Delays for unemployment benefits persist, over a year into pandemic

Finance news

A career fair in Louisville, Kentucky, on June 23, 2021.

Luke Sharrett/Bloomberg via Getty Images

Unemployment benefits are still not reaching people quickly, over a year into the Covid pandemic.

About 38% of workers who got their first payment of benefits in June had waited more than 21 days for the funds to arrive, according to Labor Department data, which reflects an average among U.S. states.

Three weeks is the official barometer for a “timely” payment of benefits.

By comparison, in January 2020, before the virus led to mass layoffs, about 7% of recipients waited more than three weeks for their first payment.

“Delays are unfortunately way too common,” according to Andrew Stettner, an unemployment expert and senior fellow at The Century Foundation, a progressive think tank. “Twenty-one days is a high standard.

“But that’s on purpose,” he added. “The idea of this program is to get benefits out to people in a timely fashion.”

Some people wait months. More than 14% of applicants waited at least 70 days for their first payment in June. Less than 1% did so pre-pandemic.

“Many people live paycheck to paycheck, and this is supposed to be compensation to keep their bank accounts solid and help pay monthly bills,” Stettner added. “You don’t only want the numbers to be good when times are good.”

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To be sure, the trajectory of delays has improved at the national level from pandemic lows. At the nadir, in June 2020, about half of applicants didn’t get a timely payment, according to Labor Department data.

Continued delays are likely the result of many factors.

State systems had buckled under a deluge of applications last year, as millions of workers lost their jobs and sought income support. Claims have fallen drastically, to around 444,000 total last week, but are still roughly double pre-pandemic levels.

States have also had to implement new rules in multiple rounds of pandemic-relief legislation, while continuing to process and pay funds — a task complicated by antiquated administrative systems in many states.

Criminal attempts to steal benefits also led states to clamp down with anti-fraud measures. These steps have helped prevent theft but also slowed receipt of benefits to some workers whose applications, while legitimate, get flagged for fraud.

Businesses may also have an incentive to appeal a worker’s claim. Their tax rate generally rises when laid-off workers collect benefits. (This policy may also serve as a deterrent to layoffs, though.)

“There are some structural problems,” Stettner said of the U.S. unemployment system.

Some states have fared worse than others.

California, Kentucky, Ohio, South Carolina and Virginia made timely payments to the lowest share of applicants – in these states, more than 60% waited at least three weeks for their first round of aid, according to Labor Department data.

By comparison, less than 10% waited that long in North Dakota and Rhode Island.

In some areas, even those who’d begun receiving benefits have seen delays in subsequent payments.

In California, for example, that may occur if a worker inadvertently answers a biweekly certification question incorrectly, according to Rita Saenz, director of California’s Employment Development Department. That triggers the need for an eligibility review, a process that’s backlogged by several weeks

On July 23, the state began issuing conditional payments to such people – essentially fronting the money before the interview has been conducted. (They’d have to pay the money back if ultimately deemed ineligible.)

“We know many claimants who cleared fraud filters and verified identity have been waiting too long for payment,” Saenz said. “In response, we are launching a new program that will help many Californians get benefits faster.”