Today’s COVID-19 recession has no modern precedent in terms of sheer suddenness, scope, and ferocity. In just 15 weeks, U.S. workers have filed more than 48 million applications for unemployment insurance. Much like how states have been left on their own to fight the coronavirus, states have been left to their own devices to deal with the tsunami of unemployment claims resulting from COVID-related restrictions on almost every sector of our economy.
With roughly one in four workers having suffered some loss of employment since March, Congress has responded with federal dollars to bolster inadequate state unemployment compensation and to cover millions of workers who are not normally eligible. But these new programs and benefits are being delivered through a crumbling infrastructure that is collapsing under the weight of worker demand.
Jobless workers grapple with clunky online applications and wait through hours, often days of busy signals to reach live customer assistance. Millions of workers are waiting weeks and weeks for UI payments, as states move cases requiring greater attention into new ever-longer backlogs. The inboxes of elected officials in every state are overflowing with the pleas of constituents who have gotten to the end of their rope and the end of their savings and are still waiting. That accumulated frustration has been increasingly directed at public servants overseeing state UI programs, with consequences ranging from public dismissal to personal safety threats.
While it may have taken an event of unparalleled economic devastation to get ordinary Americans asking what is wrong with unemployment insurance in this country, it took years of national neglect and divisive business-friendly policies to unleash the perfect storm on jobless workers that states are now struggling to navigate.
Unemployment insurance is a federal-state program in which states set their own eligibility rules and benefit levels, and tax wages to maintain a trust fund to pay those benefits. The costs of administering these programs is subsidized by the federal government, but UI administrative funding immediately before COVID was lower than it was in 2001.
During those 20 years, states have transitioned from in-person to telephone to online claim-filing systems because there are less and less federal dollars for staff. Yet, at the same time, there is no substantial federal investment or strategy for states to automate their claims systems. The result has been a long list of botched system launches and rickety online applications that work only so long as jobless workers do not pose challenges or questions requiring live assistance. In many states, online systems are not mobile-responsive and thus are impenetrable for many, especially Black and Latinx workers, who are more likely to be smartphone-dependent and without broadband at home. Adding insult to injury is a federal emphasis on fraud prevention that has led some states to incorporate new filing obstacles and others to misidentify honest workers as criminals.
Layered onto this federal indifference has been an organized assault on the unemployed by corporate interests in many states. Faced with the prospect of higher business taxes after the last recession, states where Republicans controlled both branches moved to slash worker benefits rather than reform program financing. Benefit maximums that for five decades had followed a 26-week standard were reduced in 10 states to as low as 12 weeks in Florida and North Carolina, while new benefit restrictions and weekly filing rules drove down the share of jobless workers receiving a UI payment to one in four nationally.
Unemployment for Black workers (15.4 percent) is more than five points higher than for white workers; for Latinx workers, it’s more than four points higher. Many of the harshest UI programs for workers are in the southeast, where Black workers are heavily concentrated in five of the six states with the lowest maximum benefits (less than $300). Eight of the ten states that pay benefits to the lowest share of jobless workers are states with the highest proportion of workers of color.
The inadequacies of state UI programs led Congress to authorize emergency federal aid to help more families weather a uniquely battered economy that will likely only fully recover with a medical breakthrough. Although all states have struggled (and some have absolutely failed) to timely deliver the current array of state and federal jobless aid, state UI systems are still best situated to deliver broad financial relief in times of economic crisis. But it is time to face the truth that there needs to be dramatically more federal oversight of unemployment insurance.
We need national standards that ensure all jobless workers can qualify for an unemployment benefit that reflects a fair percentage of their lost wages. We need a federal guarantee that every state will provide UI long enough to help workers bridge the gap until that next job. And we need a true federal investment in claims systems infrastructure, organized around the principle that every worker who loses a job has a right to easily access unemployment insurance, no matter what their background or in what state they live.
Rebecca Dixon is executive director of the National Employment Law Project (NELP) and George Wentworth is former senior counsel at NELP.