Millions of Americans have discovered an ugly truth about unemployment.
Don, a commercial boat captain in Sarasota, Florida, wasn’t on Twitter before the coronavirus pandemic. Recently, though, he decided to join; after weeks of struggling with his state’s unemployment insurance system, signing up for Twitter was a last-ditch attempt to make progress. “I googled how I can get ahold of the state, just looking for answers, and I saw some Twitter posts popping up,” he told me.
Don, 47, and his wife both work for the same company and were laid off on March 18. They’ve spent weeks trying to navigate Florida’s unemployment system, dealing with crashing websites and blocked phone lines, sometimes calling hundreds of times a day. Three weeks ago, his wife was finally deemed eligible to start receiving benefits, but he’s still waiting. “There’s no rhyme or reason to it,” he said.
The coronavirus crisis, which so far has left more than 80,000 people dead in the United States and at least 33 million out of a job, has revealed many uncomfortable truths about America, including the country’s unemployment system: It is broken, and in many cases, it is broken by design. After years of disinvestment and underfunding, benefits systems across the country have been left starved and in disrepair. In many states, benefits are intentionally difficult to collect and application processes complex to navigate.
The system has been hobbling along, and now a crisis has hit, said Andrew Stettner, a senior fellow at the Century Foundation. “Then people realize we actually want this thing to work, and it doesn’t work in the way people thought it would.”
That’s certainly been the case for Don, a father of 10-year-old twins who has just now encountered the unemployment program for the first time in his life. “I didn’t know that it was like this, and I didn’t know how terrible the system was to apply,” he said. “It’s sick the way that they set it up, and they just made the system to fail, which is what’s so disheartening to us.”
“This is a kind of crisis that’s forced people to realize what the system is all about,” Stettner said.
Unemployment is a state-by-state patchwork where what you get depends on where you live
The first state to implement an unemployment insurance program was Wisconsin in 1932; the general idea was extended nationally under the Social Security Act of 1935. In the debate leading up to the law, some reformers pushed for a federal program, but ultimately, what was put into place was a joint federal-state venture, where states set criteria within a set of federal guidelines. The program is funded through unemployment insurance taxes that employers pay to the state and federal government, and the amount collected by states varies, as do the benefits they provide, the way they set up their systems, and the way they deal with applicants.
“The Department of Labor has always tried to abide by the spirit of that amount of state discretion, kind of balancing that off with having some coherence across the country as a whole in how the system is set up,” said Erica Groshen, a senior extension faculty member at Cornell University and former commissioner of the US Bureau of Labor Statistics. “There’s a kind of funny balance.”
And so, what the country has wound up with is a patchwork of unemployment systems. Many basic state programs provide for 26 weeks of benefits, but that varies — Alabama, for example, cut its maximum from 26 weeks to 14 weeks at the start of the year based on its state unemployment rate. How much claimants are paid varies as well. The national weekly average was $387 as of February 2020, but it was just $215 in Mississippi while it was $550 in Massachusetts.
Unemployment insurance is supposed to act as a stabilizer in an economic downturn, but ungenerous benefits mean that’s not the case. “In some of these states, the benefits are so hollowed out that it couldn’t be countercyclical,” said Rebecca Dixon, executive director of the National Employment Law Program, meaning benefits are unable to help boost the economy when it’s needed most.
Many red and purple states have been particularly egregious in underfunding their programs and cutting benefits, while blue states have been more generous. That reflects a broader push within the Republican Party to pare down the social safety net and make it harder for people to access programs. It’s played out recently on Medicaid expansion, which 14 states have rejected.
“It’s this unholy alliance between right-wing ideologues who are just against government in general and people with these implicit or explicit racial biases,” said Harry Holzer, a professor of public policy at Georgetown University and former chief economist of the US Department of Labor.
But Democratic-leaning states aren’t off the hook as many of their unemployment and safety net systems are severely insufficient, as well.
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, the $2.2 trillion stimulus package signed into law in March, makes some temporary adjustments to unemployment insurance. It adds on $600 a week in federal benefits through the end of July, extends eligibility by 14 weeks, and expands the pool of workers who can apply to include freelancers, gig workers, and those who are self-employed. Still, poor infrastructure and funding in different states make accessing those benefits hard.
Melissa, who lives in Orlando and works for a major airline, has been put on a reduced hourly schedule and will go to zero hours in mid-May. She officially filed for unemployment on April 20 as a worker with reduced hours, but for some reason, her application status has been changed to a layoff, and she can’t get through to fix it. “I cannot get anyone on the phone, responses via Facebook, Facebook Messenger, I’ve tried the email request form, and my fear is that my claim is going to be denied,” she told me. “It’s going to look like fraud, which I did not commit.”
