The US unemployment system continues to suffer from post-pandemic 3-year delays

People wait in line to attend the job fair at SoFi Stadium on September 9, 2021 in Inglewood, California.

Patrick T Fallon | Afp | Getty Images

These days the United States unemployment system It is kind of an anomaly.

Almost three years after the outbreak of the Covid-19 pandemic The worst unemployment crisis in the United States since the Great Depression, The unemployment recovered to near-historic lows. Claims for unemployment insurance have been at or below their pre-pandemic trend for the better part of a year.

However, Americans who need unemployment benefits aren’t getting them quickly — a dynamic that belies the apparent lack of pressure on the system.

The federal government considers the first payment “just in time” if states issue funds within 21 days of the initial benefit claim. In March 2020, 97% of payments were on time; Today, the share is on average 78%, according to US Department of Labor data.

The Department of Labor sees 87% as the measure of success for a timely first batch.

The outcome is even worse for workers who appeal the subsidy decision. For example, less than half — 48% — of lower appeals circuit hearings are resolved within 120 days. The pre-pandemic share was nearly 100%, according to Labor Department data.

The delays are certainly not that bad used to be. In the pandemic era, only 52% got a “just in time” down payment on unemployment insurance, for example. It also varies greatly between states, which offer benefits to laid-off workers, and delays get shorter.

But the Government Accountability Office said in a June report that the delays were still “significant”.

It can have real-world effects: deferred bills, deferred rent, outstanding credit card debt, raided retirement savings, loans from family and friends for cost of living, relying on community food pantries to live before payments arrive, The Government Accountability Office said.

Unemployment experts attribute the discrepancy — the longer delay despite fewer claims to processing — to remnants of the pandemic and state agencies already running with financial vapors heading toward the crisis.

“Although new claims are down, states are still shedding their workload during the pandemic,” said Nick Gwynne, an unemployment insurance advisor for the Center on Budget and Policy Priorities and a former staff director for the House Ways and Means subcommittee that oversees House Ways and Means. unemployment benefits.

Pandemic drives system ‘out of control’

Meanwhile, the CARES Act created new programs to strengthen the safety net: a $600-per-week increase in typical benefits, extensions of benefits for gig workers and others who are not normally entitled to assistance, and an increase in the duration of assistance.

These programs have been renewed and transformed several times between March 2020 and Labor Day 2021.

States were initially doing all this work—managing a flood of claims, taking anxious calls from applicants, implementing new and amending programs, and issuing a warrant An unprecedented amount From financing – with basic staff and resources.

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Administrative funding for state unemployment systems fell 21% between fiscal years 2010 and 2019, according to the Government Accountability Office. (The decrease was greater [32%] after accounting for inflation.)

Federal funding for these programs eventually reached lows dating back to the 1970s in the run-up to the pandemic, said Andy Stetner, deputy director for policy in the Labor Department’s Bureau of Labor for Unemployment Insurance Modernization.

Funding fell 21% in the most recent fiscal year, Stetner said, to $2.6 billion in 2022 from $3.3 billion in 2021.

The downward trend during this time reflects an underlying tension in the system structure. States obtain funding based on administrative workload, such as the amount of claims that states pay.

Nowadays—as in the years after the Great Recession—states receive relatively lower levels of federal funding due to more muffled unemployment claims. About 186,000 people filed an initial benefit claim in the week ending Jan. 21, according to the Labor Department, down from about 200,000 or so who filed a weekly claim at the start of the pandemic.

This reduced funding is building into a morass of remaining administrative work, some of which was sidelined as states scrambled to implement CARES Act programs.

He was placed upside down and is “out of control” on the base, Stetner said.

“The states were so nervous going into the pandemic that they were unprepared,” Stettner said. One of the reasons for this backlog: [States] They had to put off a certain business when all the new claims were coming in, and they’re trying to catch up now.”

Part of the current administrative burden is a kind of forensic accounting for funding issued during the pandemic, said Michele Evermore, a fellow and unemployment expert at the Century Foundation.

For example, states are evaluating the extent to which they may have excessive benefits, she said.

This is especially true of the CARES Act program, which is Pandemic Unemployment Assistance. Some state agencies didn’t realize that they had to re-evaluate—on a weekly basis—the reason a worker qualifies for benefits, whether that be illness, caring for a sick person, childcare, temporary disruption and self-employment. Now, Evermore said, they require PUA recipients to verify that they are indeed eligible for all benefits they have received.

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Criminals are ‘addicted’ to unemployment fraud

Experts said there were other complicating factors.

Countries have also faced historical levels of Forgery. Organized crime rings and crooks hacked state systems to take advantage of the chaos in hopes of accessing relatively rich levels of federal aid.

“The fraudsters have had a big part in making things harder and slower,” Evermore said.

It was a lot of it by identity theft Where criminals steal personal data to claim benefits on behalf of others.

In fiscal 2021, “inappropriate” benefit payments are estimated to have increased more than ninefold, to about $78.1 billion, from $8 billion a year earlier, according to the Government Accountability Office. The amount may exceed multi-year $163 billion Or more, the Labor Department said.

Experts said criminals are still attacking the system. They’ve adopted new tactics, too, such as “bank account hijacking,” Evermore said, in which hackers identify claimants receiving unemployment insurance and divert their weekly cash infusion into a fraudulently new bank account.

“There are some criminals of this nature who are addicted to this and they will keep trying,” Stettner said of the scam.

Countries have cracked down by implementing many fraud controls such as better identity verification. In some cases, these controls have delayed the issuance of legitimate claims in a timely manner. In general, any claim reported for any reason should be examined by someone at government manpower agencies.

It all amounts to a delicate balancing act: protecting money from flowing to criminals or preventing claimants from getting too much money, while trying to get help to people who need it quickly.

What happens to the UI system if we have another recession? It’s a very troubling question.

Nick Gwen

Unemployment insurance advisor for the Center for Budget and Policy Priorities

Agencies have also had to move staff to deal with backlogs in the appeals process, Stetner said, for example, reducing resources to ensure first payments are delivered on time.

Stetner said the Labor Department is working with states to automate procedures, where possible, to boost efficiency.

“There are many countries that are still struggling to achieve this acceptable level of performance,” he added. “It’s not the situation we want to see.”

However, he said he believes “we are moving into the final stages” of the delay.

The system is not prepared for another recession

Things are going in the right direction, Gwen agrees. But amid fears of another economic downturn looming – with the risk of a spike in unemployment – the unemployment system is not in a good position to respond if that happens in the near term.

This result is not a given, of course.

The Federal Reserve is raising borrowing costs for consumers and businesses in an effort to pump the brakes on the US economy to tame high inflation. The central bank sees a path to a so-called soft landing that averts a recession.

“What happens to the UI system if we have another recession?” Gwen said. “It’s a very troubling question.

“I put it all together and this will be a system that is close to being ready for another recession,” he added.

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