It’s time to transform our unemployment system

As the U.S. prepares to celebrate Labor Day, more than 7 million jobless workers face dire prospects as federal pandemic unemployment compensation programs are scheduled to end the same day — Monday, Sept. 6.

These jobless aid programs, created by Congress in the CARES Act in March 2020, have been one of the success stories of the pandemic. The money has helped nearly 53 million workers and their families pay their bills and afford basic necessities and bolstered the economy with $800 billion to recover from the effects of the coronavirus crisis and avert a deeper recession.

Ending these programs could not come at a worse time, as cases related to the COVID delta variant surge, wildfires blaze out of control, and hurricane season intensifies — threatening further job losses and making it even more urgent to fix state unemployment programs.

As crucial as they are, the federal pandemic unemployment programs merely paper over a deeply flawed unemployment insurance system. Long before the COVID crisis, state unemployment systems were out of date and inefficient. So, it was no surprise they were wholly unprepared and incapable of adequately supporting workers when pandemic-induced mass unemployment surged in 2020.  As President Biden put it in a recent letter to Congress: “the pandemic has exposed serious problems in our UI system that require immediate reform.”

The CARES Act programs temporarily filled in some of the huge gaps and inadequacies in state unemployment programs. When the programs were set to expire earlier this year, millions of jobless workers made their voices heard and Congress passed the American Rescue Plan, which extended the programs to Sept. 6.

But in spite of this, over the last three months, governors in 26 states, spurred on by corporate America, have unilaterally decided that pandemic jobless aid is no longer needed. These governors moved to prematurely discontinue these programs well before the Sept. 6 end date, cutting off jobless workers and families from this crucial aid and turning their backs on constituents who fought for and need these benefits. 

The past 18 months of political ping-pong over our unemployment insurance system have been detrimental to tens of millions of U.S. workers and their families, with no lasting resolution to longstanding problems in the system. This is unacceptable.

The need for unemployment insurance reform has never been clearer. Congress must heed the call from communities across the country now echoed by President Biden, too: The time to transform our unemployment system has come, and our elected leaders must include reforms in the upcoming budget reconciliation package.

Specifically, in addition to helping states update the antiquated technology that many run their programs on, Congress should ensure that benefits are adequate to support people’s basic needs. On a national average, unemployment benefits replace only 44 percent of workers’ wages, but in many states, particularly those with higher percentages of Black, Indigenous, and immigrant workers, the replacement rates are far lower. 

Too many workers are ineligible for unemployment benefits. In 2008, only 37 percent of unemployed workers actually received them. By 2019, this recipiency rate had shrunk to 28 percent, with some states in the teens. Black, Indigenous, and immigrant workers are more often shut out of the system than white workers. This must change.  

Moreover, the duration of benefits in many states falls far short of the 26-week standard that was long the norm before states started slashing their programs after the Great Recession. Congress has a large menu of levers it can press to remedy these and other shortcomings, and it should do so immediately.  

As a nation, we must make comprehensive unemployment insurance reform a top priority. Systemic reforms need to be centered around the needs and experiences of Black and brown workers, so that no one is unjustly excluded, and so all workers can thrive.

With pandemic unemployment programs slated to end on Sept. 6, we must ask ourselves: Do we want this Labor Day to be remembered as the beginning of another needless humanitarian crisis, in which 7 million people will have no income to live on as they look for work? Or do we want this Labor Day to be a celebration of our nation’s working people because Congress will have made the right decision to begin to repair and reform our broken unemployment system?

The choice is clear: It’s time to do right by working people and transform the unemployment system. 

Rebecca Dixon is executive director of the National Employment Law Project.