Her airline has provided some support, but employees have largely been left on their own. “Because every state has different rules and we have crewmembers in almost every state, it’s hard when someone says, ‘file and put this and file and put that,’ and no one really knows,” she said.
Some states simply don’t have the money in their unemployment “trust funds,” which are funded through unemployment taxes, to keep up with the surge in demand. When states inevitably run out of money — during the Great Recession, about three dozen did — then they borrow from the federal government to keep up funding. And that’s money they have to pay back. States are already running out of money now.
“Many states have refused to raise taxes to fund unemployment insurance. They’re always betting that the feds will bail them out if things get really bad, and no one expected it to get this bad, just a crush,” said Holzer.
Unemployment insurance hasn’t kept up with the times
What’s happened in many parts of the country is unemployment systems have gradually been whittled down. Part of the problem is that many people on the left have been more focused on getting aid to workers, and many people on the right have focused on cutting funding altogether, so infrastructure has been neglected. People pay attention when there’s a crisis, and then it’s too late to act.
That’s partially what’s happened this time around. As Makena Kelly at The Verge recently documented, multiple states are still using COBOL, a coding language dating back to the 1950s, in their systems. In April, New Jersey put out a call for COBOL programmers to help reinforce its program. The problem with the language isn’t necessarily that it’s a bad one, it’s that there aren’t a lot of people who know how to use it anymore. That means there aren’t enough people to fix bugs in the system or update it to take on an influx of applications.
“No one could have anticipated this kind of a crush, but my God … it’s inexcusable,” Holzer said.
Stettner said that particularly after the Great Recession, there was disinvestment and clawbacks in unemployment systems that left it very weak. “The states have been mostly left to their own devices, and they owed billions of dollars to the federal government for loans, and they cut way back on the program,” he said. “The quality of the administration waned during that period.”
“We know from the last recession that empathy for the unemployed starts to wane,” Dixon said. “Lots of states decided that they were going to just do cuts or primarily cuts, so what you had is after the last recession, they gutted their programs to build back their trust funds, so that’s a perverse incentive for states not to cover workers.”
There are no guarantees that even the most state-of-the-art UI system could handle the level of claims that are coming in right now. But as the weeks tick on and people still aren’t able to get through, it’s hard not to imagine something could have gone better, especially for those waiting on benefits.
New York, for example, has been one of the states hardest hit by the coronavirus crisis and the economic downturn. It saw a 16,000 percent increase in calls to its Department of Labor and a 900 percent increase in traffic to its website in late March. The state enlisted Google in April to help reboot its system, but many New Yorkers are still waiting.
That’s the case for Michael Cline, who prior to the crisis had been driving for Uber and Lyft in Rockland County. He applied for unemployment on March 16, and nearly two months later, his claim is still pending. “The unemployment line is worthless,” he told me, ticking through the number combinations he’s deciphered to get ahead on the automated system, only to eventually be hung up on. He estimates he’s called 4,000 times. “I am working harder and longer hours trying to get my claim approved than I ever worked as a ride-share driver.”
In a statement to Vox, New York Labor Department Commissioner Roberta Reardon said that the state paid $4.6 billion in benefits to more than 1 million people from March 9 to April 30, but she acknowledged “the frustration and anxiety” those who have been unable to collect are feeling. “I will not rest until every New Yorker has access to the unemployment benefits they are entitled to,” she said.
For those who have now gone through two rent cycles without being able to collect unemployment, that promise may fall flat.
Cline, 54, invited me to a Facebook group where he and other unemployed New Yorkers share their problems and try to help each other navigate the system. It has more than 40,000 members. “Being a gig worker, my major complaint is the fact that the government told me, ‘don’t work, self-isolate, we will help you financially.’ And I have done that, and they haven’t done anything,” he said. “My savings are gone. I’m paying my bills on a credit card at this point.”
And it’s not just New York gig workers and freelancers who are waiting to be approved under expanded pandemic benefits, it’s workers who would have straightforwardly qualified under the typical regime as well. One Brooklyn physical therapy technician I spoke with was laid off on March 18 and her application was stuck in a sort of limbo until May 12, when it was finally approved. (She has yet to collect benefits.) Within the first few minutes of searching for other New Yorkers to speak to for this story, I inadvertently ran into two people I’m connected to who are also stuck waiting for benefits. The Department of Labor says they’ll be paid retroactively, but that doesn’t make the wait any easier.
