BY GRACE GEDYE
The state agency that handles unemployment benefits pursued lowering costs and hindering fraud over making it easy for workers to access benefits, a new report found.
If you get laid off, there’s a system that’s supposed to help you get by: unemployment benefits. Whenever California stares down a pandemic or a possible recession, the partial wage-replacement program is one of the most important economic safeguards for workers.
But the benefits have become more difficult for workers to access, due to the program’s design and decisions made by California’s embattled Employment Development Department. That’s according to an in-depth report released this morning from the Legislative Analyst’s Office, a non-partisan agency that provides advice to the Legislature.
The report found that the benefits program’s orientation toward businesses — which fund the benefits and have an incentive to keep costs down — led the department to emphasize holding down costs. Pressure from the federal government to avoid errors led the department to try, however successfully, to minimize fraud.
The result: the department pursued lowering costs and hindering fraud over making it easy for workers to access benefits.
“Looked at individually, one of these policies might seem totally reasonable, either to limit fraud or or minimize business costs,” said Chas Alamo, the report’s author and principle fiscal and policy analyst with the Legislative Analyst’s office. “But when you look at them, and kind of step back and look at the suite of policies that have been made over several decades, it becomes clear that there’s a sort of imbalance in the system,” said Alamo.
Early in the COVID pandemic as joblessness rates soared, the department struggled to keep up with a surge of benefits claims — leaving some Californians repeatedly calling the department in frustration and waiting weeks or months for the money to arrive.
Then came sensational reports that the department had paid out as much as $20 billion in fraudulent benefits.
Last December, the department froze 345,000 disability insurance claims due to suspected fraud. As it tried to root out disability benefits fraud, calls to the department with questions surged, and many went unanswered.
Despite an increase in fraud during the pandemic, fraud has historically been uncommon in California’s unemployment benefits, likely “representing less than 1 percent of claims,” the report found. The vast majority of fraud that occurred during the pandemic was concentrated in a temporary federal program that has now ended.
The report lays out evidence that unemployment benefits have become too difficult for workers to access.
Story was first published on CalMatters.
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