Our Broken Unemployment System Is a National Scandal

Kathy, a 52-year-old substitute teacher in Omaha, Nebraska, has a new Sunday ritual. Like millions of people across the country, Kathy files for her unemployment benefits at the end of every week. When the next week comes, she files again. So far, six weeks have passed since Kathy first filed her claim, after the state’s school shutdown put her out of a job. But Kathy, who has worked as a teacher for 21 years, still hasn’t seen a single dollar of relief.

“I don’t know how long they think people can wait. I really don’t,” Kathy said.

Kathy, who declined to provide her last name, said her claim was marked as approved online when she first filed on March 21. Eventually, after fruitlessly trying to get through to the unemployment office, she got an email verifying her benefit amount that said there was no need for her to contact the office. Because of the expanded $600 benefit in the CARES Act, Kathy should have received $4,272 by now, or $712 per week starting from when she first applied. But, like many of the people VICE spoke to, she still hasn’t gotten anything.

In the meantime, Kathy is surviving off of her paychecks from her work in February, but soon, that money will run out.

With over 30 million people filing unemployment claims since the pandemic began, politicians of all stripes are sounding the alarm about what appears to be a historic economic collapse. But if unprecedented unemployment is a five-alarm national emergency, then our backlogged unemployment insurance system should be treated as a true national scandal—an unnecessary and wholly avoidable extra crisis at the worst possible time.

The current backlog affecting people like Kathy has gotten some notice—a few days after the CARES Act passed, Senators Chuck Schumer, Bernie Sanders, and Ron Wyden sent a letter to the Department of Labor, asking the agency to do everything in its power to get people their unemployment benefits in a timely fashion.

Millions are losing their jobs and need urgent help to feed their families. They cannot afford delays.

Congress passed the largest unemployment expansion in history.

Now the Labor Department must do everything in its power to ensure people have their benefits within two weeks. pic.twitter.com/FpyQvcFtPf

— Bernie Sanders (@SenSanders) April 1, 2020

But that clearly hasn’t happened. While the Senate delayed its return until the first week of May, the program that was supposed to act as a safety net in the meantime was failing the millions of desperate Americans who—almost two months out from the beginning of the pandemic—are still not getting any relief. According to a Pew Research Center report, only 29 percent of unemployed Americans received benefits in March. And the official unemployment numbers themselves aren’t even capturing the whole picture: An Economic Policy Institute report recently found that for every ten people who successfully filed an unemployment claim between mid-March to mid-April, five to six either tried to apply and didn’t get through, or didn’t even bother because it was so difficult to do so.

But if unprecedented unemployment is a five-alarm national emergency, then our backlogged unemployment insurance system should be treated as a true national scandal—an unnecessary and wholly avoidable extra crisis at the worst possible time.

Consequently, “the economic pain people are feeling is even larger than massive numbers we’re seeing reported every week,” Elise Gould, senior economist at the Economic Policy Institute, a think tank focused on low-income workers, told VICE. A fuller picture will be revealed when the Labor Department releases its new jobs report on Friday, which officials are predicting will be the “worst ever.”

The excuses for this mess of a situation are beginning to pile up. Many state officials are pointing to the massive number of claims as the main reason why their unemployment offices are so backed up. States also have to deal with the introduction of the federal pandemic unemployment assistance, which is a whole new program that needs to be integrated into existing systems.

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Both are major issues with the capacity to create bottlenecks, even with an ideal system. But to wave off what’s happening as an expected consequence of an unprecedented situation papers over the fact that our dilapidated unemployment insurance system was deliberately designed to keep certain people from accessing benefits, long before coronavirus came around. And now, those decisions are ruining millions of people’s lives. Kathy, for one, is currently strategizing about how to not get kicked out of her home.

“I’m going to have to call him and tell him I don’t know how I’m going to do this,” Kathy said, referring to her landlord.

Our country’s social programs have long been built around an ethos of framing people either as “deserving” or “undeserving” of benefits. It’s a racist trope furthered by Ronald Reagan’s welfare queen myth and the Bill Clinton era of welfare reform, ingraining the idea that our social safety net’s primary function isn’t to help people, but to get them off of the dole. That was in plain view after the Great Recession, when states that had exhausted their unemployment funds either had to raise employer taxes or cut worker benefits. “Many chose the latter,” The New York Times recently reported.

This ethos can be seen throughout an unemployment insurance system that, like most of our welfare state, is built to prioritize rooting out “fraud” rather than get benefits quickly to the people who need them. As Pamela Herd, public policy professor at Georgetown University, put it to Vox, “Most of our social welfare policies are designed in such a way where they’re a lot more concerned about preventing people who aren’t eligible from accessing benefits than ensuring that those who are eligible actually receive them.”

To wave off what’s happening as an expected consequence of an unprecedented situation papers over the fact that our dilapidated unemployment insurance system was deliberately designed to keep certain people from accessing benefits, long before coronavirus came around.

Such choices have led to states in the South, which have a higher proportion of workers of color, now having some of the most stringent unemployment requirements. In real terms, this has meant that 7 out of the 10 states that had fewer than 15 percent of unemployed people receiving benefits in March were in the South. In Florida, where the situation has been especially egregious, only 7.6 percent of jobless people got their benefits. By comparison, 65.9 percent of those in Massachusetts who applied for jobless benefits got them.

