Delays in unemployment benefits altering shape of recovery once the pandemic eases
Nearly a month after Washington rushed through an emergency package to aid jobless Americans, millions of laid-off workers have still not been able to apply for those benefits — let alone receive them — because of overwhelmed state unemployment systems.
Across the country, states have frantically scrambled to handle a flood of applications and apply a new set of federal rules even as more and more people line up for help. On Thursday, the Labor Department reported that another 4.4 million people filed initial unemployment claims last week, bringing the five-week total to more than 26 million.
“At all levels, it’s eye-watering numbers,” Torsten Slok, chief international economist at Deutsche Bank Securities, said. Nearly 1 in 6 American workers lost a job in recent weeks.
Delays in delivering benefits, though, are as troubling as the sheer magnitude of the figures, he said. Such problems not only create immediate hardships but also affect the shape of the recovery when the pandemic eases.
Laid-off workers need money quickly so that they can continue to pay rent and credit card bills
and buy groceries. If they can’t, Slok said, the hole that the larger economy has fallen into “gets deeper and deeper and more difficult to crawl out of.”
Yet according to the Labor Department, only 10 states have started making payments under the federal Pandemic Unemployment Assistance program, which extends coverage to freelancers, self-employed workers and parttimers. Most states have not even completed the system needed to start the process.
Ohio, for example, won’t start processing claims under the expanded federal eligibility criteria until May 15. Recipients whose state benefits ran out but who can apply for extended federal benefits, will not begin to have their claims processed until May 1.
Pennsylvania opened its website for residents to file for the federal program a few days ago, but some applicants were mistakenly told that they were ineligible after filling out the forms. The state has given no timetable for when benefits might be paid.
Reports of delays, interruptions and glitches continue to come in from workers who have been unable to get into the system, from others who filed for regular state benefits but have yet to receive them, and from applicants who say they have been unfairly turned down and unable to appeal.
Florida has paid just 17 percent of the claims filed since March 15, according to the state’s Department of Economic Opportunity.
“Speed matters” when it comes to government assistance, said Carl Tannenbaum, chief economist at Northern Trust. Speed can mean the difference between a company’s survival and its failure or between making a home mortgage payment and facing foreclosure.
There is “a race between policy and a pandemic,” Tannenbaum said, and in many places, it is clear that the response has been “very uneven.”
Using data reported by the Labor Department for March 14 to
April 11, the Economic Policy Institute, a liberal research group, figured that 7 in 10 applicants were receiving benefits. That left 7 million other jobless workers who had filed claims but were still waiting for relief.
States manage their own unemployment insurance programs and set the level of benefits and eligibility rules. Now they are responsible for administering federal emergency benefits that provide payments for an additional 13 weeks, cover previously ineligible workers and add $600 to the regular weekly check.
So far, 44 states have begun to send the $600 supplement to jobless workers who qualified under state rules, the Labor Department said. Only two — Kentucky and Minnesota — have extended federal benefits to workers who have used up their state allotment.
With government phones and websites clogged and drop-in centers closed, legal aid lawyers around the country are fielding complaints from people who say they don’t know where else to turn.
“Our office has received thousands of calls,” said John Tirpak, a lawyer with the Unemployment Law Project, a nonprofit group in Washington.
People with disabilities and nonnative English speakers have had particular problems, he said.
Even those able to file initially say they have had trouble getting back into the system as required weekly to recertify their claims.
Colin Harris of Marysville, Wash., got a letter March 31 from the state’s unemployment insurance office saying he was eligible for benefits after being laid off as a quality inspector at Safran Cabin, an aerospace company. He submitted claims two weeks in a row and heard nothing. When he submitted his next claim, he was told that he had been disqualified. He has tried calling more than 200 times since then, with no luck.
“And that’s still where I am right now,” he said, “unable to talk to somebody to find out what the issue is.”
If he had not received a $1,200 stimulus check from the federal government, he said, he wouldn’t have been able to make his mortgage payment.
Millions of additional claims are expected to stream in from around the country over the coming weeks, while hiring remains piddling.
States are frantically trying to catch up. California, which has processed 2.7 million claims over the past four weeks, opened a second call center Monday. New York, which has deployed 3,100 people to answer the telephone, said this week that it had reduced the backlog that accumulated by April 8 to 4,305 from 275,000.
In a survey that the Pew Research Center released Tuesday, 52 percent of low-income households — less than $37,500 a year for a family of three — said someone in the household had lost a job because of the coronavirus, compared with 32 percent of upper-income ones (with earnings of more than $112,600). Fortytwo percent of families in the middle have been affected as well.
Those without a college education have taken a disproportionate hit, as have Hispanics and African Americans, the survey found.
An outsize share of jobless claims have also been filed by women, according to an analysis from the Fuller Project, a nonprofit journalism organization that focuses on women.
The first wave of layoffs most heavily affected the restaurant, travel, personal care, retail and manufacturing industries, but the damage has spread to a much broader range of sectors.
At the online job site Indeed, for example, postings for software development jobs are down nearly 30 percent from last year, while listings for finance and banking openings are down more than 40 percent.
While new layoffs are expected to ease over the next couple of months, the damage to the economy is likely to last much longer. In a matter of weeks, the shutdown has more than erased 10 years of net job gains — more than 19 million jobs.
Health and education are going to revive relatively quickly, said Rick Rieder, chief investment officer for global fixed income at BlackRock, but leisure and hospitality are going to take a lot longer.
“A lot of the people who have been furloughed won’t come back,” he said. “Companies will either close or decide not to take back those workers.”
Over the past decade, the employment landscape has shifted substantially as new types of jobs have appeared and old categories have disappeared. The U.S. economy is now “going to go through another period of evolution,” Rieder said.