every other state reported an increase in the number of people receiving unemployment insurance in the second week of April, Florida inexplicably reported a decrease of 162,000 people from the first week of the month.
Once all of these workers get into the system, federal aid will help smooth some of the inequality in benefits across states.
“That was on our minds every single day through all of this,” said Senator Ron Wyden, Democrat of Oregon, who pushed the expansion of unemployment benefits in the CARES Act. “That you could have an unemployed worker in State A getting less help than an unemployed worker in State B.”
Congress pledged additional weeks of federally paid aid, ensuring that workers can receive up to 39 weeks even in states that have shortened their benefits. Congress funded an extra $600 per week, per worker, through July, lifting some maximum state payments as low as $235 to a more livable income. The bill also expanded benefits to self-employed and gig workers who make up more of the labor force in Florida, California and New York.
But it is harder amid a crisis for Congress to counteract the subtler differences between states in access to aid.
“What you can’t see in numbers is how hard it is to apply for unemployment insurance, state by state,” said Stephen Wandner, a senior fellow at the National Academy of Social Insurance and a former U.S. Department of Labor official.
Michigan has tried to undo some of its restrictions. Gov. Gretchen Whitmer has temporarily pushed the maximum benefit duration back to 26 weeks, what the state offered before the cuts passed in 2011. She suspended criteria limiting which workers qualify and stretched the eligibility window to file a claim.
Michigan has now fielded claims covering more than 20 percent of its work force, the highest share of any state. But the process has confounded many.
Loretta Lee, who lives in Detroit, was furloughed in late March from her job in supply chain management for a manufacturer. The state unemployment site kept crashing; the system told her she was missing required information. She called an overloaded call center more than a thousand times. She called her U.S. senator, then her state senator.
“I felt like a child,” said Ms. Lee, 32. “I was so helpless.”
Finally, she reached a state worker by phone who told her to send in a copy of her pay stub — by fax, marked “Attention: Pam.” And so, wearing a mask, she took the pay stub to a hotel concierge desk, entrusting her personal financial information to a woman she did not know who had access to a fax machine in a pandemic.
‘Layer after layer, adding red tape’
In the last recession, most states depleted their unemployment trust funds and had to borrow from the federal government. As the economy improved, they had two options: raise taxes on employers who fund unemployment insurance, or cut benefits to workers.
Many chose the latter. Nine states cut the length of time workers could remain on unemployment. Others raised the minimum income to qualify, or cut weekly payouts.