(Reuters) – The U.S. unemployment benefits program, a key part of the safety net for the labor market, is about to face its biggest test in more than a decade.
More than 1.5 million applications could be filed this week, economists said, as people who work for restaurants, bars, hotels and other businesses suddenly find themselves out of work because of the coronavirus.
States that cut unemployment staff and benefits during better economic times may be unprepared for the deluge in applications, analysts say.
“States are just not in a position to respond to this,” said Michele Evermore, a senior policy analyst at the National Employment Law Project in Washington, D.C. “They’re at historically low levels of funding and they’re moving into a state where there may be historically high levels of claims within a couple of weeks.”
The pandemic is dealing a blow to states already facing budget shortfalls. Twenty-three states were short on unemployment insurance trust funds as of last year, before the coronavirus shock, a Department of Labor calculation shows here
Some workers who applied for the program this week were met with downed websites, long waits on phone lines and other delays.
After being laid off from her job as a bar tender in New York City, Caitlin Ma, 29, went online to apply for unemployment and food stamps on Thursday. “But the systems are so bogged down,” she said. To expedite her food stamp application, Ma will have to go physically to the offices, despite health officials’ recommendations.
Making things worse, qualifications and benefits available may also vary based on where workers live.
The U.S. Department of Labor, which sets federal guidelines for the program, recently gave states the flexibility to provide benefits to people temporarily out of work. But states administer the benefits, and not all have made the change.