Most of the estimated 23 million independent contractors and gig workers made newly eligible last month for unemployment benefits during the coronavirus pandemic are still waiting for relief.
Six weeks after the pandemic set off a continuing wave of massive layoffs, only 21 states have started paying out benefits to self-employed workers and others not traditionally eligible, according to the Labor Department. That's up from 10 last week. The payments are being made under a new temporary program, Pandemic Unemployment Assistance.
New Jersey is one of the states where self-employed workers are still waiting. More than 100,000 self-employed workers applied for jobless benefits there over the past several weeks, but the state won’t begin paying out the benefits until Friday, according to New Jersey state officials. They said the state will then need to take more time to verify those workers’ eligibility.
“The Department has worked hard over the past month to get this program up and running despite the unprecedented challenges of the coronavirus, and it is now available,” said New Jersey Labor Commissioner Robert Asaro-Angelo. “While it will take time to determine eligibility for everyone who seeks PUA benefits, the process has begun.”
States reporting the largest number of weekly claims, including California and Florida, have just started to get their systems up and running this week.
California, which launched its new program on April 28, has received 190,000 applications already from self-employed and contract workers, according to Governor Gavin Newsom. But state officials have warned the program is threatened by its overloaded system.
"We are getting our arms around this unprecedented volume,” Newsom said Wednesday.
California’s unemployment system has been slowed and strained by the more than 3.7 million applications it’s received since layoffs began in early March, officials say. The state has distributed more than $6 billion in benefits so far.
Florida, whose unemployment system has also been overwhelmed as more than a million people struggled to get assistance, did not start accepting applications from independent contractors and those are self-employed until this past Tuesday.
The instructions sent out by the Department of Economic Opportunity urged people who had turned in applications before April 4 to try again now. DEO’s own data shows that more than 266,000 people who had applied with the state since March 15 had been deemed ineligible, although the information released by the agency does not specify why people are being turned away.
Labor Secretary Eugene Scalia affirmed last week that his agency is “working very closely every day with states across the country to help them get these benefits to the Americans who are entitled to them.”
According to DOL, it’s delivered more than $750 million of $1 billion in emergency administrative funding provided by Congress to state unemployment offices to help them handle the surge in claims and implement the new program. “As they request this funding, we're distributing it quickly,” Scalia said. “And if they don't request it. We're contacting them to see how we can help.”
States have been struggling to figure out how to calculate weekly benefit levels for these self-employed workers, whose wage information may be contained on multiple forms and is harder to verify.
California, which last year passed a sweeping bill aimed at compelling businesses to reclassify many independent contractors as employees, has said gig economy workers should be eligible to apply for benefits under the state's normal unemployment insurance program.
But some drivers for Uber and Lyft in California say the state is calculating their weekly benefits to be $0, because their companies aren’t sharing payroll information with the state unemployment agency.
Those app-based workers must then request an investigation from the state into their wage information — adding more time to the process.
Workers have also complained they haven't even been able to apply for benefits, hindered by jammed phone lines and crashing websites, as state unemployment agencies scrambled to beef up their systems following the passage of the massive unemployment benefit extension included under the CARES Act.
Florida’s unemployment website, which was first installed in 2013, had been routinely been flagged by state auditors before the coronarvirus outbreak started. But the surge in jobless claims overwhelmed the system, forcing the state to leave it offline for hours. It was offline all of last weekend as the state tried to play catch up on processing claims. Florida decided to start accepting paper applications due to the website’s constant failings.
The DOL’s Office of the Inspector General recently warned that state legacy computer systems used to process unemployment benefits weren't up to the job, and threaten "the management and oversight of UI benefits."
“The risk of fraud and improper payments is even higher under PUA because claimants can self-certify their UI qualifications,” the IG wrote, urging the DOL’s Employment and Training Administration to work with states to establish better methods of detecting fraud and recovering improper payments.
DOL officials say the department has been reaching out to the states to discuss and offer assistance with IT and call center issues.
But according to economists, all workers, including those who are eligible for traditional benefits and don’t have to apply under the new federal program, have been struggling to get the unemployment relief in their pockets.
For every 10 people who said they successfully filed for unemployment benefits during the past month, three to four additional people tried to apply but could not get through the system, according to an survey conducted by the left-leaning Economic Policy Institute.
In total, DOL’s data indicates only 14 percent of the 12 million workers who filed for benefits in the month of March were paid an unemployment check, said Andrew Stettner, senior fellow at The Century Foundation. “While many of the claims that started in mid-March were likely paid not until April,” he said, “this figure is yet another sign underscoring the major structural challenges facing the unemployment program as it responds to the COVID-19 crisis.”
How an individual's claim is processed varies widely from state to state.
“On the high end, Rhode Island made initial payments to 51 [percent] of the 60,000 individuals who filed claims,” he said. “On the low end, Florida only paid 2.4 [percent] of the 280,500 individuals who managed to file a claim, the third lowest in the country, just above Indiana, which stood at 2 [percent].”
In Iowa, one of the first states to get its PUA system up and running, officials pointed to its low unemployment rate and rurality as reasons why it was able to move so quickly.
“For the last couple years, our unemployment’s only been like 2.5 percent,” Iowa State Treasurer Michael Fitzgerald said. “So our unemployment fund started out really full.”
“In a lot of areas we didn’t have the shutdown as early as some of the other states,” he added, “so we were probably in a better spot than most other states, and able to attack it.”
Eleanor Mueller, Gary Fineout, Katy Murphy and Katherine Landergan contributed to this report.