New Data Show Unemployment Programs Delivering Aid, but Struggling with Record Demand

The COVID-19 unemployment crisis has triggered record numbers of layoffs. While it is clear that the resulting unemployment insurance (UI) claims have overwhelmed the capacity of the state agencies responsible for processing them, there have been few indicators of how quickly aid is actually reaching families in need. This fact sheet analyzes new data that the U.S. Department of Labor made available on April 27 that shows state-by-state figures on unemployment payments for the month of March. The data shows a system that managed to pivot from one of the lowest unemployment rates in U.S. history to near-record payments in a single month, but has clearly struggled to meet the urgent demand of Americans for temporary relief to pay their bills:

• During the month of March, 1.7 million workers were newly paid an unemployment check.¹ That’s an indication that the UI system was able to quickly respond to the growing economic crisis. In a single month, states were able to more than triple their ability to pay out claims, from under 500,000 in February to 1.7 million in March. And they did so with limited staff and federal funding based on the expectations of low unemployment rates.
• Still, 1.7 million represents only 14.2 percent of the nearly 12 million new workers who filed claims in March. These 11.7 million claims overwhelmed an infrastructure that had been neglected for decades. The surge of activity caused unemployment insurance websites to crash and rendered phone systems unreachable. The bottom line is that, even among those fortunate enough to make a claim in March, emergency relief did not reach them before bills—such as April’s rent—came due. While the challenges states currently face are unprecedented, the wait for benefits has been excruciating for workers, and the low through-put percentage puts an actual number on that frustration.
• Data is available only through the end of March, and April data will tell a fuller picture. Under federal rules, states are given up to twenty-one days to make an initial payment. New unemployment claims grew toward the end of March, so even the pre-pandemic processing time would have likely bled into April. Figure 1 looks at three key data points around unemployment insurance and the initial month of the COVID-19 crisis. It shows, as stated above, 11.7 million Americans filed benefits and 1.7 million began to get paid in March. It also shows 6 million workers who were newly counted as insured unemployment (an increase from 2.1 million at the end of February to 8.2 million at the end of March); that is, these workers’ applications have made it through the first step of processing, and are on their way to being paid (which should show up in the April data), or have been held in a pending status while the state decides their case.

Figure 1

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• States’ ability to process claims varied widely. On the high end, Rhode Island made initial payments to 51 percent of the 60,000 individuals who filed claims. Similarly Virginia delivered aid to 47 percent of the 236,000 jobless individuals who filed for aid. On the low end, Florida only paid 2.4 percent of the 372,700 individuals who managed to file a claim, the third-lowest in the country. Florida’s UI website has been particularly riddled with problems, and at one point they recommended individuals file paper claims. Indiana fared the worst, processing only 2 percent of claims. Importantly, this data shows the percentage of first payments as a percent of claims that were successfully filed. States such as New York, which had major processing challenges, might appear better because the percentage is applied to a lower claims number, as opposed to states such as Pennsylvania, where claims rose much faster.

Looking Ahead

The data above came before assistance from the CARES Act delivered additional aid to jobless workers. But as the data above indicate, states cannot deliver aid to workers and families in need without the administrative infrastructure required to do so. States should be supported with increased grants to hire staff to speed up processing and make smart improvements to websites and business processes that can ease the burden for workers and state agencies alike. Congress can heed those lessons as it considers ways to shore up worker protections and unemployment insurance programs during Phase 4, or CARES Act 2.0, relief packages.

header phtoo: An unemployment application is seen in a box as City of Hialeah employees hand them out to people in front of the John F. Kennedy Library in Hialeah, Florida.

1. This is technically known as a first payment, meaning that individuals have established a new benefit year, rather than reactivating or continuing a claim based on an earlier layoff.