There is growing media attention to the plight of federal workers impacted by the current federal government shutdown, the longest such shutdown in our nation’s history. With negotiations deadlocked, there is no telling when 800,000 federal workers (and numerous contractors) will be able to count on getting a paycheck again. There are stories of federal workers being forced to sell possessions on Craigslist and relying on food banks and free meals to get by. But what about the first line of defense that most workers rely on when they are out of work—unemployment benefits?
The promise of unemployment benefits is that laid off workers can count on them for timely, temporary wage replacement during a period of unexpected joblessness. Unemployment insurance (UI) was in fact designed with temporarily laid off workers in mind: in fact, many states allow companies that routinely lay off workers during factory shutdowns to start unemployment applications on behalf of their workers. But it’s not so easy for furloughed federal employees, and their challenges reveal some fundamental problems with UI program that are overdue for repair.
Numerous Obstacles to Assistance
Let’s imagine you are a furloughed federal worker thinking of filing for UI benefits. The first thing to know, a policy particular to this workforce, is that Congress has typically voted to allocate back pay to furloughed workers only once the government has been reopened. This means that you will have to pay back any jobless pay you receive: otherwise, the understanding goes, you will have been paid for those hours with delayed compensation twice. This still does not make it a bad idea for federal workers to file. New York City’s Hebrew Free Loan Society has just announced it is offering interest-free loans to furloughed workers. Federal workers could think of UI that way: as an interest-free loan available from the government. But, the U.S. Department of Labor (DOL), along with the media, have built up the idea that federal workers have to pay back their UI benefits as a reason to think twice about filing benefits, when it really shouldn’t be.
Another turnoff are the normal, though frustrating, delays in the distribution of unemployment benefits. In nearly all states, it takes about three weeks to receive an unemployment check. If everything goes right, you can apply and be found eligible in week one, then certify you are indeed unemployed in the second. But that second week is not, in UI terms, compensable. It is a called the “waiting week,” and a federal law passed in 1980 made it nearly universal across the country. So only after you report to the state that you have been unemployed for a third straight week do you get paid. The justification for the waiting week policy, which in practice has extended a two-week waiting week to three weeks, was that it would incentivize workers to get a new job rather than file for UI. However, this applies equally to those, like federal workers, who are only temporarily out of work.
Work documentation, and the differences in processing, must also be taken into account. Typical private sector workers do not have to provide documentation of their work history when they apply for unemployment. It’s all stored in state computers, and states have the first responsibility of verifying lay-off details with companies. Federal employees are directed to get forms from their federal employers that verify their employment and separation and submit them to their state of residence (who run the UI program), who then bill the federal government for the checks. Here’s the rub: the U.S. Office of Personnel Management has directed shuttered agencies not to issue the form. States can accept worker affidavits and other forms of proof, such as pay stubs and W-2 records; but these are atypical, and take longer to process, thereby increasing the time from application for and reception of benefits to longer than three weeks. Responding to claims of delays, Senator Ron Wyden (D-OR) and Representative Richard Neal (D-MA) called on DOL to issue clear guidelines to the states that they can and should expeditiously accept this kind of alternative proof for federal workers.
Another twist is that about half of furloughed workers have been deemed essential and forced to work without pay. Because they are working, they are not considered unemployed under unemployment law. Thus they are ineligible for UI, and can’t get a UI check to replace their missing paycheck. California Governor Gavin Newsom has said his Labor Department will pay claims to these workers, but these payments are likely to be challenged by the federal government. Another promising move was a bill introduced by U.S. Senator Richard Blumenthal (D-CT) that would deem these workers eligible despite state law provisions to the contrary, a move supported by Governors from Michigan, New York and Washington.
After all of these obstacles, workers still determined enough to successfully receive a UI check will run into state rules that require they search for a new job each and every week. These rules have become increasingly strict over the last decade, with some states requiring unemployment recipients to submit proof of multiple job applications each week into arcane online systems. States can waive these rules for temporarily laid off workers, but typically only do so if the workers have a definite recall date (something federal workers don’t have). During the last extended shutdown, President Obama’s administration reminded states that many federal workers have limitations on taking on new work while officially employed for the federal government in sensitive roles. The Trump administration should be more proactive and issue guidance as advisories to both federal employees and all relevant agencies on how to overcome this and other hurdles.
How States Can Help
Most of the issues described above are not going to be fixed anytime soon, if any are. So is there any hope of public assistance for all of the furloughed workers ensnared in this record-breaking shutdown? In fact, there is: but from the states, and not from the feds.
Even though the federal government pays the tab for furloughed workers’ benefits, states control a lot of the details. There are many governors and state legislators who want to do something about the shutdown, in addition to openly challenging federal rules like Governor Newsom has. Part of the motivation may be political, but it’s also economic. The lost spending power from federal workers is hitting small businesses and local economies, extending the shutdown’s damage far beyond the families most directly impacted. Among other things, these states could:
- Set up speedy processes to accept and process affidavits for workers who can’t get documentation of their federal unemployment. (Perhaps a crafty group like Code for America could design a quick mobile phone app that delivers info to state UI agencies in a way that they could easily receive.)
- Waive work search requirements for furloughed federal workers collecting unemployment.
- Waive the waiting week for federal furloughed workers so they can get aid sooner.
- Set up fair processes for paying back benefits once the shutdown is over. This could include penalty-free payment plans for those facing financial strains and waivers of overpayments when it would cause duress, like losing a home or car.
- Backdate claims of federal furloughed workers who waited to file UI because they thought that federal government would adequately, and swiftly, respond to their needs. This would allow federal workers to get paid for all their weeks of unemployment.
Some of these actions can be done at the executive level, while others may require emergency state legislation. But the unprecedented length of the shutdown has already led thousands of furloughed workers to file for UI, and many more applications will come. Helping them get UI is one systematic way we can ease the collateral damage of a shutdown born of a single issue but threatening the well-being of hundreds of thousands of Americans. And maybe the lessons learned from this will show how we might fix the flaws of the UI system—flaws like long waits for payments, difficult-to-meet work search requirements, and strict overpayment rules. If designed well, UI is a much better answer to a potential crisis than a sandwich line; as the program stands now, though, for furloughed workers, it’s an empty promise.