Newly unemployed may not see expanded benefits for weeks

States are struggling to get expanded unemployment benefits into the hands of those who need them, according to labor advocates, at a time when the number of Americans filing new jobless claims is shattering records.

In the last two weeks, an unprecedented 9.9 million people have applied for unemployment insurance as economic activity ground to a halt in the face of the coronavirus pandemic. During the Great Recession, it took six months to hit a similar number.

The crisis has pushed existing unemployment benefits systems to their limits, leaving some people scrambling to get financial help.

Reports of systems crashing, busy phone lines and other problems filing claims have surfaced across the country, including in New York, Florida, Maryland and Oregon. Some states still process unemployment claims on computer systems that are decades-old and using antiquated coding languages.

“We have drastically under-funded these systems for decades. We’ve heard the stories about systems shutting down, people not being able to get through,” said Heidi Shierholz, an expert at the left-leaning Economic Policy Institute and former Labor Department Chief Economist.

In some ways, observers say, the resilience of the existing systems is remarkable. Two weeks ago, states were able to process 3.3 million claims, some five times the highest number they’ve seen on a given week in recent history.

The following week, the number doubled to 6.6 million, as businesses ranging from restaurants to retail stores have shuttered. Many states had to process claims without the benefit of physical presences at unemployment offices that frequently process claims.

“These are extraordinary times, and states have been doing a really impressive job of keeping things running,” said Michele Evermore, a Senior Researcher and Policy Analyst at the National Employment Law Project.

The problem is that it may still be weeks before people get the added help provided for them in the $2.2 trillion emergency relief bill President Trump signed last Friday, which vastly expanded the size and scope of unemployment benefits.

“In normal times it takes 2-3 weeks to get your first benefit check,” said Evermore.

But these are not normal times, she added, and states could take longer than normal to validate and process all the claims. When it comes to some of the extended benefits, it could take as much as a month and a half.

The stimulus package provided two main avenues of padding unemployment benefits. The first was adding $600 to weekly unemployment checks, a roughly 150 percent increase over average payments.

The other was expanding benefits to people who normally are not eligible, people who have not yet showed up in the unemployment claims because the new systems aren’t yet in place.

“Our regular unemployment system has gaps in it that you could drive a train through, so this will certainly understate the number of people who are out of work,” said Shierholz.

But the expanded benefits are part of a separate program, called Pandemic Unemployment Assistance (PUA), which legislators based off previous disaster unemployment schemes in order to speed along the implementation. It allows freelance workers, the self-employed, and participants in the gig economy to receive help.

In order to get that program up and running, the Department of Labor needs to issue guidelines and regulations to states, who then have to be ready to implement them, update their own processes, and upgrade their websites.

The department, which is still working on paid leave and other safety net issues included in the previous COVID-19 stimulus bill, has yet to issue these guidelines and regulations, and has not given an indication of when it might.

Unlike regular unemployment, which relies on readily available tax data from employers to verify a recipient’s former income level, the new benefits need other forms of proof.

“However you know how much money you’re earning, save that documentation,” Evermore advised those planning on applying for PUA, saying they may need as much as 18 months worth to prove what their income was.

To further complicate things, some states can make changes by executive action, while others might need legislative changes, a difficulty when many legislatures are out of session and dealing with their own social distancing guidelines.

“There are some states that are much more proactive in responding than others,” said Dave Shideler, Chief Research Officer at Heartland Forward, a think tank focused on economic performance in the central regions of the country.

While states like New York and California are quickly responding to problems, he said, others have the luxury of time. States that haven’t been as damaged by the pandemic have seen smaller increases to their unemployment rolls, and will already have guidance by the time they feel the pressure.

“Much of the heartland of America are lagging behind 3-4 weeks from the coasts in terms of COVID-19 impacts, so we can learn from others as we go,” Shideler said.

On the other hand, some states might still wait until more support is promised from the federal government.

“Some states are more fiscally conservative and concerned about what kind of support they’re going to get for ramping up support,” he said.

The combination of bureaucratic delays, technology and a workforce unprepared to deal with the rush of new cases mean some people will get their $1,200 stimulus checks before they can access unemployment benefits.

Others might be less lucky.

A memo circulated among Democratic House offices found that while the IRS would be able to direct deposit stimulus checks in the accounts of some 60 million people by mid-April, it won’t be able to start issuing paper checks for others until May. Some people will have to wait as long as 20 weeks to get the stimulus, according to the memo.

One final hurdle to getting cash in the pockets of people unemployed during the pandemic is getting good information to people.

In some states, companies that are reducing hours can also apply for programs to fill in the wage difference for their employees.

Evermore said that businesses laying off people can let their state unemployment offices know to ease the process of verifying claims.

Better yet, said Shierholz, companies can opt to furlough workers instead of severing their jobs altogether, which will help both the business and the employee when things get back to normal.

“That idea of keeping people on the payroll during a downturn, we’re not really well-socialized to that in the United States,” she said. But the stimulus law has provisions to provide some level of compensation for furloughed employees, which could be helpful when the lockdowns let up.

“In Europe they do it all the time, and it’s much better for both the businesses and the workers,” she said.