Unemployment Glitch Leaves 300,000 Without Safety Net

Worried Woman Looking at Computer
•••

Justin Paget/Getty Images

Since the fall of 2020, benefits for 300,000 unemployed people have been cut off by a flaw in government programs that prematurely removed a safety net in 32 states, a new analysis shows.

The Extended Benefits (EB) program is a government measure that adds 13 weeks of unemployment benefits beyond the 26 weeks normally available in most states. It’s meant to provide an extra safety net in states suffering from high unemployment, automatically kicking in for a state when a certain percentage of workers there claim unemployment benefits and turning off again when that percentage drops.

But thanks to a dysfunctional “trigger mechanism,” the EB program has been prematurely shut down in 32 states, according to a report from the California Policy Lab, a nonpartisan research organization.

The pandemic “laid bare important holes in our social safety net,” said Alex Bell, a postdoctoral scholar at the California Policy Lab and co-author of the report, in a statement. “The automatic Extended Benefits program provides not only needed income to workers, but also stabilization to the economy. … In state after state we see that the counter-intuitive design of the program’s trigger system is causing the exact opposite to happen.”

To help workers weather massive layoffs that took place when the pandemic struck, the federal government created several emergency unemployment programs, including the Pandemic Unemployment Assistance (PUA) program, which allows gig workers and the self-employed to collect benefits, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which, like the EB program, extends the amount of time that unemployed workers can claim benefits. Thanks to extensions in the American Rescue Plan, both the PUA and PEUC programs now run through September 6 and allow people to stay on them for 79 weeks in most cases.

However, because people using the two special pandemic unemployment programs and the EB program itself do not count toward the number of people claiming unemployment benefits for purposes of determining when the Extended Benefits program turns on and off, the program cut off in many states despite high unemployment, the California Policy Lab said.

For example, in Minnesota, the EB program cut off on December 13, 2020, because the rate of workers claiming unemployment benefits fell below 5%, which would normally signal an improving economy. However, if all those using the EB and PEUC extension programs had been counted, the actual rate of workers collecting unemployment benefits would have been 7.41%, according to the Policy Lab analysis.

Those booted from the EB program are still able to collect unemployment benefits, at least for now, because EB recipients can go on PEUC instead, the Policy Lab said. But the EB program will no longer be available as a safety net for long-term unemployed people who run out of PEUC benefits. Some people also saw their benefits lapse if they were kicked off EB before the PEUC program was extended in December.