Many factors have played a role in the speed of states' response to a massive upsurge in unemployment claims as the COVID-19 pandemic forced widespread business closings. Even history gets part of the blame.
Outdated computer systems, staffing cuts and confusion over Labor Department guidance all have contributed, according to state employment agencies and longtime observers of the unemployment system. But the snags also reflect differing approaches to jobless benefits that have emerged over the years in the states.
“I think all states are having difficulties, but some states have a very small capacity relative to the need,” said Chris O’Leary, an economist who follows labor market issues for the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich.
Many states, including Florida, North Carolina and Georgia, have pared unemployment benefits in recent years, O’Leary said. Florida cut the duration of benefits to 12 weeks, and North Carolina to 10 weeks when unemployment was low, based on the view that employees should get back in the workforce fast instead of using more time to find the best job match.
Smaller caseloads allowed states to reduce staff and investment, as well as the tax employers pay to fund the unemployment system. Downsizing also left some states with less capacity.
Zach Schiller, who follows unemployment issues as research director at Policy Matters Ohio, said that Republicans in Columbus tried for years to reduce benefits, an effort that eventually failed. But underinvestment in the administration of the benefits system was a side effect of the fight.
“We’re reaping the results, and people are experiencing that at the worst possible moment, when people really need these benefits,” Schiller said.
Based on data released by the Labor Department, CQ Roll Call calculated that only about 59 percent of some 855,000 initial claims filed in Ohio have been processed into the unemployment caseload. The calculation is based on initial claims filed in the four weeks through April 11 and the number of claims approved for benefits after excluding the number already in the unemployment caseload before the pandemic hit.
O’Leary said some claims that don't meet eligibility criteria should be rejected, and therefore all initial claims shouldn't be expected to show up later as part of the caseload.
And the Labor Department has emphasized that states first must assess whether claims qualify for regular unemployment payable out of the state fund before looking to new federal benefits.
However, Schiller said that Ohio’s Department of Job and Family Services has lagged in processing claims. Only last week, the state announced it would begin to accept claims for expanded categories of new benefits, known as Pandemic Unemployment Assistance, or PUA, on April 24. State officials have said PUA claims likely will not be approved until mid-May, he added.
Bret Crow, a spokesman for the Ohio agency, said it has made a concerted effort to handle “unprecedented demand.” While 96 percent of initial claims are filed online, many require more labor intensive staff work via phone to reconcile missing documents or coordinate among multiple employers to determine eligibility, he said.
The department expanded call center staff from 42 to 1,602 and launched a virtual call center on April 24, Crow said, but call volume continues to exceed half a million each day.
Ohio has approved more than 484,000 claims, but the department also has denied more than 200,000. Crow said those denied for regular unemployment can still file for the new PUA benefits.
Refiling for added benefits
Ohio is not alone in handling claims with a two-step procedure.
Georgia, which lags other states in processing the wave of initial unemployment claims into the caseload of insured unemployed, has worked through a two-step process that requires all applicants to file first for regular unemployment.
“These individuals must be determined not eligible for state benefits before being evaluated for federal PUA benefits,’’ the Georgia Department of Labor website says. “Once an applicant is deemed ineligible for state benefits, they will receive notification by email with a link to the application or mail containing information regarding the PUA application process.”
New York has been relatively successful in pushing out unemployment benefits, with 88 percent of initial claims now reflected in the unemployment caseload. But officials highlighted confusion caused by the Labor Department over how to apply for the new benefits.
“The feds then put guidance out that said you have to apply for unemployment insurance, get rejected, and then apply for pandemic unemployment insurance, which was a complete disaster,” Melissa DeRosa, secretary to Gov. Andrew Cuomo, said at a press conference last week. “We have now streamlined that process in New York.”
A senior Labor Department official said in a background briefing on April 15 that the department hadn't intended states to use a two-step process and had issued guidance to clarify that when it realized some states were employing such a procedure.
Michigan, by contrast, has been successful in converting the upsurge in initial claims to caseload. Data calculated by CQ Roll Call shows that about 82 percent of claims have been processed to the insured unemployed column.
Steve Gray, director of the state’s Unemployment Insurance Agency, cites several factors for its relative success. Benefit software was relatively modern, and a modification implemented in 2017, to cope with an upsurge in claims caused by flooding in the state’s Upper Peninsula, provided a path to modify software and handle new federal benefits.
“It was pretty complicated, but we had a good team and they worked really hard,” he said.
Michigan started paying the extra $600 weekly federal unemployment benefit the week of April 8, and it was able to start taking applications for PUA on April 13. The agency paid out the first PUA benefits last week, Gray said.
The state has focused on making claims filing easier, with some 95 percent filed online, although Michigan also has quadrupled staff handling phone lines or web inquiries. Michigan also avoided a crucial misstep in designing its claims process to handle PUA claims from the self-employed, gig workers and others who fell into that basket.
“It seemed to us that they weren’t requiring that we have a denied claim first, that we should check for state eligibility, which we did as part of the same process,” Gray said.
“But we are not requiring necessarily, if you don’t have covered wages, that you have to go in and be denied a state claim first,” Gray said.
Gray, who had directed a clinic at the University of Michigan law school that represented unemployment claimants, said that agency staff worked hard to roll out the program because they knew that those with part-time low-wage jobs and the self-employed would need those benefits.
“Three hundred and sixty seven dollars was the maximum amount you could get on state benefits, so these additional benefits are just key,” Gray said. “Think about if those people had not been eligible for regular benefits. So that’s making a huge difference. “