Why Changing Unemployment Payments Could Take Months

Other jobless workers receiving benefits may not have any earnings history at all. Workers who had job offers that were rescinded because of the pandemic, for example, can still receive checks even though they didn’t have any income.

Archaic computer systems aren’t helping.

States already had trouble reprogramming their systems to deploy the expanded benefits provided under expansion under the CARES Act. Many states administering unemployment benefits are relying on archaic systems, which were quickly overwhelmed by the influx of claims. Some are using aging mainframe computers programmed using a language called COBOL, which is more than 50 years old, and some states, like Connecticut, had to recruit retirees who knew how to program in the antiquated language.

Only 16 states have fully modernized their unemployment insurance systems, according to recent testimony by Rebecca Dixon, executive director at the National Employment Law Project, and many of those that did update their system still experienced problems.

“I would be very surprised if a state could get a new system to pay a percentage replacement up in two months,” Ms. Evermore added, “given everything else they have to deal with right now.”

Low-wage workers lose while red states win.

If states were somehow able to make the shift, it would carry the side effect of subsidizing states with less generous unemployment benefits, funded by lower taxes — a set of states that is heavily Republican. It is the opposite dynamic from another sticking point in the negotiations over the next stimulus bill: Republicans have resisted sending direct aid to states with large budget shortfalls amid the crisis, because they say they do not want to subsidize high-tax Democratic states.

It would also be a particularly large blow to workers in Democratic states, who would lose the most money per week out of their benefit checks. The federal government would kick in significantly more support to bring the benefit up to 70 percent for workers in a low-benefit state like Arizona than in a high-benefit state like Washington.

Low-wage workers will be hurt the most. They have been receiving the most, compared to previous earning, from the $600 weekly federal supplements. (That also means they are the workers Republicans fear are being discouraged from returning to the workplace, because they’ve been earning more from unemployment than from their former jobs.)

Article source: https://www.nytimes.com/2020/07/30/business/unemployment-payments-change.html