Here's why millions of Americans are struggling to file for unemployment benefits at a time when they have never been more generous

Associated Press
  • State unemployment systems are overwhelmed across the US due to a massive surge of laid-off workers filing for benefits.
  • Budget cuts, poor staffing, and old technology are key problems hobbling state safety nets nationwide.
  • “We haven’t made the investments that we would need to be agile and effective enough to absorb what we’re seeing,” labour expert Heidi Shierholz told Business Insider.
  • Visit Business Insider’s homepage for more stories.

More than 10 million people filed for unemployment benefits in the last two weeks of March. It’s an unprecedented spike in the wake of the coronavirus pandemic which has shut down wide swaths of the American economy.

That surge has overwhelmed unemployment systems across the US. Phone lines are overwhelmed and government websites are crashing, leaving many laid-off workers uncertain of when they will receive some of the most generous benefits there’s ever been.

Many of the problems can be traced to poor staffing, budget cuts, and antiquated technology dating back several decades ago, according to Heidi Shierholz, a labour expert and director of policy at the Economic Policy Institute.

“These programs have been drastically underfunded for decades,” Schierholz told Business Insider. “We haven’t made the investments that we would need to be agile and effective enough to absorb what we’re seeing.”

In Florida, The Tampa Bay Times reported the state has racked up a backlog of over 500,000 applications with many more likely on the way.

Yet Gov. Ron Desantis said at a press conference on Monday that state officials hoped to process around 80,000 claims for the week, a pace that will certainly leave many waiting for critical government aid.

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New Jersey also had similar problems, and one more rooted in technology. According to the Bergen Record, the state still uses a system constructed in the 1980s to administer claims and send out checks to the unemployed.

“We literally have a system that is forty-plus years old,” Gov. Phil Murphy said at a recent press conference. New Jersey state officials are vowing to speed up hiring to handle the crush of claims.

Shierholz pointed out these unemployment benefits will serve a crucial function tiding laid-off workers over during the pandemic – at a moment when they need to stay home, commit to social distancing and keep the virus from spreading.

“These programs are the lifeline for millions of people that will make sure they can make it while we shut down the economy,” she said.

Unemployment aid has never been more generous, but its also never been harder to access

In the recent stimulus law signed by President Trump, lawmakers opted to add $US600 per week onto every state’s benefits to tide over newly unemployed Americans for up to four months. Eligibility was also expanded to include contract workers and self-employed workers.

A previously passed coronavirus package gave states around $US1 billion in extra funding to shore up their unemployment systems.

The number of Americans seeking those benefits is unparalleled. For the week ending March 28, Labour Department data showed that around 6.6 million people winded up filing for unemployment.

That’s over 31 times more compared to the final week of February, when 215,000 claims were recorded.

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The federal government oversees unemployment systems, though it leaves their administration to each state and gives them significant discretion setting benefit levels and eligibility rules. That’s created a patchwork of regulations that differ from one state to another.

In the decade since the Great Recession, nine states cut the maximum weeks that workers are allowed to draw benefits, according to the Centre on Budget and Policy Priorities. In some, the situation is more dire for jobless workers.

Fewer than one in 10 unemployed people in Mississippi, Nebraska, North Carolina and South Carolina receive government aid, the CBPP said in its analysis on state-level readiness for recessions.

“People will suffer at a time like this needlessly,” Shierholz said. “It’s not abstract. It’s people not being able to provide for their families because these systems are down.”

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