Bloomberg Law
March 25, 2020, 2:28 PM

Fired Americans Send Unemployment Websites Crashing Down (2)

Gabrielle Coppola
Gabrielle Coppola
Bloomberg News
Mallika Mitra
Mallika Mitra
Bloomberg News
Margaret Newkirk
Margaret Newkirk
Bloomberg News
Danielle Bochove
Danielle Bochove
Bloomberg News

When Aaron Garza was dismissed this week from his job as a parts specialist at a Toyota dealership in Grand Rapids, Michigan, he joined a tidal wave of unemployed people swamping systems to help them and straining state finances to the breaking point.

On Monday, Garza went to Michigan’s unemployment website and tried logging on to apply for benefits electronically. After 30 minutes, he was able to sign on, but by the time a verification code was sent to his phone 25 minutes later, he had already given up. As of Tuesday afternoon, he still hadn’t been able to get through.

The 24-year-old and his girlfriend, who also lost her job at a dealership, are confident they can make rent on the first of the month. After that, things could get dicey. “It will definitely lead to bigger issues very soon if we don’t get unemployment,” Garza said.

More than 108,000 people filed for unemployment benefits in Michigan last week, 20 times more than normal. Across America, state-run insurance systems are buckling under the weight of the new coronavirus’ economic fallout. National jobless claims last week saw the biggest spike since the aftermath of Hurricane Sandy eight years ago, jumping 33% to 281,000. This Thursday’s figure could be as high as 3 million -- quadruple the record set in 1982 -- according to S&P Global Ratings.

Other countries are experiencing surges as the world beyond Asia deals with the swelling tides of Covid-19 cases. Norway on Tuesday posted the highest unemployment rate since World War II. Canada last week saw 20 times as many people apply for benefits as the same period a year ago, and that figure is expected to double this week.

Funding Questions

Despite balky websites and frustrating hold times, states have the administrative capacity to process the millions of claims, said Christopher O’Leary, a senior economist who studies public employment policies at the W.E. Upjohn Institute in Kalamazoo, Michigan.

“There’s going to be some waiting, but people are going to get benefits; it’s going to be done,” he said.

A bigger question is the funding. There will be some federal help, thanks to the stimulus bill passed early Wednesday: Unemployment insurance would be extended to four months, benefits would be raised by $600 a week and more workers would be eligible.

Still, as many as 21 states and U.S. territories could see their unemployment reserve funds go into the red if the U.S. experiences a severe recession, according to a study O’Leary co-authored this month.

That may force some states to take out loans from the U.S. Treasury, saddling them with more debt. Some states that issued bonds for unemployment during the 2007-2009 recession were still paying them back as of December 2018, according to O’Leary’s study.

“We’ve already seen some states start to make budget cuts and use their rainy-day funds and reserves,” said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers. “There is also the possibility of tax increases down the road.”

Coast to Coast Crashes

In the present, the pressure is here. A message on the Michigan website Tuesday afternoon pleaded for patience: “Our IT team is making adjustments to restore the system to full capacity. We apologize for any inconvenience.”

Lisa VanLonkhuyzen, a sign company account representative in Grand Rapids, was let go Monday with most of her 100 co-workers. At 10 a.m. Tuesday, she started trying to apply for benefits online and by 1 p.m. was tweeting angry memes.

“It’s super frustrating,” she said.

Ohio apologized on Twitter for problems at its website and call center and started drafting employees from other divisions to help out.

The system just wasn’t built for a crisis, Ohio’s lieutenant governor, Jon Husted, told reporters: “It was built to take care of what we could expect on a regular or even robust basis.”

Claims filed online in In Washington state were 18 times normal and the phone system was cutting off calls before they even connected, benefit seekers told the Seattle Times. When 47,000 Louisianans filed claims last week -- more than 30 times the weekly average -- they crashed the website and the phone system cut off applicants in mid-sentence.

In Florida, the chaos spurred its own job boomlet: Officials rushed to hire 100 workers to answer calls and process applications, and to add server capacity. The state ties staffing and funds to the prevailing unemployment rate and had been cut to the bone when coronavirus arrived to spoil a booming tourist economy.

Kafka’s Castle

Almost a third of Americans could be out of work in the second quarter, James Bullard, president of the Federal Reserve Bank of St. Louis said Monday, as GDP is cut in half. Already, a huge number are finding themselves, at least temporarily, locked out of benefits when they need them most.

Kat DeVoe-Peterson, a 26-year-old actress in Los Angeles, said she experienced unemployment both before and after the epidemic, and claiming benefits has gone from difficult to almost impossible. Her health insurance runs out on April 1, the same day her rent is due. “I’ve been extremely anxious,” she said.

Alan Connor was much happier with Georgia’s system -- at first. The owner of a restaurant called Dakota Blue in Atlanta’s Grant Park, Conner got an email from the state labor department last week telling him how to file for the 10 to 12 employees he laid off March 16, as the city began urging, then ordering, restaurants to end sit-down dining.

“I was thinking, ‘This is what we pay taxes for,’” Conner said.

Then he got online. The system was so overloaded that the first page took 45 minutes to load. Nearly two hours later, Conner finished -- and was promptly rejected. He was supposed to wait a week to file.

“It was kind of Kafkaesque,” he said.

(Updates with Husted comments in 16th paragraph; earlier version of story corrected timing of Garza’s layoff in first paragraph.)

--With assistance from Jonathan Levin and Kelly Gilblom.

To contact the reporters on this story:
Gabrielle Coppola in Detroit at;
Mallika Mitra in New York at;
Margaret Newkirk in Atlanta at

To contact the editors responsible for this story:
Danielle Bochove at

Stephen Merelman

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