UI Became Biggest Assistance Program In History During COVID
August 10, 2021
The federal government “stood up the biggest cash assistance program in history” in just a couple of weeks at the start of the pandemic last year through the Coronavirus Aid, Relief and Economic Security Act, according to Michele Evermore, of the U.S. Labor Department.
And it did so on top of “horrendously underfunded” state unemployment agencies, whose funding was at a 50-year low.
Those state agencies were expected to set up three new unemployment programs while they were receiving new initial claims “over 10 times what they had seen at that highest period in history before that,” she said.
“Naturally, that is going to create a little bit of friction,” Evermore told attendees of the National Conference of State Legislatures’ online Base Camp conference Thursday. The subject was “A Deep Dive Into Unemployment Data: Takeaways for States.”
She noted the highest rate of new claims in a week previously had been 695,000, set in October 1982.
“But in mid-March last year, we saw in one week 3.3 million new claims, and everybody was just shocked,” Evermore said. “But the next week it was 6.6 million, and the week after that, again 6.6 million. The week after that 5 million. The week after that 4 million. And it remained at over a million new claims every week for a year. That is just historically shocking.”
Throughout the pandemic, she estimated that 53 million people have received over $800 billion in payments.
Today, 12.9 million people continue to receive benefits in all programs. Only 3.2 million are collecting regular unemployment benefits at this point, she said.
There are 5.1 million people on Pandemic Unemployment Assistance (PUA), which is for those not normally eligible for benefits like gig workers. Some 4.2 million people are still on Federal Pandemic Unemployment Compensation (FPUC), the extra $300 per week for all unemployed. That program is actually disaster aid authorized by executive memorandum.
And 239,000 are on Pandemic Emergency Unemployment Compensation, which are federal extended benefits.
PUA and FPUC are scheduled to end Sept 4 and 5.
If those numbers don’t seem to match the unemployment rate set by the Bureau of Labor Statistics, currently 3.7% nationally and 5% in Michigan, it is because the bureau considers who is unemployed differently, Evermore said. For instance, the bureau considers anyone who hasn’t looked for work in the last four weeks to have dropped out of the labor force even though they may still be collecting benefits.
Last May, when it seemed things couldn’t get worse, Evermore said, criminal fraud rings began attacking state unemployment systems.
“These fraud rings really are an existential threat to UI,” Evermore said. “But also, over-focus on fraud can be an equally big problem. Program integrity really ought to mean giving states the ability to pay the right benefits to the right people at the right time. But a strike team that looked at one state’s systems (and) looked at fraud flagging, found that the flags they had in place hadn’t caught any actual fraudsters. They caught innocent people making rookie mistakes, essentially.”
Asked what state legislatures should be trying to fix to the face of the pandemic, Evermore said states should work on “access and sufficiency” of unemployment benefits.
Duration is also important because some states, including Michigan, pay fewer than 26 weeks.
“I think that particularly is also a racial equity issue, as well,” she said. “I’d just point out that the average duration of unemployment, prior to the pandemic the average duration of unemployment for a Black worker was around 26 weeks. Reducing benefits below 26 weeks is going to have an adverse effect particularly on Black workers and Asian workers, whose duration of unemployment tends to be the longest.”
NCSL offers an overview of unemployment funding on its website.