ncsl base camp 2021 unemployment covid

Clockwise from top left: NCSL’s Suzanne Hultin talks with Michele Evermore of the U.S. Department of Labor, and Matthew Hartman, chief of staff to Massachusetts Senator Patricia Jahlen (D) during NCSL Base Camp 2021.

A Deep Dive Into Unemployment Data: Takeaways for States

By Mark Wolf | Aug. 10, 2021 | State Legislatures News | Print

When COVID-19 steamrolled the American economy last year it hit state and federal unemployment departments like, well, a pandemic.

“The highest week of initial unemployment claims before that was 695,000 in October 1982,” said Michele Evermore, a senior advisor on unemployment insurance in the U.S. Department of Labor’s Employment and Training Administration, during an NCSL Base Camp 2021 session, “A Deep Dive Into Unemployment Data: Takeaways for States.”

“In one week in mid-March (2020), we saw 3.3 million, and everybody was shocked,” she said. “The next week was 6.6 million, then 6.6 again, 5 million, 4 million. It remained over a million new claims a week for over a year. That is just historically shocking.”

In one week in mid-March (2020), we saw 3.3 million, and everybody was shocked. The next week was 6.6 million, then 6.6 again, 5 million, 4 million. It remained over a million new claims a week for over a year. That is just historically shocking.” —Michele Evermore, U.S. Department of Labor

By contrast, new claims in early August were 323,763, which Evermore characterized as “surprisingly low.” During the same week last year, the number was 1.1 million. About 3.2 million Americans are collecting regular unemployment, and, of the 12.9 million total claims, most are for programs ending the first week of September, Evermore said.

During the pandemic, 18 states borrowed $64 billion to keep up with the estimated 53 million people who got $800 billion in benefits.

“States running out of funds is one challenge but access to sufficient benefits is also a huge issue in terms of recession readiness,” she said.

When Congress passed the CARES Act in March 2020, “we thought, ‘This is a huge problem that’s going to be with us for a few months.’ Nobody could have thought benefits still would be in place today, a delta variant, cases still on the rise again.”

The Labor Department had to get guidance on how to set up the benefit programs at a time when state unemployment agency funding was at a 50-year low.

“They were historically, horrendously underfunded, and we’re giving states three new programs to set up as quickly as possible while they’re seeing claims over 10 times higher than any period in history,” Evermore said.

“Unbelievably, most states had pandemic assistance programs set up, a whole new compensation program, within a month,” she said. “It was an enormous new thing put on the backs of very skeleton crews of people. You saw lines around the block for benefits, there is still a backlog in most states. People lost their homes, their families, even their lives because benefits couldn’t go out fast enough. We’ve lost many state agency staff from burnout, desperation, suicide. Naturally in that scenario, things were bound to break.”

The CARES Act covered up two core problems with unemployment insurance, Evermore said: “Not enough people get benefits; recipiency was down in most states compared to just before the Great Recession and benefits were replacing less than 30% of income in most states.

And then the crooks hit.

“The fraud rings found unemployment insurance,” she said. “These are international criminals for the most part. Prior hacks gave criminals access to personal information that they used to apply for benefits. Fraud rings really are an existential threat to unemployment insurance, but over-focus on fraud can be an equally big problem.”

For example, Evermore said, a strike team looking at one state’s system realized that the flags in place to look for fraud hadn’t caught any actual fraudsters, instead catching people making rookie mistakes. One of the issues was the unemployment program relied on disaster unemployment rules that don’t require wage verification or an employer check. With no wage verification, it’s a lot easier for fraudsters to get through.

The American Rescue Plan Act, passed earlier this year, included $2 billion to fight fraud.

“We’re pretty excited about the things we’re working on to cut out fraud to make sure people get the right benefits at the right time,” Evermore said. “It’s important to understand how strained resources were before the pandemic to understand why things didn’t work during the pandemic the way they should have.”

In Massachusetts, claims spiked from 52,000 per week to 600,000, said Matthew Hartman, chief of staff to Senator Patricia Jahlen (D).

“Our unemployment assistance staff went from about 50 people to about 2,000 people in space of a year as we added remote call centers,” said Harman, a veteran staffer who has also served as a policy advisor and legal counsel.

Facing an estimated $6 billion in claims with about $1.5 billion in the state’s trust fund, Massachusetts quickly started taking out federal loans.

“We were one of the lowest states in the country in terms of solvency level,” he said. “It hasn’t been an issue for the last four to five years because our economy was doing so well and there were not that many claims. Everyone knew the tax was going to skyrocket, which is based on claims usage from the previous year.”

Because it seemed unfeasible to ask businesses to reopen while their unemployment taxes soared, the Legislature and governor put together a package that would bond the more than $2 billion in loans to be paid off over 20 years and also established a commission to examine the issue.

While outdated IT systems may seem a logical reason for state bottlenecks, Evermore said that’s not the case.

“Some states with modernized systems did not meet the challenge, and some states operating on old mainframes figured out how to flip switches in the system to get things to move more quickly,” she said.

Siloing, in which one person may be in charge of one specific facet of the unemployment system, is an issue in many states, she said.

“You don’t have to completely modernize your system or move to the cloud,” she said. “Sometimes it’s just setting up a better password reset protocol. In some states you have to call and talk to a real person and he will mail you a new password.

“It’s just the boring good government stuff that states are doing that is really helpful.”

Mark Wolf is editor of the NCSL Blog.

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