With two senior Trump administration officials admitting on Sunday TV talk shows that the unemployment situation could reach levels seen during the Great Depression of close to 25% if it hasn’t gotten there already, state labor department officials throughout the U.S. were bracing for an onslaught of new unemployment insurance applications while still trying to cope with existing backlogs.
Treasury Secretary Steven Mnuchin told Chris Wallace, host of “Fox News Sunday,” “The reported numbers are probably going to get worse before they get better.” When asked by Wallace whether the country could already be close to the Great Depression’s 25% unemployment, Mnuchin replied, “Chris, we could be.”
Kevin Hassett, White House senior economic adviser, appearing on the CBS program “Face the Nation,” said, “Right now, looking across the U.S., there are more than 30 million people that are getting initial claims for unemployment insurance. That’s the biggest negative shock to the jobs market that we’ve seen since World War II. To get unemployment rates like the ones that we’re about to see … which I think will climb up towards 20 percent by next month, you have to really go back to the Great Depression to see that.“
New York State Department of Labor Commissioner Roberta Reardon held a May 8 conference call in which the Business Journal participated during which she again apologized for problems people might have experienced in trying to file unemployment insurance claims.
“I’ve been unemployed before myself. I know that losing your job is extremely anxiety-inducing,” Reardon said. “Every state is being hit with an expected and unprecedented wave of new unemployment claims.”
As businesses shut down and employees were furloughed or fired the Department of Labor’s website and telephone system became so overloaded they crashed or produced only busy signals for tens of thousands of would-be unemployment insurance applicants. The Labor Department brought in outside computer experts, including personnel from Google, increased to more than 60 the number of servers used by its online system and put hundreds of additional workers on the phones.
Reardon said that as of May 7, New York had paid out more than $6.8 billion in unemployment benefits.
“We paid just $2.1 billion in total last year, so in just two months we have paid out over three times of last year’s total,” Reardon said. “During this crisis we’ve paid an average of over $650 million per week compared to an average of $41 million per week in 2019. That is an increase of nearly 1,500%.”
The federal government offers three benefits in addition to state benefits. Pandemic Unemployment Assistance (PUA) extends eligibility for individuals who have traditionally been ineligible for unemployment benefits such as self-employed workers and independent contractors.
Pandemic Unemployment Compensation adds an additional $600 per week, on top of regular benefits, for all unemployment insurance recipients and Pandemic Emergency Unemployment Compensation stretches unemployment benefits to 39 weeks instead of the usual 26 weeks.
Reardon explained that the federal government required that applicants for PUA had to first be rejected by a state before they could apply for the federal benefits. She said that New York managed to work out a deal so that the two steps could be eliminated and only a single online application is now required, dramatically speeding up processing and eliminating a lot of red tape.
“One of the first things we need to do when we talk about PUA is we all need to admit that it did not exist until March 27,” Reardon said. “It was signed into law March 27. We didn’t even get federal guidance on how to administer it as a program until April 5 and then the guidance was complicated and, frankly, contradictory. Early on people were told they had to apply for unemployment insurance, they had to go through the process of being denied, then they had to fill out another application for PUA. A lot of people got caught in that original glue trap of regulation,” she said.
“In recent weeks we have focused on improving our communication efforts so New Yorkers will have the information they need to file their applications, complete their claims and of course receive their benefits,” Reardon said. She said that the Labor Department has issued a notice to all employers reminding them they are required to provide employees with the information they need to easily and completely file for unemployment. She said that the department has been reaching out to people who have failed to do required weekly certifications of their unemployment status without which payments cannot be released.
Reardon said that the department is working on a system that will allow it to inform applicants as to how far along their application is in the approval process. She explained that the existing system was designed to be binary, only reporting whether an application was pending or no longer pending.
“Every state is facing this problem. We have 1.6 million New Yorkers processed in this past report and we know that’s not the end of the applications,” Reardon said.
“We know more people are coming into the system as we speak. It is crushing. One of the statistics that amazes me is that in two months we filled two years’ worth of new claims and that’s just a staggering number. And, this is a figure that every state in the union is confronting. There’s no state who hasn’t staggered and fallen to their knees under this. All of the states, even the states that recently rebuilt their systems, have had their systems crash. It’s just strictly a volume issue.”
Reardon said that people need to know that those receiving unemployment benefits cannot turn down a job because of a generalized fear of COVID-19 or dislike of the job. A person can turn down a job, however, because of a specific COVID-19 related health issue such as having symptoms or an issue such as being the sole caretaker of a child who cannot attend school.
Reardon said that the Labor Department had been in the middle of a five-year rebuild of its computer system when the pandemic hit.
“I do understand the frustration,” Reardon said. “I’m going to keep working night and day to process applications, complete certifications and make payments.”