Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

Can States Finally Fix Their Unemployment Systems?

The $1.9 trillion stimulus enacted last month includes $260 billion to extend enhanced unemployment benefits into September. Only a fraction will go to upgrading administration.

People waiting in a long line outside the entrance to a building.
People wait in line to troubleshoot unemployment claims outside the Dunn-Oliver Acadome in Montgomery, Ala., on Thursday, June 25, 2020. (Jake Crandall/ Advertiser)
Last week’s jobs report was full of good news, with 916,000 Americans finding work in March. But weekly jobless claims also came in higher than expected, with 719,000 new applications for unemployment benefits.

The economy is rebounding, but there are still several sectors that will take time to turn around. That means millions of Americans will continue to need help. They’ll get it, at least through Sept. 6. Just days before enhanced federal benefits were set to expire, they were extended by the latest stimulus package. The cost of the extension was $260 billion.

At this point, a majority of unemployment recipients are getting their checks either through enhanced federal benefits or Pandemic Unemployment Assistance (PUA), a program created by Congress last year to offer benefits to workers who had not previously been covered, such as gig workers or the self-employed.

No matter how generous the benefit levels, however, the money only helps if it reaches recipients in need. Over the past year, too many states have failed that test, 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 efficient unemployment insurance program,” says Maryland state Del. Lorig Charkoudian. “People are suffering and need the money they’ve paid into the system. It’s also a really crucial macroeconomic counter-cyclical tool, injecting money into the economy as fast as you can.”

Millions of unemployed workers faced serious frustrations in 2020 and into this year, unable to log into systems or having to wait weeks and months to get answers about their claim status. “Most states at this point are not meeting federal standards of getting benefits out within 14 to 21 days,” says Nzingha Hooker, an attorney with the National Employment Law Project, a progressive research and advocacy group.

Charkoudian sponsored a bill that would speed up timelines, increase consumer service standards and require that the Maryland Department of Labor maintain sufficient staffing to ensure applicants can speak to a human being. It would require that 92 percent of claims be adjudicated within 21 days and establish a single point of contact for applicants whose claims aren’t resolved within eight weeks. In addition, the bill would connect unemployment applicants to the state’s health insurance exchange.

“Structurally, the department hasn’t gotten it right,” Charkoudian says. “The department has to get the structures right in order to maximize its ability to get the resources out to people.”

Unemployment is a mixed federal-state program. Most of the burden of paying for administration falls on the feds. That’s one reason states have been unwilling to pay for updates to their creaky computer systems. The other is that, until last year, they didn’t see the need. It didn’t make sense to legislators to spend $45 million upgrading a system that prior to the pandemic might have processed 250 claims a week.

Hooker says that states are now taking steps to modernize their IT systems, such as opening up 24-hour access to call centers or taking the simple step of allowing people to leave messages. “A lot of these delays are not about outdated computer systems,” she says. “Some of the states that were among the first to get out benefits were using old COBOL programs,” referring to the antiquated programming language many systems still rely on. 

The new federal benefit levels and programs added complexity to the process, she notes. States have also failed to protect fully against fraud. Last week, the Government Accountability Office reported that states had made more than $3.6 billion in PUA overpayments from March 2020 through February, plus an additional $2.6 billion worth of traditional unemployment insurance overpayments. Other estimates of the amount lost to fraud run far higher, up in the $40 billion range and beyond. 

Short on cash, a total of 20 states have borrowed a total of $50 billion from the feds to pay out benefits. Despite the influx of federal aid to states included in the stimulus, paying off that debt will likely not be the first order of business. Those loans are, at least for now, interest-free.

Alan Greenblatt is the editor of Governing. He can be found on Twitter at @AlanGreenblatt.
From Our Partners