How the Biden administration can fix our dysfunctional unemployment insurance program.
Labor Day marks the end of the summer, back to school, and a reminder that unions were the folks that brought you the weekend. This year, it should be dedicated to ensuring that unemployed workers receive their benefits on time.
Why? Because the unemployment insurance system, as is, has failed to deliver at least $17 billion in aid, especially impacting Black and brown workers.
In May, we wrote about our proposal for a presidential executive order that would coordinate an interagency effort to ensure that the unemployed get their money quickly. The order would come in conjunction with the $2 billion appropriation from the American Rescue Plan Act that was aimed at improving timeliness, equity, and fraud prevention in current unemployment insurance programs nationwide.
Now, with record job growth that began in early summer, and employers proclaiming a huge worker shortage, one could reasonably ask: Is executive action and urgent attention to the issue still warranted?
Short answer: Yes. Before explaining why, though, let’s review the current U.S. unemployment situation and some initial steps the Biden administration has taken to fix it.
In June, the government’s calculated unemployment rate was 11.1 percent, one of the highest since official records began in 1948, according to the Peterson Institute for International Economics. The number of new people filing unemployment claims every week from March until July of this year hovered around 2 million. As of September, the unemployment rolls had 8.4 millionpeople registered—and that is likely an undercount.
Cyber fraud also continues to impact the unemployment insurance system, which has caused delays for those out of work. ProPublica reported that criminal hackers have stolen at least $80 billion in what could become “one of the largest internet crimes in history.”
A historic unemployment crisis still grips the country even with the economy starting to rebound. And the unemployment insurance system, in many ways, broke during the peak of the pandemic, and there is little evidence to suggest that needed changes have been made. Simply put, many of the people who need help the most have still not been paid.
To be sure, progress is happening under the leadership of Labor Secretary Marty Walsh. The Department of Labor recently announced a $1.1 billion plan to address failed aid delivery and cyber fraud. The agency calls for the creation of small technical teams that will be deployed to states to resolve backlogged claims, identity verification solutions, and grants to states for addressing equity issues. But real gaps remain in the plan, as it did not allocate any money for tech modernization, and $900 million remains unallocated.
While six states have already signed up for the technical teams—including Colorado, Kansas, Nevada, Virginia, Washington, and Wisconsin—it is unclear how the Labor Department plans to scale up the teams from six to 50 states and over what time frame. Further, its plan does not articulate how the learnings from the technical team successes will be incorporated into other areas.
At the same time, the Employment and Training Administration, tasked with implementing those dollars, has no experience managing such a cash infusion, likely leaving its well-qualified staff straining under the demands and having to figure out the best use of limited resources.
That’s why an executive order is still needed—and needed urgently. We believe the order should include establishing cooperation among federal departments and agencies around a federal ID verification system. Such an interagency process would pertain especially to the Department of Labor and the Department of the Treasury, because the latter created the Emergency Rental Assistance Program, which has been plagued with multiple challenges disbursing the aid, similar to the unemployment insurance system.
The executive action should also include a “vaccine reaction benefit” for workers who need to take a post-jab paid sick leave day; this might also incentivize increased vaccinations, something the country sorely needs. At the same time, the order could create a mechanism to ensure that states can leverage federal data to improve unemployment insurance administration through a federal data hub.
The ultimate goal would be for all workers’ legitimate claims to have been paid a year from now, so that next Labor Day, we are celebrating the employed worker, for whom the holiday was intended, rather than needing to dedicate it to the unemployed one.