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New York and other states are still struggling to process a deluge of new applications for unemployment benefits, leaving millions of Americans frustrated and unable to receive badly needed cash.
A record 30 million people have filed initial jobless claims in the six weeks since the coronavirus caused much of the U.S economy to shut down. Yet only about two-thirds may have gotten approved for benefits, drawing from a separate report known as continuing claims.
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From March 14 to April 18 about 26.5 million people applied for benefits, according to seasonally adjusted figures from the U.S Labor Department. Yet during the same span a smaller 18 million people were approved for benefits. Continuing claims are reported with a two-week lag.
“The shortfall means states are struggling more than expected in beefing up systems and getting claims in the mail,” said chief economist Chris Low of FHN Financial.
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The media is replete with articles about delays, long waits and other snafus facing countless Americans trying to apply for claims online. Getting a live person by phone is impossible for many. State unemployment offices were lightly staffed before the pandemic and unprepared to handle the record surge in claims.
Adding to the confusion are loosened eligibility guidelines approved by Congress as part of a economic-rescue package that allows more people to qualify and gives them extra benefits of $600 a week.
States have had to readjust their computerized approval process to take into account newly eligible workers such as the self-employed. Even then many gig workers such as Uber drivers and freelance writers have been unable to get approved right away.
The Economic Policy Institute estimates that only 37 workers out of every 100 who have applied for benefits have yet to make it through the process. If so, new claims could be as much as 8 million higher.
“We are not sure if the disconnect between initial and continuing claims in recent weeks is due to workers being called back to work after their employers restructure operations to comply with social distancing measures, or if it is due to denials of the initial claims for gig workers or others that only qualify for benefits through expanded programs,” economists Thomas Simons and Aneta Markowska of Jefferies LLC told clients.
“It seems that each state has a different way of handling these types of applications, and all of the unemployment offices are incredibly overwhelmed with volume, so it is impossible to disentangle these factors,” they added.
Read: Why the U.S. economy’s recovery from the coronavirus is likely to be long and painful
It’s likely that continuing claims will soon catch up to new claims, but delayed approvals only make it harder for Americans to pay their rent, mortgages and other bills. The delays could also make it harder for the economy to rebound.
“There’s little doubt this will hurt spending beyond the damage imposed by lockdowns alone,” Low said.
