Almost a year into the pandemic, unemployment remains high. Jerome Powell, the Federal Reserve chairman, said on Wednesday that about 10 percent of the work force remains out of work, significantly higher than the government’s official estimate of the unemployment rate. And many states are still struggling to deliver aid. A survey in January found just 24 percent of unemployed workers nationwide were getting benefits. Georgia reports a backlog of 180,000 applications. A California assemblyman said last week that his office logged 3,000 calls from people unable to get benefits. A Texas congressman said one constituent spent six hours on hold with the state unemployment office before her call was disconnected. She never did get to talk to anyone.
The Biden administration most likely can improve on the performance of the Trump administration simply by trying. Two days after his inauguration, Mr. Biden announced the creation of “benefit delivery teams” to work with states on improving access. He also directed the Labor Department to issue guidance that would encourage states to extend benefits to people who leave work, or refuse to return to work, because of the risk of contracting the virus.
Money also can help. Senator Ron Wyden, Democrat of Oregon, introduced legislation on Wednesday that would provide $500 million for the Labor Department to build a set of programs that states can use to process applications and manage benefits. It’s a good idea that would help states like New Jersey, where, in the early weeks of the pandemic, the embarrassed governor said the state was struggling to find programmers who knew how to write code for the state’s 40-year-old systems.
But inducements are not enough. The federal government needs to step in, too.
The shortcomings of the unemployment system are rooted in federalism. Congress created unemployment insurance and Social Security at the same time and as sister programs. Both were funded by a tax calculated against the first $3,000 of income. Since then, Congress has increased the taxable wage base for Social Security to $142,800 to preserve the program’s financial health. But it allows states to assess unemployment insurance taxes, which are paid by employers, on a wage base of as little as $7,000 per worker. Conservative states in particular have eagerly accepted that invitation, gratifying business interests by maintaining low levels of taxation.
The necessary solution is for Congress to establish stronger national standards. When the pandemic recedes, and the federal government stops dispensing emergency aid, it can induce states to raise more money for unemployment benefits, and require states to spend more money on benefits for more workers.
Pre-crisis eligibility requirements in many states were absurdly restrictive. Self-employed workers and independent contractors were generally ineligible. Part-time workers didn’t qualify. People who left a full-time job were required to look for another full-time job. Looking for part-time work was enough to lose benefits, too. It was not enough to leave a job involuntarily. The employer had to do the pushing. People who left work to care for an ailing family member, for example, didn’t get benefits.
Last year, Congress temporarily expanded eligibility for unemployment benefits, at federal expense, to include many people in these circumstances. The Democrats’ fiscal plan would extend that expansion through the summer.