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DOL Surveys States on ‘Heavy Lifts’ of Jobless Aid Redesigns (2)

July 23, 2020, 5:11 PMUpdated: July 23, 2020, 9:25 PM

The Labor Department has been pumping states for feedback about rebooting their unemployment processing systems on the fly, including asking for an assessment of the feasibility of a varying benefits total based on an individual’s prior income.

The department sent state workforce agencies a short survey July 13 in which it acknowledged states face “heavy lifts” in updating unemployment insurance software if Congress enacts a new formula for expanded benefits. The $600 weekly supplement lawmakers added to all unemployment insurance checks in March expires this weekend and is one of the main points of divergence between Republicans and Democrats in efforts to develop another major stimulus bill.

DOL asked states how long it would take to implement an update that would provide enhanced payments based on an individual’s past wages—a proposal the Trump administration and some Republican lawmakers now appear to be backing in the coming high-stakes negotiations with Democrats.

“We need to take your temperature so we have good information to provide to the Hill,” DOL stated, according to a copy of the survey questions Bloomberg Law obtained. The survey was sent by DOL Unemployment Insurance Administrator Gay Gilbert, who added, “I know from our conversations with a number of you that these are heavy lifts, and we want to be able to quantify that appropriately.”

DOL media representatives didn’t immediately respond to questions, including how the survey results were shaping the administration’s advocacy in stimulus talks.

Senate Majority Leader Mitch McConnell (R-Ky.) plans to unveil Monday Republicans’ proposal for a wide-ranging relief measure to shore up the economy—in effect, countering the $3.5 trillion HEROES Act Democrats passed in the House.

The Democrats’ blueprint calls for continuation of the $600 plus-ups through 2021, but some GOP senators, White House officials, and business groups are pushing for a reduced amount to ensure that payments don’t discourage workers from returning to their jobs.

‘Obvious Craziness’

McConnell said on the Senate floor Thursday that his party’s bill will “continue some temporary federal supplement to unemployment insurance while fixing the obvious craziness of paying people more to remain out of the workforce.”

Exactly how Republicans and the Trump administration aim to lower the $600 supplement has been the subject of highly fluid Capitol Hill discussions in recent days. The debate has included conversations about whether to reduce the payment to a flat amount or to adopt a varying formula specific to each worker.

Treasury Secretary Steven Mnuchin said on CNBC Thursday the GOP bill will include enhanced unemployment benefits that “will be based on approximately 70% wage replacement.” That suggests a formula that would pay out varying amounts depending on how much workers earned at their prior job.

Democrats are likely to push back against a 70% wage replacement proposal by arguing that states will be unable to implement an individualized approach without lengthy delays. Four states told Bloomberg Law they would anticipate it taking anywhere between two weeks to multiple months to update their systems to process varying boosts in jobless aid.

Maine Labor Department spokeswoman Jessica Picard said individualized payments “would take months and extensive programming” to implement.

Hawaii Department of Labor and Industrial Relations spokesman Bill Kunstman echoed those comments. “It would be extremely difficult for the department to implement variable supplements and it would likely involve falling back on a manual process that would take several months to implement,” he said.

Sen. Rob Portman (R-Ohio), an influential figure in talks on the coming GOP proposal’s unemployment piece, said Wednesday on Bloomberg TV the better approach would be a new design based on wage replacement. He added that states have said they’re “now capable of coming up with a more complex system.”

The administrative burden states would face to adapt software systems to pay extra benefits that vary by individual has motivated lawmakers from both parties to pursue an extension with a fixed total—numbers such as $100, $200, and $400 have been floated. The fear is that a varying amount could cause state processing systems to crash at a time when more than 20 million Americans are still relying on jobless aid per week—including 1.4 million first-time filers in the week ending July 18, DOL reported Thursday.

It remains unclear whether a varying total is still in play for the GOP proposal. It’s also an open question whether Congress will agree to a separate short-term extension for expanded unemployment benefits this week, to avoid a lapse. That would involve developing a longer-term solution as part of the broader stimulus negotiations.

‘Extremely Difficult’ to Reprogram

The DOL survey posed three questions to state unemployment insurance directors.

The first was how long it would take states to redesign expanded benefits that would be “individualized based on past wages"—for processing of both regular state claims and ones under the new Pandemic Unemployment Assistance for independent contractors.

It also asked how long it would take to reprogram to a new flat amount for all workers receiving the full weekly benefit while prorating to lower totals for those who are on regular and PUA partial unemployment. The DOL also wanted to know how long it would take to implement both scenarios simultaneously.

DOL media representatives didn’t immediately respond when asked to provide the aggregated results of all state responses.

Other states told Bloomberg Law it would take weeks to update their software systems.

“Several weeks would likely be a conservative estimate on any reprogramming outside of a continuation of the $600,” said Colorado Department of Labor and Employment spokeswoman Cher Haavind.

The Alabama Labor Department said in its survey response that it would take up to two weeks to incorporate a new system with individualized payments, said ADOL spokeswoman Tara Hutchison. She added that workers would continue to receive regular unemployment insurance checks during the reprogramming and that missed weeks of supplements would be paid retroactively once the new system is established.

Labor Secretary Eugene Scalia, in an interview on Fox Business News on Monday, acknowledged that states will need backup.

“One thing we need to do is simply help states improve their systems,” he said. He didn’t endorse a specific proposal for extending the enhanced benefit, but repeated his past opposition to keeping it at $600 per week.

Although Scalia hasn’t publicly ruled out an individualized solution to replace wages, his department provided guidance to the House Ways and Means Committee on May 15, stating that DOL “strongly opposes” a change in the expanded benefits system that would vary per individual.

“States would find it exceedingly difficult, if not impossible, to implement a unique payment amount,” DOL said in a copy of the guidance publicized Wednesday by Ways and Means Chairman Richard Neal (D-Mass.), whose panel has oversight of the federal-state unemployment system.

(Updated with quote from Senate Majority Leader Mitch McConnell (R-Ky.))

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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