Inadequate US state unemployment systems leave millions vulnerable
The onset of the Covid-19 pandemic left millions of Americans jobless in the US, overwhelmingly state unemployment benefit systems that did not have the staffing, technology or resources to handle the influx of those who lost their jobs.
Federal pandemic relief added an additional $600 a week to unemployment benefits which was cut to $300 a week, as most state benefits provide only a fraction of the value of weekly wages for the average worker.
The benefits expired in September 2021, with several states cutting them off early, affecting an estimated 7.5 million people. Proponents for cutting off benefits claimed the benefits were resulting in labor shortages, though the US still has more job openings than unemployed workers and research found cutting off the benefits had little to no impact on job growth and employment.
Since the expiration of federal benefits, state unemployment benefit systems have been left again as primary benefit providers. But many are still lagging and seem unprepared to deal with any future wave of job losses as high inflation rates have been inciting concerns of a looming economic recession, according to a new report from the Century Foundation.
That has left many vulnerable unemployed Americans vulnerable to poverty, losing homes and struggling to pay bills or feed their families.
About two months ago, Melinda Sayre’s partner James filed for unemployment in Pennsylvania after losing his job when his employer ended his contract after working there for a few months. He was approved for benefits and has claimed weekly for over a month without receiving anything yet.
“He expected to find another job right away, but a lot of employers that act like they really need someone and are ‘urgently hiring’ are taking a long time contacting potential employees and it’s making it hard when he just wants to get back to work right away,” said Sayre. “If our local ministry hadn’t paid rent for us, we would probably be homeless.”
Sayre said her partner had contacted their local state representative for assistance, but had not been helped yet and they had already fallen behind enough on bills to lose his phone because they can’t afford the bill, and were behind on utility and internet bills.
“We are struggling to have enough money for food and gas,” she added.
In the 12 months ending August 2022, only 26.8% of jobless Americans were receiving state unemployment benefits, compared to 76% through early 2021. The benefits are also paltry compared to average wages, with average weekly benefits in the first quarter of 2022 at $347.22, replacing just 39% of the average weekly wages by those receiving benefits, compared with 79% of pre-layoff wages when pandemic benefits were still supplementing state benefits.
“A lot of eligible people don’t apply for benefits,” said Andrew Stettner, the director of workforce policy and senior fellow at the Century Foundation, who co-authored the report.
Surveys and data from the Bureau of Labor Statistics that the majority of jobless workers do not apply for unemployment benefits.
The report also notes that states that struggled to pay out benefits and resolve issues throughout the pandemic have largely not resolved the administration problems plaguing state unemployment systems.
As of August 2022, only 15 states met a federal requirement to pay out at least 87% of eligible claims within 21 days and workers are waiting nearly four months to have appeals of benefit denials settled. The report also noted these shortcomings, delays and insufficient benefits disproportionately affect Black workers.
Kim Lytton of Tennessee was relying on unemployment benefits after losing her job as a personal assistant when her benefits were suddenly cut off in May 2021 as she was wrongfully deemed ineligible.
She spent months filing appeals, struggling to get a hold of someone in the unemployment system to resolve her issues and finally received back pay in August 2022, though she said it was short of the benefits she was actually owed but gave up in trying to fight for the correct amount.
“It put me in a really bad position. I begged and pleaded with them, I confirmed my identity over 20 times,” said Lytton. “We lived in my car for a few weeks. My car was up for repossession, I got several jobs, but with my daughters, working a regular nine-to-five as a single mother is really hard for me.”
Lytton said she was eventually told an error was made by an unemployment agency worker who denied her initial appeal when her benefits were first flagged.
“It’s supposed to be there to help you, but they’re actually making things harder,” added Lytton.