Why Millions of Americans Are Struggling to File for Unemployment Benefits, When They've Never Been More Generous
Budget cuts, poor staffing and old technology are key problems hobbling state safety nets nationwide.
More than 10 million people filed for unemployment benefits in the last two weeks of March. It's an unprecedented spike in the wake of the coronavirus pandemic, which has shut down wide swaths of the American economy.
That surge has overwhelmed unemployment systems across the U.S. Phone lines are overwhelmed and government websites are crashing, leaving many laid-off workers uncertain of when they'll receive some of the most generous benefits there have ever been.
Many of the problems can be traced to poor staffing, budget cuts and antiquated technology dating back several decades ago, according to Heidi Shierholz, a labor expert and director of policy at the Economic Policy Institute.
"These programs have been drastically underfunded for decades," Schierholz told Business Insider. "We haven't made the investments that we would need to be agile and effective enough to absorb what we're seeing."
In Florida, The Tampa Bay Times reported the state has racked up a backlog of over 500,000 applications with many more likely on the way.
Yet Gov. Ron Desantis said at a press conference on Monday that state officials hoped to process around 80,000 claims for the week, a pace that will certainly leave many waiting for critical government aid.
New Jersey also had similar problems, and one more rooted in technology. According to the Bergen Record, the state still uses a system constructed in the 1980s to administer claims and send out checks to the unemployed.
"We literally have a system that is 40-plus years old," Gov. Phil Murphy said at a recent press conference. New Jersey state officials are vowing to speed up hiring to handle the crush of claims.
Shierholz pointed out these unemployment benefits will serve a crucial function tiding laid-off workers over during the pandemic — at a moment when they need to stay home, commit to social distancing and keep the virus from spreading.
"These programs are the lifeline for millions of people that will make sure they can make it while we shut down the economy," she said.
In the recent stimulus law signed by President Trump, lawmakers opted to add $600 per week onto every state's benefits to tide over newly unemployed Americans for up to four months. Eligibility was also expanded to include contract workers and self-employed workers.
A previously passed coronavirus package gave states around $1 billion in extra funding to shore up their unemployment systems.
The number of Americans seeking those benefits is unparalleled. For the week ending March 28, Labor Department data showed that around 6.6 million people winded up filing for unemployment.
That's over 31 times more compared to the final week of February, when 215,000 claims were recorded.
The federal government oversees unemployment systems, though it leaves their administration to each state and gives them significant discretion setting benefit levels and eligibility rules. That's created a patchwork of regulations that differ from one state to another.
In the decade since the Great Recession, nine states cut the maximum weeks that workers are allowed to draw benefits, according to the Center on Budget and Policy Priorities. In some, the situation is more dire for jobless workers.
Fewer than one in 10 unemployed people in Mississippi, Nebraska, North Carolina and South Carolina receive government aid, the CBPP said in its analysis on state-level readiness for recessions.
"People will suffer at a time like this needlessly," Shierholz said. "It's not abstract. It's people not being able to provide for their families because these systems are down."
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate