Unsanitized: The COVID-19 Report for Aug. 1, 2020

Federalize and Overhaul State Unemployment Systems
California's experience serves as a good example

 

A closed job center in Pasadena, California. (Damian Dovarganes/AP
Photo)

First Response

Starting today, if you file a first-time unemployment claim, you will
get the standard payment determined by your state system, with no $600
federal enhancement. Congress knew the it put a deadline in place more
than four months ago, had ample statistics showing how vital this boost
was to maintaining some level of consumer spending, and they let it go
anyway. That it was inevitable that aid for individuals would be
retracted prematurely while aid for big business and investors would
endure-stocks went up yesterday
on the final day of the unemployment boost-is why I didn't like the
CARES Act very much in the first place. I take no pleasure in this
vindication.

Among all the other hardships, we are now in a situation where, if
Congress does manage to reach a deal ever that includes a federal
enhancement for unemployment, the state systems that deliver it will
have to turn back on that allowance, after turning it off today. It took
several weeks to get the $600 increase up and running, depending on the
state. And if you have filed but not yet received a claim, there will be
weeks with the $600 boost, weeks with $0, and down the road, weeks with
the compromise number that Congress lands on. (And weeks tied to an
individual replacement rate, if Republicans have their way.)

These antiquated systems are definitely not equipped to give each
individual, say, 70 percent of what they made before they were laid off.
(State unemployment systems don't even have that information!)
They're probably not equipped to shut down and turn on again and make
sure everyone gets those varying amounts properly. And as what we're
finding, they're not even equipped to process the level of claims
received.

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California has offered some welcome transparency on its unemployment
system. The nation's largest state has had the nation's largest
number of claimants, having processed 8.7 million claims from March 8 to
July 18. But increasing anger over delays and lack of communication led
Governor Newsom to form a "strike team
"
to identify solutions and deal with the backlog of claims.

How big is that backlog? This information

from the state Labor Secretary offers a clue. Since March, the
Employment Development Department (EDD) has added nearly 5,000 new
personnel, redirected more staff from other departments, created an
online chatbot, a new call center, and more. But while in March, 87
percent of claimants received their payment within two weeks of filing,
by June that number had dropped to 52 percent. Currently, according to
EDD, 1 in 5 unique claimants-1.2 million Californians-have not been
paid.

Problems include identity verification (which must be mailed or faxed to
EDD) and continued certification of eligibility, which must be done
every two weeks. EDD has found at least 370,000 who haven't certified,
and even after contacting them, only 221,000 did so.

And to answer the question I posed earlier of what it would take to shut
off federal benefits, reprogram them, and get those benefits out, the
EDD chair said "as long as 20 weeks
"
in California. Interestingly, bills don't stop coming for unemployed
people in that period.

I don't mean to pick on California; the state is being up-front about
it's problem, which is more than can be said for many other states.
The larger point is that this is an unacceptable delivery system for
federal transfer payments. The states are not properly funding their
systems, which almost certainly need to be federalized. We can design
all sorts of innovative ways to get people past this crisis intact, but
if we can't get the money into their hands quickly, it's not as
meaningful.

The technology is more than available to enact real-time or
near-real-time payments to a Federal Reserve bank account

set up for every American through their Social Security number. If I can
take a picture of a check on my phone and have it deposited, if I can
Venmo someone, we can make this service available for everyone, with a
one-time delivery of a debit card

that can be endlessly reloaded, or a phone-based service doing the same.
It's unacceptable that these systems are so neglected that they become
unreliable precisely when they are needed.

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Days Without a Bailout Oversight Chair

127
.

We Can't Do This Without You

Today I Learned

* Better call this weekend of baseball "The World Series" because
they're likely to be the final games of the season
.
(ESPN)

* Overnight camp in Georgia overrun with COVID-19
.
Masks were not required. (Houston Chronicle)

* Just nothing doing on Capitol Hill, no deal in sight
.
(Los Angeles Times)

* Those "free" coronavirus tests still keep costing people lots of
money
.
(ProPublica)

* Small businesses moving their money

because they couldn't get PPP loans from their big banks. (Wall Street
Journal)

* Kodak executives got lots and lots of stock options
right
before announcing that government loan that sent the stock soaring.
Uh-oh. (Non-GAAP Thoughts)

* Housing and the crisis, from Robert Shiller
.
(New York Times)

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