States Debate Improvements to Unemployment Systems

By: - March 18, 2021 12:00 am

Harry Varela, right, wears a protective mask as he talks with a woman requesting an unemployment form at a Miami-Dade County library. Florida lawmakers are under pressure to improve the state’s troubled unemployment insurance system. Lynne Sladky/The Associated Press

When Floridians can’t log in to their state’s unemployment insurance website, or can’t figure out why they’ve been denied benefits, or have been waiting weeks to be approved for benefits, they often end up calling state Rep. Anna Eskamani. 

Eskamani, a Democrat who represents part of central Florida, says that during the pandemic, her team has fielded questions from over 20,000 unemployed people from across the state. Once word got out that her team was available to help, even paying for a hotel room or medicine sometimes, she said, the calls and emails came flooding in.

“It’s been almost a year of dealing with this broken unemployment system,” Eskamani said. “It’s been really, really bad.”

Skyrocketing unemployment nationwide last spring revealed how ill-prepared states were to get aid to workers in an emergency. Now governors and lawmakers in many states have proposed fixing ancient computer systems or hiring more staff to process claims, and in some states, lawmakers have proposed increasing benefits and making them easier to access.

While there’s bipartisan support for tech upgrades, some Republicans don’t support increasing benefits. In fact, Republican lawmakers in Maine and West Virginia have proposed cutting the amount of time people can stay on benefits when the statewide unemployment rate is low. 

But as Florida’s experience shows, the combination of public pressure and more federal money to spend could create room for Democrats and Republicans to compromise on changes to unemployment insurance systems.

Unemployment benefits are funded by taxing employers, and many Republicans and business groups don’t want to raise business taxes. They also fear that better benefits could dissuade out-of-work people from looking for jobs.

“We’re willing to discuss the max weekly benefit, just so long as we don’t end up competing for employees with our own tax dollars,” said Bill Herrle, executive director of the Florida chapter of the National Federation of Independent Business, an organization that advocates for independent business owners.

Some states have used federal coronavirus aid to replenish unemployment insurance trust funds and hold down business taxes. The latest federal relief package could be used in the same way, said Andrew Stettner, a senior fellow at the Century Foundation, a left-leaning think tank with offices in New York City and Washington, D.C. “It would certainly be better to do that than to cut benefits,” he said.

The relief package also includes $2 billion in grants to help states upgrade unemployment insurance technology. It extends federal support for unemployed workers by providing an additional $300 to former employees and $100 per week to freelance and gig workers through Labor Day.

Some Florida Republicans back increasing benefits. “We have a moral obligation to provide enough to help meet some basic needs while they look for work,” said Florida state Sen. Jason Brodeur in an emailed statement to Stateline. He proposed increasing the weekly benefit maximum from $275 to $375 a week, closer to the national average of $387 a week.

In a move that could defuse tension over business tax increases, Florida legislative leaders last week announced a plan to tax online sales to Floridians and spend the revenue on the unemployment insurance trust fund.

Florida state Sen. Annette Taddeo, a Democrat who co-sponsored the sales tax bill as well as legislation that would increase unemployment benefits, said she’s been invited to join a bipartisan Senate group focused on the unemployment insurance system. 

Ideas coming out of that group “are not going to be perfect,” she said. “But I just want us to do something.”

A Broken System

When millions of people were laid off last spring, a crush of unemployment insurance claims swamped aging state systems—some still powered by 1950s-era computer code—and overwhelmed officials. Backlogs became the norm in every state, and payment processing slowed down further as state agencies were hit with major identity theft scams.

Unemployed workers faced hard-to-use websites, legal jargon and strict eligibility requirements, and struggled to get overworked agency officials on the phone. In the latest twist in Florida’s saga, residents are now struggling to get the tax forms they need to report unemployment benefits as income, Taddeo said.

“All around, they’ve just been screwed, over and over in Florida,” she said of unemployed people. “And it’s so frustrating.”

Nationally, just 29% of unemployed workers received benefits in March 2020, according to an April analysis from the Pew Research Center. (The Pew Charitable Trusts funds the research center and Stateline.) Rates were lowest in Arizona, Florida and North Carolina, where 10% of unemployed workers or fewer received benefits.

Some state unemployment policies exclude whole categories of workers, such as gig workers and freelancers who don’t have a traditional employer, and part-time workers who earn too little to qualify. Other workers are denied benefits because they didn’t fill out paperwork correctly.

Some of Wisconsin’s unemployment forms and the online portal are only available in English and unemployment paperwork must be completed online, although some workers don’t read and write English well and lack consistent internet access, noted Victor Forberger, a Madison-based lawyer who specializes in unemployment insurance claims. 

Wisconsin’s labor department also has continued to painstakingly investigate workers’ job histories and why they left prior jobs, Forberger said, a process other states paused during the public health emergency. But during the pandemic, Wisconsin joined other states in dropping requirements that claimants prove they’re looking for new jobs.

Wisconsin officials blame eligibility requirements and old technology for payment delays. “Dealing with complex eligibility laws and outdated IT systems has led to substantial challenges over the past nine months,” the agency’s secretary-designee Amy Pechacek told legislators during a December hearing. 

In many states, people who did get state benefits during the pandemic discovered they were barely enough to live on. 

Kelly Johnson, a 48-year-old single mom of eight, started a Facebook group for unemployed Floridians last spring after she was furloughed from two jobs, as a manager at a gym and as a manager at a restaurant, then finally laid off from the restaurant. 

