Three years after the pandemic recession, signing up for unemployment still isn’t easy
Three years after the pandemic recession, signing up for unemployment still isn’t easy
Unemployment is almost certainly going to rise as the Federal Reserve’s interest rate hikes slow this economy down.
The unemployment rate rose 0.3% in May. And while 3.7% is still low by historical standards, the Federal Reserve predicts it’ll keep going up and hit 4.5% in 2024. Initial claims for state jobless benefits have been rising too; in the week ending June 17, the four-week moving average hit its highest level since November of 2021.
It’s hard to forget what a mess state-run Unemployment Insurance (UI) systems were in early on in the pandemic: Unemployment claims spiked into the millions, computer systems crashed, applicants and would-be applicants (those who weren’t sure if they were eligible for state or expanded federal benefits) couldn’t get through to anyone on the phone; and people waited weeks or months for benefits.
Since then, the federal government and states have spent hundreds of millions of dollars to upgrade unemployment insurance systems.
Like that of many other states, New Jersey’s unemployment system is still playing catch up from the tsunami of jobless claims during the height of the pandemic. Appeals and state efforts to claw back benefits (due to alleged overpayment or fraud) are ongoing. The state’s phone and computer systems are still stressed.
And Neil Fisher, 46, has experienced that firsthand. He’s an engineer with two kids who lives in South Jersey. In May 2022, his job running computers for a startup ended. So he applied for unemployment. And waited.
“I did call one time to see what was taking so long,” said Fisher. “I ended up not even being able to get in contact with anybody.”
He did at least find out why: “They sent me an email saying there’s a lot of people waiting to get calls, and the call center is backed up.”
Fisher’s unemployment insurance claim was eventually approved, and after two months he got a new job, managing computers for a bank.
New Jersey, meanwhile, is continuing to modernize its UI system. Sarah Hymowitz, supervising attorney in the Workers Legal Rights Project at Legal Services of New Jersey, is eagerly anticipating more progress.
“The Department of Labor has been working very hard and we give them a lot of credit for that — modernizing, upgrading many systems,” she said. But “it’s still very difficult to pick up the phone, call one of the call centers, reach a claims examiner who can answer questions, help resolve a problem.”
Upgrading outdated IT systems is a challenge nationwide, said Marcie Chin, product lead for the Unemployment Insurance Program at U.S. Digital Response — a nonprofit that’s helping states with their efforts.
For one thing, she said, many states still use old mainframe computers. “Systems have not been upgraded for literally decades,” she said. “So a lot of them are very brittle, hard to update, very hard to respond quickly, especially during a crisis.”
The federal government has invested significant funding and staff time since the pandemic crisis hit, per Michele Evermore, a senior fellow at The Century Foundation who helped coordinated efforts to improve state UI systems in the Biden Administration’s Labor Department.
“It wasn’t until very recently that states even had the capacity to start really digging into their systems and making improvements,” said Evermore. “So far, $500 million has gone out the door to states — for fraud grants, equity grants and for these ‘tiger teams,’ which are groups of experts that figure out where the real bottlenecks for each state are.”
Still, most states are not prepared for a significant spike upward in unemployment, according to Steve Wandner, a labor economist and senior fellow at the National Academy of Social Insurance who has written extensively about UI.
“We’re no better ready to deal with a coming recession than we were, say, with the Great Recession,” he said.
And even as many states update their IT, some — including Iowa, Kentucky and Texas — are erecting additional barriers to qualifying for and receiving benefits, said Wandner.
“Some states have enacted restrictive legislation that makes it more difficult to apply for and receive benefits, to have lower benefits for a shorter period of time,” he said.
Meanwhile, New Jersey is among states trying to make it easier for laid-off workers, Wandner added. “They allow different ways to apply for benefits: in person at local workforce offices, by telephone or by computer.”
New Jersey is also trying to simplify the bureaucratic process of applying and trying to make it easier to track one’s claim through the system. That includes “making the application easier to understand, changing the terminology that we use,” said Jessica Rivera, a veteran state UI claims representative and supervisor who works out of the North Jersey call center in Union City, New Jersey.
Rivera, who is of Puerto Rican descent, has been working with several of her bilingual coworkers from different regions of Latin America and U.S. Digital Response to develop new tools to help Latino workers, in particular, access benefits.
Marcie Chin at U.S. Digital Response explains the challenge: “Research shows that workers with limited English proficiency have an up to 50% lower uptake in benefits than their English-speaking counterparts.”
In focus groups, Rivera and her team members try to figure out, for example, which Spanish words — in different dialects — would best convey that a worker is eligible for unemployment benefits because they were laid off for lack of work. “They say more like ‘I was fired,’” said Rivera. “They’ll say ‘me corrieron, me botaron, se termino trabajos.’ And because of not using the right term, that can delay your benefits.”
New Jersey is also redesigning its forms and online apps. Earlier this year, former unemployment recipient Neil Fisher was part of a focus group that got to test-drive a new jobless application for mobile phones. “The whole process was a lot quicker” compared to when he applied one year ago, said Fisher. “The interface was easier to use.”
At this point, states can’t expect much more help from Congress.
Michele Evermore at The Century Foundation pointed out that in the recent bipartisan debt ceiling deal, Congress canceled half of the funding already approved for UI improvement. “They took a billion dollars,” she said. “It was all technology modernization and identity verification and fighting fraud.”
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