Some programs are designed to make it particularly difficult
During the current crisis, Florida’s unemployment system has proven to be particularly problematic. Under the watch of Republican former Gov. Rick Scott, the program was designed to deliberately make it hard to access — one adviser to current Republican Gov. Ron DeSantis described it to Politico as a “shit sandwich” — and now, unemployed workers are suffering.
Scott rebranded Florida’s UI system the “Reemployment Assistance Program” in 2012 under the same legislation that reduced unemployment taxes paid by state businesses. The state spent more than $70 million on a new website that has been problematic from the get-go and designed its system to make it difficult for users to access. Now, the state’s unemployment trust fund actually grew from March 1 through April 16, and it has paid only 28 percent of the 1.9 million applicants to the system since March 15.
“Undoubtedly, Florida stands out for not stepping up to the plate very effectively,” said Wayne Vroman, a labor economist at the Urban Institute.
Florida has begun limiting the hours people can access its unemployment site, saying that it’s necessary for it to process claims. People need to check into the site every two weeks to verify their claims, and now they’ve got limited time to do so. This means that even for people who have successfully been able to apply for unemployment insurance, there are still problems.
That’s the case for Katie Roy, who was previously working at a college program at Disney World. She got approved relatively quickly and has been getting $175 from the state plus an additional $600 in federal benefits. But then on Monday morning, she encountered an issue. Florida has said it will waive work search requirements through May 30, but when she went in to do her biweekly claim, the system asked for her work search history. She answered that she hasn’t been searching — because it’s not required — and now, her claim has been listed as a “pending issue.”
When asked about the issues with Florida’s program, a spokesperson pointed to a recent press release from its Department of Economic Opportunity on the program and said I would be added to the list for a requested interview with Jonathan Satter, secretary of the Florida Department of Management Services.
In 2019, Florida ranked second-worst in the rate of unemployed people who had at some point received insurance, at just 11 percent, ahead only of North Carolina at 9 percent. States such as Louisiana, Nebraska, and Georgia also had recipiency rates of under 15 percent. By comparison, New Jersey and Massachusetts were at over 50 percent.
States employ a number of tactics to keep people from collecting and to discourage them from accessing the system. They put a hard-nosed administrative face to clients by way of work search verification, fraud prevention, identity verification, and adding in bureaucratic layers that are difficult to maneuver around. And by cutting back benefits, they also make it so workers feel like it’s less worth the hassle to apply. (Part of the problem now is that the $600 in weekly federal money is pretty motivating.)
“Some states with more conservative regimes view their primary clients not as the beneficiaries but as the employers,” Vroman said.
We’ve seen the flaws in the system. So how do we fix them?
As Vox’s Ella Nilsen wrote, even with expanded unemployment insurance under the CARES Act, navigating the program has been a nightmare at an implementation level and on the ground:
States first have to wait for the Trump administration to issue guidance so they know they’re administering a benefit correctly. Then they have to set up their own policies and interpret them to decide who qualifies. … Finally, states have to program the computers in their unemployment systems with the new information — and some states rely on mainframes and programming that haven’t been updated since the 1970s.
Beyond administrative and infrastructure shortcomings and the stinginess of benefits, there is also a very real issue that unemployment insurance is not designed for the modern-day workforce and leaves people out. When the program was created in the 1930s and intervening years, it was designed for a largely white male workforce who were breadwinners and who were laid off for short periods of time and called back, Dixon explained, like a factory that would temporarily put workers on leave during a slow period. Employers wanted unemployment because they wanted their workers to be available to come back. But today, more layoffs are permanent, and there’s no relationship with employees.
“And the system has largely left women out, many of whom work part-time,” Dixon added. “It hasn’t changed very much over the years to actually account for women and the need for part-time in some cases, or folks who are doing gig work and independent contracting.”
So what are some solutions? If the US were to start over, it may very well try to deal with unemployment insurance at a federal level, Vroman said: “Internationally, almost every country that has unemployment insurance has a national system.”
But if not, one could at the very least envision a stronger role of the federal government so that states don’t take such a diverse approach and systems aren’t so neglected. It could implement baseline benefits for states and modernize unemployment systems. We’ve seen the federal government take a bigger role right now, and it could be that way always — though that may come down to political will. And there are ideas out there. Sen. Michael Bennet (D-CO), prior to the coronavirus outbreak, put forth a plan to prevent recessions that, among other things, would automatically ramp up extended benefits in the unemployment system when the unemployment rate jumps.
“We have an opportunity to now create permanent structural change to this program,” Dixon said at a recent panel. Her takeaway: “We often say that something is broken and not working as designed, and I would just encourage us to realize it is working as designed, and we need to change that design.”
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