Millions of Americans frustrated by delayed unemployment checks

Millions of Americans are still waiting for their first unemployment checks after months of waiting for state systems to clear unprecedented backlogs. 

More than 40 million Americans have filed new claims for unemployment benefits since late March as the coronavirus pandemic forced thousands of businesses to close and lay off workers. 

The surge in jobless claims has overwhelmed state processing systems that experts say depend on outdated technology and have long been underfunded, leaving as much as a third of applicants without their owed benefits. 

State governments are facing increasing pressure to send out checks while facing their own financial crises as Congress struggles to find common ground on providing financial assistance for unemployed workers at a time of falling state revenues. Congress approved federal funds to provide an additional $600 a week.

The shortfalls in state budgets have left thousands of vulnerable Americans who qualify for unemployment benefits facing immediate pressure and financial issues that could persist long after the pandemic.

“There are states that have actively been trying to improve their systems but for some reasons workers are having more trouble accessing benefits than they had historically,” said Michele Evermore, senior policy analyst at the National Employment Law Project, a nonprofit that advocates for stronger labor protections.

“This is a national problem. There’s no state system that hasn’t fallen victim to this in some way,” she added. 

Unemployment insurance is administered through a partnership between the federal Department of Labor and state agencies. Every state and the District of Columbia has its own unique processing and distribution systems for unemployment benefits, each subject to the political whims and priorities of local leaders.

“There’s three main attitudes,” Evermore said. “One is, ‘let’s make sure that we get as many benefits to as many people as possible because we see the value of this program and its countercyclical effect.’ Then there are the states that are like, ‘Yeah, this is a thing we have to administer so we will.’ And then there are the states who are actively trying to reduce access to these programs.”

“The patchwork is just getting to be so uneven that maybe we need to start thinking about federalizing programs entirely,” she also said.

Evermore added that while the overall unemployment benefit system needs updates to reflect the rise of gig work and more nuanced methods of sorting workers with medical limitations, an immediate fix would involve a massive increase in administrative funding to help handle claims.

The unprecedented surge of unemployment insurance applications has left every state struggling to send out benefits, leaving millions without help, according to estimates.

A survey from hiring firm ZipRecruiter found that of the 75 percent of workers laid off due to the COVID-19 outbreak, only 58.1 percent say they’ve begun receiving benefits. More than 37 percent reported that they were still waiting to check their checks, and another 4.2 percent said they were denied. 

“For the last couple of years the numbers of weekly initial claims have been so stable, so predictable,” said Julia Pollak, ZipRecruiter’s labor economist. “Unemployment insurance offices had so few people coming to the doors, they didn’t need many staff and the fact that they had really old technology in many cases didn’t matter.”

“Overnight that completely changed and instead of 200,000 claims we saw 6 million initial claims in a week,” she continued, “and the state unemployment insurance offices just were completely unprepared for that reality.”

The previous record for most initial applications for unemployment benefits in a week was just over 600,000 in October 1982. That mark was shattered the week ending March 22, when 3.3 million Americans filed new claims for jobless insurance.

While weekly jobless claims have steadily fallen from a peak of 6.8 million in late March to 2.1 million in the week ending on May 23, states are struggling to catch up to the flood just as their own treasuries run dry amid sharp declines in tax revenue driven by pandemic.

An analysis from Bloomberg News found that roughly 33 percent of new unemployment claims nationwide have not been paid after more than two months since the pandemic tore through the U.S. economy. Those lags are raising pressure on governors to take aggressive action to unjam the system and remove those who’ve failed to improve it.

Oregon Gov. Kate Brown (D) fired the state’s director of employment Sunday for failing to pare down a backlog of more than 200,000 applications, according to The Oregonian. In Washington state, Gov. Jay Inslee (D) is facing calls to dismiss the state’s employment security chief after the state lost hundreds of millions of dollars to a fraud scheme, The Seattle Times reported.

And in neighboring Idaho, the state labor department contracted a call center as residents waited on the phone for hours to file and check on their claims, according to The Idaho Statesman. 

The slowness in providing sorely needed unemployment checks is causing a slew of predictable issues such as in paying bills, while leading to increased debt and risk of homelessness. But the lack of financial support can also cause long-term issues for those who don’t receive checks and are forced into extreme circumstances to put food on the table.

“Job seekers who are looking right now express a degree of urgency we’ve never seen before,” Pollak said.

“So many job seekers are under enormous pressure to accept the very first job they can find, and the problem in that type of situation is that job seekers lose leverage,” she continued.

Pollak added that unemployed workers who are forced to sell cars, computers or other productivity-boosting items could also struggle to find a job or maximize potential applications. 

“It could have long term impacts on their earnings,” she said.