It took her a week to get into the state system, Johnson said. And she found she qualified for just $71 a week. “The biggest problem I see is that the benefits are too low,” she said. “If they had been a bit higher, people wouldn’t be facing the evictions and facing the car repossessions.”

Johnson’s benefits were based on her restaurant income, not her gym manager income, because the gym classified her as an independent contractor. 

Congress gave workers a lifeline last March when it approved an additional $600 per week for claimants, including gig workers. Those benefits expired in July, so the Trump administration instead created a program to send claimants an additional $300 per week. Congress then reauthorized its program, and began sending claimants an additional $300 per week in December. That money was again approved in the $1.9 trillion relief package President Joe Biden signed last week.

The multiple rounds of aid have been tough for states to speedily hand out, however. Donalyn Manion, a 55-year-old professor of graphic design in Kansas who was laid off last spring, said she’s been struggling to make ends meet since December, because she’s received no state or federal benefits since then.

Manion said she’s still eligible for benefits, but it’s taken Kansas a long time to start distributing money that Congress approved in December. She qualifies for $449 per week in state benefits, close to the $503 maximum.

Manion said she’s not low-income enough to qualify for food stamps or rental assistance. She’s cut back on expenses and is burning through her retirement savings. “It’s hard. It’s a very hard pivot,” she said. “And I have to say, if you’re not living it, you don’t really understand it.”

Labor department officials told KMBC 9 News that the agency needs time to prepare its computer system to distribute the new aid.

Johnson and Manion have channeled their frustration into organizing workers online and getting involved in state and national advocacy groups such as the Center for Popular Democracy, a pro-worker group with offices in New York City and Washington, D.C. Johnson even ran (unsuccessfully) as a Democrat for the Florida House in November.

“Unemployment [aid] is supposed to be there to sustain you, not drive you down in the hole further and make you desperate,” she said.

Seeking Solutions

Governors and legislators are looking for ways to improve unemployment insurance systems, starting with tech upgrades. 

The Democratic governors of Wisconsin, Kansas and New Jersey have proposed spending $79 million, $37.5 million and $7.7 million on upgrades, respectively. Republican lawmakers in Florida have proposed spending $73 million over two years to start fixing the state’s website.

Florida’s system was plagued by delays, overspending and technical problems even before its launch in 2013. It’ll cost $244 million over five years to fix, a joint study by the state Department of Economic Opportunity and iSF, a consulting firm, found last month.

The department’s executive director, Dane Eagle, compared the unemployment insurance system to an outdated cell phone during a March hearing. “We were issued an iPhone in 2013, we didn’t do the updates or bother to get a new iPhone in that process, and we’re still operating on older data,” he said.

Florida processed more claims in 2020 than in the prior eight years combined, Eagle said. His agency has tried to patch things up and add capacity, such as by installing 82 new servers and training hundreds of new call center workers. 

Eagle worked with Republican state Rep. Chip LaMarca and Republican state Sen. Aaron Bean on a bill that would require his agency to make certain tech upgrades. The bill doesn’t include money for the upgrades, but lawmakers are “more than willing” to consider investing in system improvements, LaMarca told Stateline.

In Wisconsin, Democratic Gov. Tony Evers’ proposal was rejected by the Republican-controlled legislature. Lawmakers approved a bill, which the governor signed, that instructs the agency to seek out contractors first.

“If we allocate $80 million, like the governor asked for, the bids will be at least $80 million,” said Republican state Sen. Howard Marklein, co-chair of the Joint Committee on Finance, in an emailed statement. “We need the administration to do the work, request proposals, make a plan and come back with actual bids so that we know the real cost to update this technology.”

Democrats in several states want to expand benefits or make them easier to access. A New Jersey bill would allow workers who earn as little as $100 a week to qualify, for instance. A Minnesota bill would allow high school students to qualify. And in Florida, several Democrats and one Republican, Brodeur, have filed separate legislation that would increase benefit amounts.

“My concern, with my bill, is that we don’t just fix the website and think everything’s okay,” Taddeo said. She proposed increasing weekly benefits to a maximum of $600, up from $275, and a minimum of $200, up from $32, and allowing Floridians to claim benefits for at least 26 weeks.

Eskamani has proposed separate legislation increasing weekly benefits to between $100 and $500 for 26 weeks, adjusting how benefits are calculated, allowing people to qualify if they seek part-time work, and suspending work search requirements during an emergency, among other changes.

She said a strong unemployment system will be key to Florida’s economic recovery, because better benefits help people keep food on the table and avoid homelessness. “A functioning unemployment system is one of the best stimulus [policies] that a state can craft for its people,” she said.

Some Republicans in the state have said they don’t think low benefit amounts are a problem. “I don’t know the issue was amounts, it was access,” state Sen. Danny Burgess, chair of Florida’s Select Committee on Pandemic Preparedness and Response, told the Palm Beach Post last month. Burgess’ office did not respond to requests for comment.

Taddeo and Eskamani don’t expect to gain Republican support for their proposals. But there could be room for compromise. 

I think all of us are more than happy to look at a different level of benefits,” LaMarca said.

Meanwhile, unemployment rates nationwide are falling as businesses reopen and companies anticipate the end of the pandemic. Johnson was called back to her restaurant job this week part-time and is planning to go, even though she’ll earn less money there than she would on expanded unemployment benefits.

“I’d rather keep my foot in the door and go back to work,” she said. 

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Sophie Quinton

Sophie Quinton writes about fiscal and economic policy for Stateline. Previously, she wrote for National Journal.