Washington unemployment insurance claims decline; nationally, claims filings increased. Is the system ready for major reform?

The state Employment Security Department reports a 13% decline in initial regular unemployment insurance claims last week. 

During the week of February 7 –  13, there were 13,607 initial regular unemployment claims (down 13.0 percent from the prior week) and 447,412 total claims for all unemployment benefit categories (down 7.3 percent from the prior week) filed by Washingtonians, according to the Employment Security Department (ESD).  

  • Initial regular claims applications remain at elevated levels and are at 119 percent above last year’s weekly new claims applications.
  • Initial regular claims applications, Pandemic Unemployment Assistance (PUA) initial claims, Pandemic Emergency Unemployment Compensation (PEUC) initial claims and continued claims for regular benefits all decreased over the week.
  • Reductions in layoffs in the retail trade, accommodation & food services as well as the health care and social assistance sectors led the overall decrease in regular initial claims last week. Regular initial claims in the retail trade sector decreased by 240 claims over the week to 1,303 total regular initial claims.

In The Seattle Times Paul Roberts reports,

New unemployment claims in Washington state fell for the sixth consecutive week even as the nation as a whole saw a modest uptick in the number of people seeking jobless benefits.  …

He reports there’s some missing information.

Until recently, the ESD also reported the number of individuals receiving benefits each week.

Also missing from the agency’s report Thursday: the number of claimants who had not been paid and were waiting for the ESD to resolve an issue with their claim; the average time required to resolve a problem on a claim; and the average time claimants typically wait to receive their first payment. That data has not been posted since December.

Agency officials have said that some claims data isn’t available because newly extended federal benefits have changed how the ESD calculates who is receiving benefits and how long it takes to pay some claimants. 

As Roberts writes, the U.S. Department of Labor reported an uptick.

In the week ending February 13, the advance figure for seasonally adjusted initial claims was 861,000, an increase of 13,000 from the previous week’s revised level. The previous week’s level was revised up by 55,000 from 793,000 to 848,000. The 4-week moving average was 833,250, a decrease of 3,500 from the previous week’s revised average. The previous week’s average was revised up by 13,750 from 823,000 to 836,750.

The advance seasonally adjusted insured unemployment rate was 3.2 percent for the week ending February 6, unchanged from the previous week’s unrevised rate.

From the AP reporting,

The figures underscore that the job market has stalled, with employers having added a mere 49,000 jobs in January after cutting workers in December. Nearly 10 million jobs remain lost to the pandemic. Though the unemployment rate fell last month from 6.7%, to 6.3%, it did so in part because some people stopped looking for jobs. People who aren’t actively seeking work aren’t counted as unemployed.

Still, fraudulent claims for jobless aid in some states and other issues, including potential backlogs of claims, may be elevating the totals. Last week, for example, Ohio reported a huge increase in applications and said it had set aside about half that increase for further review out of concern about fraud. And this week, Ohio reported that applications under a federal program that covers self-employed and gig workers jumped from about 10,000 to over 230,000. That could reflect a backlog of applications, because Ohio hadn’t reported data under that program until two weeks ago.

Likewise, Illinois reported this week that jobless claims under its regular state program doubled — from 34,000 to nearly 68,000.

“The unemployment claims data remain a mess,” said Stephen Stanley, chief economist at Amherst Pierpont.

We’ve paid a lot of attention to these reports during the pandemic; it was often the only timely information available on the recession’s progress. But, well, Stanley’s view is widely shared; the data remain a mess.

Perhaps the system is reaching a tipping point. American Enterprise Institute analysts Brent Orrell and Matthew Leger make a case for “root-and-branch” reform in this brief piece. We’ll just pull a few paragraphs for you to consider. 

The root of the administrative problem with unemployment insurance is that it is mostly an early-twentieth-century law trying to serve a twenty-first-century workforce. With eligibility criteria designed for a Great Depression-era workforce, the number of workers eligible for and receiving unemployment benefits has gradually declined, leaving out categories of workers that didn’t exist when unemployment insurance was created. When debating the need to extend unemployment benefits during the pandemic, this very fact was lost on our political leaders and in the court of public opinion as millions were never able to access benefits to begin with. Just before the pandemic in 2019, studies showed that roughly 27 percent of unemployed workers were receiving benefits, consistent with the steady decline in the accessibility of unemployment insurance over the last couple of decades. Despite rule changes, emergency patches and benefit expansions created by Congress during the pandemic, one Harvard survey found that at the peak of the unemployment crisis in spring 2020 the percentage of actual recipients was 27 percent—suggesting that millions of people who qualified for unemployment insurance support hadn’t yet received it.

And,

Perhaps the greatest, and costliest, irony of our recent unemployment insurance troubles is how this complex, patchwork system failed in both its primary role of helping unemployed workers and its secondary task of fraud prevention. Billions of dollars were siphoned out of the system by computer hackers overseas while cash-strapped Americans saw their payments delayed by systems supposedly designed to keep bad actors out

And their conclusion:

Congress needs a thorough review of the challenges of the existing unemployment insurance system, with the aim of a root-and-branch redesign. Such a transformation would include updated eligibility criteria to better reflect the makeup of today’s modern workforce; simplified application processes that reduce the burden on applicants and administrators; and built-in flexibilities that will allow states to adapt to future mass unemployment events as well as helping them keep pace with the accelerating pace of labor market change. Only then should we consider investing in technological fixes that are aligned to and will effectively implement refreshed and updated policies.

Not sure about all that, but clearly, something should change.