The Century Foundation has released an extensive report on October 5th about the efforts to modernization unemployment systems. This report is timely because, first, unemployment has become a major part of the economic response to the pandemic. After all, 695,000 new claims in October 1982 was the previous highest number of initial claims filed in a week. With the pandemic, new claims exceeded 6.6 million for two weeks in a row and have been more than 2 million every week since.
Second, in Wisconsin the old mainframe system for handling unemployment claims has been a featured explanation for why processing of clams has taken so long.
Note: While the backbone for Wisconsin’s unemployment system is an old mainframe, Wisconsin has in fact instituted at the front end a great deal of the modernization efforts done in other states (and Wisconsin has gone even further than many other states). For instance, Wisconsin instituted a detailed on-line only initial application and weekly certification process. So, while Wisconsin has not truly modernized its claim-filing system, it has incorporated many, many of the changes connected to modernization at the front end that employees see and deal with when filing their unemployment claims.
As this report indicates, modernization has hardly been the solution for delays in processing unemployment claims. Here are some key findings:
This analysis shows a systematic connection between modernization and the increasing rates of denials of those who apply for benefits, but not a statistically significant difference in state recipiency rates. In other words, modernization has presented additional challenges for those who make the effort to apply for benefits.
Report at 36.
Once the analysis is limited to those workers who have applied for UI benefits, the impacts of modernization are stark. Among modernized states, the number of unemployment insurance denials increased by 16.7 percent from 2002 to 2018.
Report at 37.
Denials relating to work search and availability to work are driving a wedge between the states. The increase in denial rates among modernized states is driven by one type of denials — nonseparation denials. Nonseparation denials typically occur when an unemployed worker is found to have failed to meet the law’s requirement for being able and available for work and searching for a job. Nonseparation denials include cases when a worker fails to comply with ongoing eligibility requirements for UI like certifying their weekly work search activities or failing to report to a required appointment with a job counselor. Modernized systems have brought significant changes to the determinations of eligibility for these questions, including the ability to ask more detailed questions to claimants about their availability to work and more regularly request names connected with job search activities. As we learned from the stakeholder feedback in our case studies, these online systems can be more difficult to navigate than the phone-based systems that they replaced.
Report at 37 (footnote omitted, emphasis in original).
Modernization clearly impacts the quality of nonmonetary determinations, as sixteen out of the twenty states analyzed did worse than the national average. In addition, just over half of modernized states also experienced a decline in their ability to move through all the steps of the determination process and deliver a payment on time. Future modernizing states should be aware that changes to businesses processes that came along with modernization can slow state payment times during and can lead to declines in quality.
Report at 39.
In the main, modernization has led to making unemployment more difficult and inaccessible to workers:
While not in the report, the authors indicate several additional issues that all of us should pay attention to in regards to modernization of unemployment claims-filing:
- Even after modernization, claims filed by phone continue to occur at a consistent rate. So, phone systems remain vital even with new kinds of on-line claim-filing have been put into place (despite the lack of broadband access in this state, Wisconsin ended the option to file claims by phone in 2017).
- Modernization should ensure 24/7 access to the new claim-filing system as well as ensure equivalent access to that system through smart phones.
- Modernization should create mechanisms for claimants to upload documents.
- Password reset protocols need to be updated so that there are options before calling in to a live person for that reset.
- Set up call back and chat technology for claimants to rely on when filing their claims so that they can get their questions answered.
- Translate on-line materials into commonly spoken languages in the state.
- Evaluate administrative processes and requirements that slow benefit payments.
- Engage stake holders in the design process rather than designing around the agency’s own concerns and agenda.
- Allow for extensive testing and redesign of options before roll out.
- Provide multiple channels of communication and institute media campaigns to explain the new system.
- Staff up call centers as the new system rolls out and questions arise.
The goal here, in short, is to create the kind of customer service that supports employees who file unemployment claims and makes the on-line system actually easier to use and less mistake-prone.
Update (1 Feb. 2021): For the sake of completeness, here are some additional resources and information on the topic of unemployment modernization. Most of these resources predate the pandemic:
- Modernizing Unemployment Insurance As Part Of The New Social Compact
- A Wall Street Journal blog post on modernization
- An op-ed at talkpoverty
- A GOA study on the customer service challenges in unemployment
- An October 2020 report card on the status of modernization projects in the nation
- A white paper on UI modernization from a modernization provider
The report proposes new and stronger federal standards for state UI programs in the areas of benefit adequacy and eligibility, job-retention and reemployment support, and financing, alongside proven tools and financial resources, to ensure that working people across the country have access to sufficient income and reemployment support when they unexpectedly lose their jobs. In the absence of federal action, the national goals of the UI program—to support families through periods without work and earnings, and to stabilize the economy during difficult times—will continue to be undercut by poorly performing states.
The Jobseeker’s Allowance, or JSA, is a modest, short-term benefit for individuals who don’t qualify for UI, such as independent contractors, caregivers returning to work, and young workers trying to find their footing in the labor market. Through the proposed JSA, on-demand economy workers and other independent contractors would be eligible for protection against involuntary earnings losses for the first time ever.