A double whammy for jobless workers

The good news is that California’s economy seems to be inching its way out of the very severe recession triggered by business shutdowns Gov. Gavin Newsom ordered to battle the COVID-19 pandemic.

The bad news is that recovery has been very slow, especially in comparison to most other states. While California’s unemployment rate has dipped to 11%, it’s still one of the nation’s highest and in September, 1.6 million fewer Californians were employed than in February, before shutdowns began.

Moreover, the official unemployment numbers don’t count about 850,000 California workers who have dropped out of the labor force since February.

“With 1.6 million fewer people employed in September than in February, the rate of jobs growth has been disappointing since May,” Taner Osman, a research manager at Beacon Economics, said in an analysis. “If we keep adding jobs at September’s rate, the state will not return to February’s level of employment until sometime in 2022 — sobering news for those who have lost work since the outbreak of the pandemic.”

The state’s stubbornly high unemployment rate, nearly 50% higher than the national rate, means that the state Employment Development Department’s lackluster service to jobless Californians who need benefits for food and shelter will continue to draw media and political heat.

The employment department has paid out more than $100 billion to unemployed workers since the recession began, roughly half in the state’s “regular” benefits and the rest in special federal benefits. But frustrated workers who have been unable to get answers from the department’s staff about delays in benefits have besieged their legislators.

Newsom ordered a “strike team” to sort through the employment department’s shortcomings. He also suspended new applications for two weeks to work on 1.6 million backlogged claims and he implemented a new technological tool, ID.me, to automatically verify applicants. However, the department reported that ID.me has automatically approved only 64% of claims, a tiny improvement.

The strike team report cited not only EDD’s technological problems but a lack of trained staff able to make eligibility decisions. Adding hundreds of new workers without training and decision-making power may have made the problem worse.

During the Assembly’s hearing, Assemblywoman Cottie Petrie-Norris, a Laguna Beach Democrat, dismissed EDD Director Sharon Hilliard’s previous assertions that backlogged claims were due to outdated technology, citing the strike team’s report.

“The strike team report points out that this backlog is due not to outdated technology, but to operational shortcomings. …,” Petrie-Norris told Hilliard. “And in terms of the hiring of a few thousand new staff members, the strike team report points out that that was not only just a total waste of taxpayer dollars, but … ultimately made things even worse.”

Senators were no less critical during their hearing, particularly when told that the 1.6 million backlogged cases won’t be cleared until January.

“We went from working an eight-hour workday five days a week to working seven days a week up to 14 hours a day … saying people are stressed is an understatement,” Irene Green, an employment programs representative at the department for 11 years, told the Senate committee.

Many of EDD’s current shortcomings, both technological and managerial, were evident during the previous recession that ended eight years ago. However, the warning signs were ignored and that’s why EDD is now an operational basket case.

One wonders whether the agency will be any more prepared for the next economic downturn.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to Commentary.