Will Pennsylvania Run Out Of Unemployment Money?
Since March 15, nearly 1.6 million Pennsylvanians have filed for traditional unemployment compensation. Thousands more have applied for help under a new federal program for self-employed and contract workers. But the unprecedented volume of applications may still not reflect the true number of people in need.
Melinda Reich worked as a prep cook at Jerome Bettis’ Grille 36 on Pittsburgh’s North Side until coronavirus shut the restaurant down. Things financially were already tight: her hours dropped at the end of football season and baseball wouldn’t start until April 1st. But Reich had prepared for that.
“You have to set yourself up for it,” she said. “You know you’re going to be slow, so you have to put money away.”
But Reich couldn’t go weeks without working and stay afloat. She applied for unemployment on March 15, shortly before all non-essential businesses across Pennsylvania shut down. When the state denied her claim, Reich appealed and then was told to refile. She wanted to discuss some details of the process with the unemployment office, to make sure she got it right, but she couldn’t get in touch with anybody.
“I just want an answer,” she said. “Am I eligible for unemployment or not? Just tell me. Because if not, then I have to figure out a 'plan b.'”
Pennsylvania’s Office of Unemployment Compensation fielded between 50,000 and 90,000 claims per day in the early weeks of the crisis; last week the daily volume of initial applications dropped to around 20,000, still “off-the-chart numbers,” said Chris Briem, a regional economist with the University Center for Social and Urban Research at the University of Pittsburgh.
Briem noted that the state hired hundreds more people to staff phones in the unemployment office. He said he’s not in the habit of being a government apologist, but “Pennsylvania clearly deserves some credit for being able to take in so many folks,” he said. “There are a bunch of states that ... have not been able to and, in some cases, haven’t even wanted to [sign people up for unemployment].”
Florida, for instance, weakened its unemployment system over the last decade, and was quickly overwhelmed by the wave of new applicants. Outdated office systems in New York led thousands of people to report crashed applications and constant busy signals on the phone. Pennsylvania was in the midst of updating its “ancient” computer system when coronavirus hit, but while it may be strained on the back end, people have still been able to use the state’s online system to file, said Briem.
Some people interviewed for this story had no problem applying and some have already received multiple checks, but it’s difficult to form an accurate picture of who wants to apply and can’t.
Tweets, Facebook posts, and interviews suggest despite staffing increases and system improvements many people simply can’t reach the Office of Unemployment Compensation. Brian Bouch filed in mid-March, right after he lost his full-time job at Eddie Merlot’s downtown. His account was marked inactive and he still hasn’t been able to resolve the issue.
“I have gotten up at 8 o’clock every day,” he said. “I have my cell phone on automatic redial and I’m on my laptop trying to get on the chat, nonstop.”
Calls to the main line are met with a busy signal, and after three beeps, the call drops. The chat function gets overloaded and asks people to try again later. Bouch says it’s really stressful.
“There’s nothing you can do,” he said. “All you think about is paying bills and when you’re going to get money and how long the money you do have is going to last.”
It’s unclear how long Pennsylvania’s money will last. This year the state had $1.6 billion in its Unemployment Compensation Benefit Payment Fund. Not every person who has filed an initial claim — 1.58 million state residents as of April 23 — will qualify for unemployment insurance. But if they did, and if they were awarded the state’s maximum weekly benefit of $573, the fund would already be $2 billion dollars short.
Auditor General Eugene DePasquale said he’s not worried the state will run out of money to write unemployment checks.
“It appears that there is a strong commitment from the federal government to making sure that that doesn’t happen,” he said.
For now, DePasquale said the state just has to hire the people it needs to help Pennsylvanians get through the pandemic.
“And when the dust settles we can then deal with the repercussions of that,” he said. “We’ve got to win the battle right now, and part of that battle is hiring people to process these claims."
The Families First Coronavirus Response Act allocated money to states to help cover administrative costs such as hiring more staff. States can also take out interest-free loans from the federal government to keep benefits going. In 2009, spurred by the Great Recession, Pennsylvania borrowed nearly $2 billion dollars to make unemployment payments, and eventually ran up nearly $4 billion dollars in debt. That obligation was just retired in 2020.
Governor Tom Wolf and his administration are "closely monitoring" the unemployment trust fund but are "unable to speculate on precisely when those funds might be exhausted," a spokesperson for the Department of Labor and Industry wrote in an email. However, Pennsylvania is prepared to borrow money from the federal Department of Labor to ensure people in the system receive their benefits.
This week, prep cook Melinda Reich finally heard back from the unemployment office. She was told the office never had her appeal, and to start her claim again.
This story was updated at 5:55 p.m. on Friday, April 24 to reflect additional information from the state.
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