States ‘Turned the Corner’ on Jobless-Aid Woes, Scalia Says (1)

June 9, 2020, 7:39 PMUpdated: June 9, 2020, 10:03 PM

Labor Secretary Eugene Scalia acknowledged states have struggled to promptly pay millions of jobless benefits claims during the coronavirus pandemic, but he told a Senate panel that he’s optimistic they’re making progress as the economy shows signs of rebounding.

“We are acutely aware that the states’ difficulty in timely processing claims and providing CARES Act benefits has caused frustration and hardship for countless Americans unexpectedly forced to rely on the UI system,” Scalia said Tuesday in prepared testimony provided by the Senate Finance Committee. “The information available to the department does indicate that by the end of May, states had turned the corner in addressing their backlog of claims. We will continue to do everything within our capacity to assist this.”

An analysis of DOL data by The Century Foundation, a left-leaning think tank, showed states had paid 47% of new filings through March and April, a significant improvement from the end of March, but one that still left millions of unemployment insurance applicants waiting for checks.

His nearly three hours under oath before the Senate panel marked Scalia’s first time testifying before Congress since he joined President Donald Trump’s Cabinet in September. He frequently forged alliances with fellow conservatives on the Finance Committee about measures to accelerate the economy, while clashing with Democrats who wanted him to take bolder steps to intervene on worker safety issues.

Senate Spotlight

At a hearing on the role of unemployment insurance during the pandemic, Scalia sought to strike a balance—highlighting his agency’s efforts to support workers unable to access expanded unemployment benefits programs, while also focusing on the need to transition the economy back to work.

He was buoyed in the latter effort by an employment report Friday showing payrolls rose by 2.5 million in May and the jobless rate fell to 13.3%, surpassing analysts’ expectations.

Initial jobless claims for regular state programs dropped to 1.88 million for the week ending May 30, DOL reported last week. That reflected a slowing of coronavirus-induced joblessness, as state and local governments gradually ease quarantine ordinances and allow workplaces to reopen.

“Fortunately, unemployment claims are now declining,” Scalia told Senate Finance lawmakers. “States have hired more staff, they’ve made enhancements to their computer systems, they’re reducing the backlogs of claims, and Americans are returning to work.”

But Democrats, led by the panel’s ranking member, Sen. Ron Wyden (Ore.), criticized the Trump administration for painting a misleadingly rosy picture of the economy. They called on Congress to pass additional stimulus spending to extend expanded jobless compensation to workers impacted by the pandemic.

The secretary waded into the partisan debate over whether to extend the extra $600 weekly supplement to unemployment insurance benefits beyond its July 31 deadline. The economy will be deep into reopening by then, requiring a change in policy from the $600 boost, Scalia said.

Many Republican lawmakers have said some newly jobless workers are making more collecting unemployment checks than they did in their last jobs because of the extra weekly benefits. Finance Committee Chairman Chuck Grassley (R-Iowa) and other GOP senators consistently expressed concern Tuesday about UI recipients being disincentivized to return to their jobs.

Sen. Rob Portman (R-Ohio), received a pledge from the labor secretary to discuss a temporary return-to-work bonus as a possible alternative to beefed-up benefits.

Scalia emphasized DOL’s guidance to states on preventing overpayment of jobless benefits and policing fraud in cases where scammers file claims after stealing individuals’ identities. Fraud detection measures, however, also have led states to delay benefits to honest claimants who are wrongly flagged by automated identity-verification software.

Gig Worker Benefits

Sen. Mark Warner (D-Va.) asked the secretary for greater clarity on the Pandemic Unemployment Assistance program that extends jobless benefits to freelancers and others who aren’t traditionally eligible regular UI.

“Over 10 million Americans qualified for the PUA expansion and I think that lifeline has made a difference from, frankly, economic ruin,” Warner said. “I hope, Mr. Secretary, that you would believe that that type of a program needs to be continued.”

Scalia wouldn’t commit to a more enduring benefits package for independent contractors. But when later pressed again about what his department is doing for gig workers and others who lack access to a social safety net during normal economic conditions, he indicated an openness to change.

“I think that’s a segment of the economy that is really important. I think there are many workers out there who like the independence that comes with having a job of that nature, but it does make sense to talk about ways to adapt some of what we do for workers in light of the particular line of work that those people are in,” Scalia said.

(Updated with additional reporting throughout.)

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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