IE 11 is not supported. For an optimal experience visit our site on another browser.

Soaring jobless rate taxes insurance system

In the past year, the explosion in the number of jobless people has taxed the nation’s underfunded unemployment insurance system, sometimes resulting in delayed payments.
Duane Hoffmann /

Cynthia Paulson of Mesa, Ariz., made a mistake on her form when she filed for an extension on her unemployment benefits in July, and she fell into a bureaucratic black hole.

Mike Dixon of Seattle put in for unemployment benefits after he lost his job as a software engineer, but his employer denied his claim, resulting in a delay of nearly two months in collecting any money.

As the nation's unemployment rate approaches 10 percent, Paulson and Dixon are just two of the hundreds of thousands of people dealing with bureaucratic delays in the nation's increasingly stretched unemployment insurance system.

Many states have added staff, upgraded Web sites and tried to make the process smoother, helped in part by recent funds from the federal government. But with 5.4 million people collecting benefits, up 77 percent from a year ago, slowdowns seem almost inevitable. The rate of people receiving payments in a timely fashion fell in 44 states in the first quarter as the number of jobless soared 52 percent, according to the Labor Department.

Delays seem especially common for individuals who face disputes or other unusual situations that require human intervention.

In Dixon's case, he eventually was granted the benefits but had to visit food banks a couple of times before the funds arrived.

“The Washington state office was helpful, but I had to be persistent,” he said. “There were times they screwed up and I had to call their number, but it was busy for long periods of time. I’d call on Mondays, and they’d say Monday is a bad day to call.”

Paulson, a former payroll administrator for an automotive company, spent weeks trying to get through to her local unemployment office as her payments stopped coming. 

Compounding the problem was her decision to shut off her landline and just keep her cell phone to save money. But she could not afford the cost of holding for up to 45 minutes so ended up driving 26 miles instead to use the phones at the local unemployment office in her effort to reach the main office in Phoenix.

“I just got so aggravated,” she said, adding that the unemployment payments resumed after a few weeks, but she’s still owed one week of benefits.

Jump in claims
“Like most states, we’re seeing a huge influx of unemployment applications,” said Steve Meissner, spokesman for the Arizona Department of Economic Security. The number of jobless filing for unemployment insurance in Arizona skyrocketed to 150,000 claims from 25,000 just a year and a half ago.

“The situation we’re facing is unprecedented in the history of the unemployment insurance program,” said Rick McHugh, staff attorney for the National Employment Law Project.

“For many years, (unemployment insurance) administrative funding, which is federal, has not kept pace with inflation,” he said. “So basically we’re in a situation where starting in the 1990s states started closing their local offices, couldn’t afford to staff them, and went more technological by taking claims over the phone and then over the Internet.”

But the technology in place when the recession hit was not sufficient to keep up with the millions of layoffs that have accompanied the recession.

In cases involve interstate filings, or where an employer disputes a claim, the paperwork ends up going the old-fashioned way — through the mail.

“With respect to issues that arise, we need to dramatically improve the technology that we’re using to communicate between state unemployment programs and employers,” said Rich Hobbie, executive director of the National Association of State Workforce Agencies. “The process is out of date."

The unemployment insurance system, operated by the states but funded and overseen by the U.S. Department of Labor, was created as a way to give workers temporary help when they lose their jobs. Unfortunately, the lag in payments has left some individuals living on the edge.

In Washington state, where Dixon lives, most claims are being paid within three to four weeks, said Sheryl Hutchison, a spokeswoman for the state’s Employment Security Department, which handles unemployment claims.

“The first week is the ‘wait week,’ in which benefits cannot be paid, so most people are getting their first benefit payment within two to three weeks after that, which is a better track record than many other states are achieving in this recession,” she said.

Most claims with questions or problems are resolved within six weeks, she added.

In Arizona, benefits are paid in about 10 days on straightforward claims, said Meissner.

But about 70 percent of claims have some kind of issue that can delay payments for a month to six weeks.

“We’re not satisfied with where we are yet,” Meissner said, adding that the department has taken steps to shrink the turnaround time, including tripling the department’s staff to 332 and making the state’s unemployment Web site more user-friendly.

There’s also a movement nationwide to implement a Web-based network called the Separation Information Data Exchange System, or SIDES, which would streamline the process now used for disputed claims. It’s being tested in six states in cooperation with the Department of Labor, said Hobbie.

Hal Bergan, administrator of unemployment insurance for Wisconsin, one of the states testing SIDES, said he expects large employers to be the first to use the voluntary system.

But the system is still months away from paying real dividends, he said.

A waiting game
For now, it’s a waiting game for many jobless who need unemployment payments to make ends meet.

Bob Johnson of New York, who lost his marketing job last year, recently had his unemployment payments suspended for more than a month even though he was still eligible.

In July, he had to open another claim after reporting income from several freelance assignments he landed. The unemployment department, he said, “opened an investigation on my claim to determine if these employers should be paying part of my unemployment benefits. Because of that, they stopped my payments.”

After spending hours on the phone and leaving many unanswered messages, Johnson called his state senator to complain. He received a call back from a top manager at the unemployment office who helped expedite a resolution.

One of the Employment Law Project’s top tips for the jobless who are having trouble getting paid is to “call the governor or your state legislator,” said McHugh.

It’s not the first thing you should do, but if you get nowhere after a week, he recommends calling.

He also recommends reading the instructions carefully on the Web site or any documents you receive before filling out your claim. And make sure you have your information at hand before you call your state unemployment insurance office.

Don’t call on Mondays, advised Bergan. “All across the country, unemployment offices are jammed with calls on Monday. People often get laid off on Friday and file Monday. It’s worth it sometimes to hold off business for later in the week when we can more likely be responsive.”

And don’t give up, said Paulson, the out-of-work payroll administrator from Arizona, even if you have to drive over to the unemployment office and get what you’re owed.

“So many people out here just stopped trying to get unemployment because it’s so difficult if there’s a problem,” she said. “But desperate times call for desperate measures.”