The Unemployment Epidemic
“[Colorado’s proposed stimulus funds] are a down payment. Only congress can allocate the sky-high sums required to state off the worst economic crisis in generations.”
Courtesy of wallethub.com
Virginia’s unemployment office has been overwhelmed since the pandemic began, and a recent report from WJLA revealed that the agency is still processing applications from July. New applications peaked in May after federal stimulus benefits ran out.
According to a member of the General Assembly, Virginia hired Public Relations firm Capitol Results to analyze and fix problems they identify in the unemployment agency on a temporary contract. There is no evidence to suggest anything was gained by that expenditure. Now the responsibility falls to an analyst at the Joint Legislative Audit and Review Commission (JLARC), which produces 4-5 studies per year. Analyzing IT system deficiencies is a task for which it it was neither designed to perform nor is it qualified to do.
To be clear, Virginia’s unemployment office, as well as the unemployment offices of other states, are working exactly as designed. Neither Republican nor Democratic administrations have prioritized improving the agency. Failures at state unemployment agencies are due to systemic racism creating systems designed to be inaccessible. We are seeing the fruits of prior generations of bigotry.
According to General Assembly staffers, many legislative offices are overwhelmed with constituent casework and calls regarding the unemployment office. In nearly every case, aids are powerless to resolve constituent issues because a majority of applicants are ineligible for benefits as they left their jobs due to unsafe working conditions in the pandemic. In addition to overwhelmed and under resourced personnel, state agencies are relying on decades-old computer systems and websites written in dead programming languages. In some cases, the state has had to bring programmers out of retirement because Cobalt has been a dead programming language since the 1990s and it hasn’t been used or taught in decades.
Far more disturbing is the bigger issue affecting every state in the US, Virginia’s unemployment office, like the others, is running out of money.
Many other states have been hit worse, including New Jersey, New York, Hawaii, Illinois, Alaska, and Colorado. Fitch, a credit rating agency, has warned that many of these states face negative credit outlooks due to the dwindling cash reserves and mass unemployment. Several states are at risk of credit rating downgrades, a trend likely to accelerate in the coming months.
The Federal Government has abandoned Americans and its constituent states in the middle of the pandemic, leaving them to their own devices. Not only do states compete against the others for Personal Protective Equipment and medical devices, but also many states are exploring their own stimulus payments using the meager funds that remain. Colorado plans to send $375/monthly stimulus checks to families with the greatest need. Wisconsin and Minnesota are also exploring recurring and one-time stimulus payments, which they hope might bridge the gap until the Biden administration can advance a federal relief package.
Sheer volume is the biggest driver of employment office backups and delays. No state system is working well. According to a recent GAO report, fraud and inconsistent state data reporting are other reasons for the delays. RSG does not find the assertions of fraud to be credible, as the numbers of Americans legitimately unemployed dwarf the number of potential fraudulent claims. Fraud has never been a significant driver of any bureaucratic inefficiency, and Virginia’s own research into medicaid fraud supports our claim.
The November jobs report suggests that long-term unemployment is setting in, and applicants are giving up on the system. This is reflected in the data available on the Virginia Employment Commission website as well. Initial claims are falling, and there is not enough new job creation to account for reductions in the unemployed labor force. The U 6 unemployment rate currently stands at 12 percent, and is expected to jump as more brick and mortar stores shutter, potentially to nearly 30 percent. 1.5 Million people are on the long-term unemployed list, a 60 percent increase from September.
To be clear, states have far too many revenue challenges to implement an adequate unemployment insurance program. With 53 separate systems, reporting methods, and requirements, the need for a uniform federal system is a top priority. To combat the unemployment epidemic that could take a decade or more to recover from, the U.S. needs either through a national office or implementing a Universal Basic Income.
