Flood of jobless claims steady as state hits reset
The U.S. economy continued losing jobs at a steady and massive pace last week.
Another 870,000 Americans sought new unemployment benefits last week, as the pandemic’s economic impacts continued to spread pain. More than 230,000 claims were in California, which now has stopped accepting new applications for two weeks while it revamps a struggling benefits system — a change that is likely to temporarily skew the state’s jobloss numbers.
Besides regular claims, 630,080 people applied for new pandemic benefits for selfemployed people, including 99,824 in California, according to data released Thursday by the Department of Labor.
The total number of new U.S. claims since the pandemic’s start is now 61.9 million. Those still on the unemployment rolls for regular benefits totaled 12.6 million as of Sept. 12, with 2.8 million in California. Including those receiving benefits for the selfemployed, veterans and other programs, the U.S. had 26 million people receiving unemployment payments as of Sept. 5.
California claims for the week accounted for more than a quarter of the national totals — far beyond the state’s 12% share of the U.S. population, which economists attribute to the state’s early and prolonged shutdown, as well as its heavy reliance on travel and tourism.
The state’s Employment Development Department has processed 13.6 million claims since the start of the pandemic but still faces a backlog of more than 1 million yet to be processed. The agency has paid out $90.6 billion in benefits since early March.
The EDD said it’s been remitting a weekly $300 supplement under the Federal Lost Wages Assistance program, covering weeks in August. If enough funds remain, the agency could continue the payments for a sixth and final week for the week ended Sept. 5. That program replaced a $600perweek federal supplement that Congress has not agreed to extend.
The update for the week ended Sept. 19 comes a few days after release of a scathing report on the California EDD, which has struggled to handle the deluge of jobless claims, leaving millions desperate to receive their benefits. The situation is “unacceptable,” said the authors of the report, written over 45 days by a strike team set up by Gov. Gavin Newsom.
While the EDD retools its systems, including a new, streamlined process for identity verification, it has stopped taking new unemployment claims for two weeks, from Sept. 20 until Oct. 4. Meanwhile, newly jobless people can submit their contact information online to be notified when the system is working again.
That will dramatically skew the U.S. unemployment numbers, since the mostpopulous state accounts for a disproportionate share of joblessness. Presumably the numbers will decline for the next two weeks, and then shoot up once California resumes claims processing. Neither the state EDD nor the U.S. Department of Labor immediately responded to questions about how they’ll handle this anomaly.
“It should distort the weektoweek comparisons,” said Stephen Levy, director of the Center for Continuing Study of the California Economy, in an email.
“There will have to be an asterisk for those two weeks,” said Irena Asmundson, chief economist for the California Department of Finance. As California seeks to process claims more quickly, subsequent numbers may also be skewed.
However, Asmundson noted, monthly reports on unemployment will not be distorted. That’s because they are based on a survey of households and a separate survey of employers, neither of which is affected by the pause in claims processing.
On top of its already high numbers, California has 1.6 million pending claims that it will not resolve until late January, according to the report, which said the backlog is now growing by 10,000 claims a day.
The report revealed horrifying gaps in service. Only 1 out of every 1,000 calls to the EDD’s weekday morning phone lines — the only one that can actually resolve claimants’ issues — was getting through.
“EDD has failed the people it serves in almost every imaginable way,” said Assemblymember David Chiu, DSan Francisco, in a statement. His office, like those of many other legislators, had fielded an avalanche of calls from distressed constituents who couldn’t get benefits. “The size of this backlog is shockingly large. We have been frustrated at EDD’s everevolving lowball estimates of the backlog.”
Californians already receiving payments won’t see any change, according to Michael Bernick, an attorney with law firm Duane Morris LLP and former head of the state’s EDD.
“Those who have accounts and claims can continue to access their accounts” during the reset period, Bernick said.
Just 30% of the jobs lost between February and April in the Bay Area made a comeback between April and August, according to Levy’s research. The state and Bay Area recovered a smaller share of the jobs lost by August compared with the nation, the result of a more cautious reopening pace and the morethan80% decline in business and visitor travel and resulting loss of spending and jobs.
The Bay Area’s unemployment rate stood at 8.6% as of August, compared with 8.4% nationally. California’s rate was 11.4%
Despite the huge backlog and the additional cases that will pile up while the online portal is down, Bernick said processing should speed up if the promised changes work as planned.
The strike force report said the retooling will ideally reduce the cases that need manual reviews to 10% from the current 40%.
The troubles at the EDD concern outofwork people like dance instructor Carolyn Goto, even if they have managed to obtain the state’s promised benefits.
Goto applied in March for unemployment insurance payments after the ShawlAnderson Dance Center in Berkeley, where she has taught part time for 18 years, closed temporarily because of the virus.
“You have this feeling you’re dealing with an octopus or a monolith,” Goto said, adding that she has had little trouble with receiving benefits but is worried about making a paperwork error and missing out on payments.
“If you make one mistake or do something incorrectly, it’s really hard to get into the system again,” she said, noting her most recent payment has not yet appeared in her account and she is unsure how best to contact the agency.
“It adds to the uncertainty and anxiety about being unemployed,” Goto said. “You’re not sure you can reach someone you can talk to,” she said, adding that she understands the agency is overwhelmed.
To stay in shape and keep busy, Goto still teaches online dance classes, which she does not charge for, and takes other classes like Pilates.
She said she believes the school will survive and reopen early next year but isn’t sure when that will be.
The city of Berkeley and Alameda County still require indoor fitness centers to remain closed. Other parts of the Bay Area have restrictions that vary based on county health conditions and state and local rules; San Francisco, for example, forbids some indoor cardio classes and requires space between students for less strenuous exertion.
“It’s hard for dancers, because dancers need space and they have to move and they breathe hard,” Goto said.