Jobless benefit errors won’t slow until state lets up

The remarkable fact about the 30,000 cases of unemployment overpayment in Connecticut, reported this week by The CT Mirror as the state claws back millions of dollars, is not that the number is so large.

No, the wonder is that the cases are so few considering the job losses, staffing and technology in place to deal with unemployment claims.

In fact, we will see a whole lot more of these ugly cases before the counting shakes out — and that will take more than a year, maybe much more.

The takeaway: An overburdened system that was not equipped to hand out $9.8 billion to some 580,000 Connecticut residents who made 1.5 million claims over the last 18 months — but had no choice — is most assuredly not equipped to manage the unavoidable fallout of errors.

Fortunately, the state Department of Labor doesn’t have to be so careful

Modern systems or none, some of us said way back in the horrible spring of 2020 that there was no way for the state and federal governments to make a shattered econony whole, no matter how much money the Feds printed. Some people came out ahead — usually those with more riches to begin with — and some fell far behind despite the volcanic flow of cash.

on the back end, if it just errs on the side of letting some of the errors fade to history. You know, like in Monopoly: “Bank error in your favor, collect $200.”

The trouble: Just teasing out the cheating from all the rest of the errors — confusion by applicants, confusion caused by vast and varied new federal jobless programs, late challenges by employers, mistakes at a department burdened by a 40-year-old computer system — is a lot of work. They’ve hired more hearing officers for the flood of appeals, but the flood keeps rising.

“There are any number of reasons why an overpayment is made. It could be made because the DOL made a mistake. It is more likely that the claimant made a mistake. It’s that they didn’t understand something,” department spokeswoman Juliet Manalan said Tuesday.

“As this tsunami wave is going through the process, there are long delays, months, to get a hearing,” she added. “This is due process.”

In other words, it’s a fine mess and there’s no easy answer. Even if we do let some cheaters go so as not to punish the innocent, who pays? Remember, the unemployment fund is financed by a levy on businesses and if those payments rise, companies can’t afford to hire back workers.

A look at the numbers shows why it could be, and might become, a lot worse.

Consider the headline number of $8.7 million in overpayments in the April-to-June quarter of 2021. That was up from an average of $2.9 million per quarter in the four years before the pandemic, 2016 to 2019, according to federal data based on filings from the state Department of Labor. It spiked a year after the crisis started because the system takes a long time to work through problems.

We can’t tie that $8.7 million to an exact payout because the errors could have happened anytime in the prior year or even longer. But overall, the state paid out $9.8 billion in seven different state and federal unemployment programs between March 13, 2020 — that infamous Friday the 13th — and Sept. 15, last week.

That’s about $540 million a month more than ten times larger than a typical, non-coronavirus monthly payout of $50 million to people out of work. And yet, the error rate, even with the spike The CT Mirror documented, is far less than 10 times the normal.

That’s partly because — get this — upwards of half the $9.8 billion in payouts falls in programs that haven’t yet come up for review, Manalan explained. We don’t know the exact amounts of payouts that have been reviewed for all kinds of reasons, not least that the department still hasn’t finished upgrading its Reagan-era systems.

So we’ll see more cases, many more, but we don’t know where this is heading.

Where it cannot and should not head, is in the direction of business as usual. The state needs to bend the rules to speed this error-reconciliation along, by a lot, and to avoid clawing back money from people who have spent it — even if that’s not fair. And the taxpayers, not the employers, need to make up the difference.

“Given the situation and the complete panic everyone was in at the time, you could understand how this could have happened,” said Eric Gjede, vice president of public policy at the Connecticut Business and Industry Association.

He blames the computer systems that could fetch a nice price at the Brimfield antiques show. “If you go back to the failure to make any kind of technology upgrade, that’s understandable.”

Modern systems or none, some of us said way back in the horrible spring of 2020 that there was no way for the state and federal governments to make a shattered econony whole, no matter how much money the Feds printed. Some people came out ahead — usually those with more riches to begin with — and some fell far behind despite the volcanic flow of cash.

This shakeout of unemployment benefits errors is just part of that unfair fallout. I know some jobless claims cheaters and they’re very, very good. The system isn’t likely to catch them. Much of the cheating, Manalan explained, is not by people out of work at all; it’s identity theft.

Would we like to stop those crooks? Of course, and the Department of Labor should do what it can to catch to easy cases. As for the innocent ones who made honest errors, or faced late, successful challenges by their old employers, gotta let more of them go — without charging their employers the full ride.

For the record, the federal filings show the state is good at clawing back money — like, 97 percent good over the last five years. It can garnish wages, it can intercept tax refunds. But it needs to let up as part of the same crisis that led to these errors.