Why there is an administrative crisis with unemployment benefits

Unemployment benefits are specifically geared to provide benefits when there is a sudden loss of work, including catastrophic and widespread job loss. Indeed, the story of how unemployment was started in Wisconsin bears this point out in detail. It is no accident that unemployment started in the Great Depression.

So, the meltdown in unemployment systems in which phone systems and on-line systems are crashing and breaking is particularly noteworthy. Unemployment is supposed to be as simple and as easy to manage as possible. That simplicity is one of the reasons unemployment was considered to be one of the central mechanisms for financial relief during this pandemic.

NELP reports how numerous states have failed to meet these basic and essential requirements for effective unemployment administration.

States Choosing to Reduce Access and Cut Benefits Led to Current Dysfunction

Washington, DC — As millions of unemployed workers across the country struggle to access the unemployment benefits they desperately need, a new report from the National Employment Law Project examines the poorest-performing states and their policy choices following the Great Recession that led to the current crisis. By cutting the number of weeks of benefits, slashing benefit amounts, or imposing barriers to obtaining and keeping UI benefits, states such as Florida, North Carolina, and others have badly eroded one of the most important tools for countering recessions. Jobless workers are now bearing the brunt of those poor policy decisions.

“This perfect storm of unemployment benefit cuts and access restrictions so destabilized the foundation of the unemployment insurance program that we are now witnessing its dysfunction in real time,” said Michele Evermore, a senior policy analyst and researcher with NELP, and author of the report.

Broken unemployment insurance infrastructures — particularly in states like Florida, which created an application process designed to discourage workers from accessing their earned benefits — are now wreaking havoc for jobless workers who need those benefits but are unable to access them. As of April 18, the state had only processed 5 percent of the claims submitted since the beginning of the pandemic, with no count of how many workers were unable to file at all.

“Policymakers must learn the lessons from past and present mistakes and ensure that state governments can provide unemployment insurance that meets the needs of all workers — both in terms of delivering adequate emergency support and by making sure that all workers have access,” said Evermore. “We know that benefit duration cuts have a disparate impact on communities of color, as Black and Latinx workers face unemployment rates at unwaveringly higher levels.”

NELP analyzed the value of states’ weekly benefits versus the average weekly benefit nationally (not taking into account workers who are unable to access benefits) and found the following:

  • In Florida, the average weekly benefit of $252.87 replaces only 38 percent of pre-unemployment average wages. If the state’s 339,150 insured unemployed workers had been paid just the national average benefit of $370.82, that would have meant $40,002,742 in additional benefits paid to claimants in Florida just for the week ending April 4, 2020.
  • In North Carolina, the average weekly benefit was $264.70 in the third quarter of 2019. If the 359,151 insured unemployed workers in the state for the week ending April 4 were paid the national average of $370.82, then $38,113,104 more in benefits would have been paid to workers in the state.
  • If Indiana paid the national average in weekly benefits, the 152,609 insured unemployed workers for the week ending April 4 would have been paid $10,807,769 more in benefits in that week alone.
  • In Arizona, if the 116,782 insured unemployed workers in the state in the week ending April 4 had received just the national average benefit, that would have put an additional $16,003,805 in the pockets of Arizonans that week alone.
  • In South Carolina, if the $273.74 weekly benefit were just raised to the national average weekly benefit, the 125,376 insured unemployed workers in the state in the week ending April 4 would have received an additional $12,171,502 in benefits that week alone.
  • In Louisiana, if the 213,338 insured unemployed workers in Louisiana in the week ending March 28 had been paid the national average benefit, they collectively would have received an additional $33,031,122 in benefits that week alone.
  • If Tennessee’s 206,622 insured unemployed workers had received the national average benefit in the week ending April 4, workers in Tennessee would have received an additional $27,003,429 in benefits that week alone.

“We’ve reached the point where it’s too late to prepare states in advance for the massive tsunami of unemployment that is rocking the economy and state unemployment systems,” said Evermore. “But we’re encouraged to see that some states that had previously implemented harmful cuts and restrictions are now, at least temporarily, restoring benefit durations and are working diligently to get payments to unemployed workers.”

As the report highlights, now is the time for states to strengthen their UI programs and ensure that workers can access meaningful benefits.

While not mentioned in the press release quoted above, Wisconsin figures prominently in the actual report:

Wisconsin is another state in which lawmakers chose to erect barriers to UI benefits. The state increased work search requirements from two per week to four per week, and five for workers who are unemployed for seven weeks or more (if the agency makes a determination that the claimant “is placing unreasonable limitations as to salary, hours, or conditions of work in accepting new work or is not engaging in work search efforts as would a prudent person who is out of work and seeking work”). It also established a voluntary system for employers to report failed drug tests to the state agency in order to more easily disqualify workers. It reduced wage levels that qualify as suitable work, increased penalties for fraud determinations, and eliminated good cause for failure to appear weekly to report information about benefits and recipients’ demographic characteristics.

While then-Governor Scott Walker touted these reforms and the effect they had on UI trust fund solvency, Black workers were criminalized by the system while the state’s Black/white unemployment gap is among the worst in the nation. While 29 percent of unemployed workers receive benefits — a little above average — it marks a steep decline from the 50 percent recipiency rate in 2007. The average weekly benefit of $323.90 replaces 43 percent of previous income.

As already noted here, the numerous filing requirements Wisconsin has instituted remain in place during this pandemic even though the point of these requirements — four job searches a week — is currently waived.

So, Wisconsin, which created unemployment during the Great Depression, now finds itself in the ranks of Florida and other states that have made the claim-filing process increasingly harder and more complicated in complete disregard of the whole point of unemployment benefits: to provide needed income when work is not available.

Sad porg

4 thoughts on “Why there is an administrative crisis with unemployment benefits

  1. I have been without a payment from unemployment since September of last year due to not having many wages to collect. My benefit year is still open and is until may 20,2020. It’s my understanding that I qualify for the peuc emergency 13 weeks extension retroactive to April 5th and will get the additional 600 a week on top of that. Just curious as if you have any idea when they plan on implementing this program. Seems like it should be pretty easy compared to PUA which they are taking applications for now. My stimulus check was garnished for back child support so need money asap. Any idea what’s going on and when I can expect a payment. Thanks

    • PEUC should be available to anyone who has exhausted a benefit year. PUA benefits should be available to anyone who has insufficient earnings to qualify for regular unemployment. I suggest calling to find out what DWD is doing and to file a PUA claim. You may also want to get your state rep and senator involved. See https://openstates.org/find_your_legislator/ to find who those folks are and then contact them about your situation.

  2. Pingback: Delays, part 1 | Wisconsin Unemployment

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