With the recent storms and flooding that have hit the southeastern states, many people are finding that unemployment benefits are their main source of income while they recover from these tragedies. For over 75 years, the Federal Government has worked with states to provide benefits to unemployed workers, and for more than 40 of those years, Lloyd “Pete” Fleming has been involved in administration of this program. Pete recently retired from the U.S. Department of Labor, but before he went, he sat down and talked about the changes the system has seen over his 41 years of state and federal service.
When I started as a management analyst working in Kentucky, the Unemployment Insurance system was converting over to computer applications. Indeed, UI was an early user of computer technology because of its huge data files, its very complex calculations and its need to keep large volumes of information stored for long periods. Claimants would have to come into a state office to file a claim, which would then be entered into the system using keypunch equipment.
We had an army of programmers and analysts to keep things moving along, and we had a staff of claim takers, reviewers and keypunchers to keep the information flowing. Every two weeks, the local offices would send their forms to the state office for processing, and about every 6 to 13 weeks, a claimant would come into a local office to be interviewed to be sure they were still eligible for benefits. One of the good things about the old system was the claim takers in the local offices reflected their local communities and could explain the system to claimants in their own vocabulary.
However, automation received a boost after the oil embargo of 1973-75, when the subsequent recession caused claimants to form double lines around UI local offices, payment timeliness stretched out for months, interstate benefit payments virtually halted and all segments of the UI system came under severe stress. Lawsuits were filed because payments were not made in a timely manner.
After the 1973-75 oil embargo-related recession, 22 states’ funds were broke and there was a push for more quality control and other efforts aimed at reducing costs. In the early years of the Reagan administration, the Employment and Training Administration Quality Control function was introduced, requiring states to not only determine the projected level of overpayments as a federal requirement but also to publish the results annually. While the Reagan administration advocated a new federalism that gave more power and authority to states, the UI program headed in the other direction.
I expect you are seeing this again, as states try to rebuild their funds following the current economic downturn. We are already witnessing some belt tightening by stricter eligibility rules, tougher work search requirements, even reductions in weekly benefit amounts and more emphasis on compliance with state rules. As we saw then, there is an increased emphasis on detecting overpayments and eliminating so-called disincentives to find jobs. Times of fiscal austerity tend to move the UI system in a more conservative direction reflecting an inherent tension between providing income support where and when it is needed and maintaining a fiscally solvent system. While State and Federal leadership have to be concerned about the plight of the involuntarily unemployed, they also have to exercise fiscal responsibility and restraint. For example, the current potential of 99 weeks of duration for receipt of State and Federal UI benefits was enacted by Congress to respond to the worst recession since the Great Depression and to a historically high duration of unemployment. Yet there are many leaders in the system who think that this is far too long to receive benefits and its cost poses an undue stress on fiscal solvency.
I think the current financial situation poses a serious threat to the UI system as we have known it, and yet I expect the system will, as it has throughout my 41 years, figure out a way to adjust.
Editor’s Note: The author, Pete Fleming, recently retired from the Employment and Training Administration Region III where he was Regional Director, Office of State Systems. Fleming is nationally known as an expert in Unemployment Insurance programs.