In order to keep certain Americans from getting benefits, the Ohio unemployment office has gone so far as to set up a form for employers to narc on employees who refused available work, even while it is getting more than 650,000 calls daily. Oklahoma workforce leaders also discussed asking the federal government to cancel the extra $600 payments because they feared it would “disincentivize” people from returning to work.

Fixes are possible. One immediate idea that some economists are pushing is for unemployment offices to assume that everyone is eligible, pay out benefits as quickly as possible, and review claims later. The switch would help people get the relief they need right away, especially for those who are wrongly denied and then must then go through an appeal process that will likely stretch on even longer. By doing so, states would reverse the assumption that unemployed people are trying to defraud the system, and instead put the onus on the very system that is failing them. But experts note that it also wouldn’t fix the underlying problems with the program, including the fact that federal grants for unemployment insurance administration fell by 30 percent in the last two decades, making it harder for people to get their benefits because the necessary infrastructure to do so is not in place.

There’s also the fact that our unemployment insurance system is actually 53 different systems, primarily run by individual states and localities. Michael Evangelist, research associate at the University of Michigan’s Poverty Solutions, told VICE that one federally run program, similar to Social Security, could help address these issues. “If we just had one system it would be a lot more efficient. We’re running up against the inefficiencies of moving 53 different entities to enact all these changes,” Evangelist said.

While states’ governors blame outdated technologies and their predecessors’ choices, people are barely scraping by. Jonathan Bowen, a laid off cook in Portland, Oregon, was already struggling when VICE spoke to him for a previous story in April. Now, as of May, he still hasn’t received any of his unemployment benefits, which he calculated should have added up to more than $5,000 by now. Because his claim is mysteriously marked as invalid, Bowen has to talk to an actual person at the unemployment office before his application can go forward, which means he’s been calling the office hundreds of times a day for nearly two months, starting every day at 7am.

“You get these little superstitions about stuff, ‘Oh I got through when I called right at 6:59 and I let the menu cycle through three times so that I would be accessing it at 7:01,’” Bowen told VICE. “It’s easy to see how people get religious.” He said he needs to buy clothes for his 6-year-old son, who has grown out of every pair of pants that he owns.

“If we just had one system it would be a lot more efficient. We’re running up against the inefficiencies of moving 53 different entities to enact all these changes,” Evangelist said.

Travis, a former floor manager for Regal theaters in Georgia, was laid off and applied for unemployment benefits on March 15. He has yet to get any of the $5,700 that he’s calculated that he’s owed. “I’ve lost count of how many voicemails and emails that I’ve sent,” Travis told VICE. If it weren’t for the fact that he lives in a house his cousin owns, Travis doesn’t know how he’d get by.

Even if people will eventually get the money they’re owed, the delay is not only creating a desperate situation right now, but also hurting their long-term financial outlooks. Bowen said he’ll soon be at least three months behind on his credit card, student loan, and car payments. Travis told VICE he was just recovering from his credit taking a “massive hit” and getting back into the green after he was last unemployed a few years ago. Now he’s more worried that if he starts missing payments, he’ll have to climb back out of the hole again.

The current crisis has given greater urgency to the issues that plague our country’s welfare state, but many of those problems—the ones that make it more difficult for low-income, minority workers to receive benefits—are intrinsic to the system. Unemployment insurance was first created in 1935 as part of the New Deal’s Social Security Act, which systematically excluded agricultural and domestic workers. The result was that 65 percent of black workers were ineligible for unemployment insurance right off the bat.

Our country’s safety net has long favored those in traditional employment structures, to the exclusion of women and minorities. “It’s always been designed for the male breadwinner model and people say that’s not what our economy looks like now,” Evangelist, the University of Michigan research associate, told VICE. “But the reality is it never looked like that for a lot of people.” Undocumented immigrants still remain ineligible for unemployment benefits, meaning that a huge chunk of workforce is still unaccounted for.

The CARES Act extends benefits to gig workers, the self-employed, and those who must suddenly take care of children or elderly family members. Instead of thinking of this as just an emergency measure, it’s worth asking why certain parts of the workforce are excluded in the first place. A recent report commissioned by the San Francisco Local Agency Formation Commission found that 78 percent of gig workers in the city were people of color, and 56 percent were immigrants. Even now, gig workers are waiting even longer to get their benefits as some states ask them to apply first for normal unemployment, get denied, and then apply again for pandemic insurance.

Amanda Novello, a senior economic policy associate at The Century Foundation, a progressive think tank, pointed out that many of the excluded gig workers are misclassified to begin with. “I think it’s a prime moment for people to not only realize that had been the norm and also to run with what has already been put in place [in the CARES Act] and not revoke it,” Novello said.

“You get these little superstitions about stuff, ‘Oh I got through when I called right at 6:59 and I let the menu cycle through three times so that I would be accessing it at 7:01,’” Bowen told VICE. “It’s easy to see how people get religious.”

After recessions, states typically scale back their unemployment benefits and funding, resulting in the administrative horror show we’re seeing play out. But with the system’s fundamental flaws in full sight, now is the time for progressives to guard against these restrictions and push for the country to rethink the priorities and design of our current system. The question isn’t one of austerity, but of political will—as EPI noted, we would need to pay the 30 million unemployed workers an extra $1,400 per week for a year just to match the size of the 2017 corporate tax cuts.

In the meantime, while they wait, all people can do is keep filing their claims over and over again. They’re not left with much other choice. If nothing comes in by the time the next Sunday rolls around, Kathy, the teacher, said she doesn’t know what she’ll do. “How I’m going to get by,” she said, “is a big question mark.”