People in half the country got unemployment checks 'unacceptably' slowly last summer, Fed report finds

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People in half the country got unemployment checks 'unacceptably' slowly last summer, Fed report finds
Demonstrators rally near the Capitol Hill residence of Senate Majority Leader Mitch McConnell, R-Ky., to call for the extension of unemployment benefits on July 22. Tom Williams/CQ-Roll Call Inc via Getty Images
  • A new report from the Minneapolis Fed looks at how long it took states to put out unemployment.
  • In August 2020, only half of states were making over half of their payments promptly.
  • While the situation has improved somewhat, it shows continued strain on UI systems.

Throughout the pandemic, unemployment insurance and its pandemic-era expansions helped jobless workers pay their bills during a crisis - that is, if they received their funds in time.

It's no secret that states struggled to get payments out to recipients. A new report from Tyler Boesch, Ryan Nunn, and Katherine Lim at the Federal Reserve Bank of Minneapolis looks at just how timely states were in sending checks to their jobless residents. The results, in some cases, were unacceptably low by Department of Labor standards.

August 2020 was the worst month for getting payments out the door in a timely manner

The report finds that, in August, just "half of states made at least 54 percent of payments within 21 days." The DOL says that the "acceptable level of performance" is at least 87% of first payments in 21 days.

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Indeed, the report shows that the median percentage of payments hovered below the DOL standard since May 2020. Payments hit a timeliness peak in April 2021, with half of states making at least 80% of their payments. Even so, that meant that a good chunk of residents in those states assistance may not have received their benefits on time.

Unemployed people in different states had vastly varied experiences

When the CARES Act put in place FPUC benefits - those additional $600 weekly - some jobless workers started receiving them far more quickly than others. Just half of the states began making those payments in 17 days. If you were in Illinois, the first payments went out in 10 days; in Wisconsin, it took upwards of a month, with payments going out after 33 days.

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And then there was Pandemic Unemployment Assistance (PUA). That program expanded who was eligible for benefits, bringing gig workers and self-employed workers into the fold. But if you applied for it, your location may have dictated how quickly you got your checks. For instance, if you were in Texas, the first payments started releasing 16 days afte the program was enacted. But Kentucky residents waited months, with first payments going out after 77 days.

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That gap persists: In May 2021, Ohio was only making 34% of first payments promptly.

Unemployment insurance was wildly important during the pandemic, but also showed system flaws

The report notes that "UI payments constituted vital support for families, for the overall economy, and for the public health mission of enabling workers to avoid COVID-19 exposure during some of the worst months of the pandemic." Research from the Urban Institute found that emergency relief programs - which includes the expanded unemployment insurance and stimulus checks - helped nearly halve poverty from 2018 levels.

And the Fed report says that the creation of PUA "represents another substantial achievement." That program made up the greatest share of federal UI distributed by the end of 2020, according to a report from the left-leaning Economic Policy Institute.

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Some politicians have seized on the widespread adoption of PUA - which is set to wind down in September - as an argument to permanently reform UI. Sens. Ron Wyden of Oregon and Michael Bennet of Colorado bundled their "jobseeker allowance" - which would give bonuses to the same type of workers receiving PUA - with modernizing UI infrastructure.

President Joe Biden's initial infrastructure proposal included a nod towards reforming UI, but did not include any concrete proposals or funding.

The report concludes: "As the pandemic demonstrated, it can be difficult or impossible to predict the next recession, making it all the more urgent to bolster the resilience and capacity of UI systems before they are tested again."

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