Even as economists are forecasting an economic slowdown and rising unemployment in Washington later this year, the state system that provides benefits to jobless workers hasn't even recovered from the last slump.
Washingtonians still wait longer to get benefits from the state Employment Security Department than they did before COVID shuttered the economy in 2020, even though fewer are filing claims. Workers whose benefits are delayed struggle to get help: calls to the ESD's help desk were answered just 12.5% of the time in December.
"It's just been like a surrealistic nightmare," said Aydin Bates, 22, of Tacoma, who has spent months wrangling with ESD over $1,300 in pandemic benefits the agency wants back; she's appealing her case while also working a full-time job.
In December, state auditors chided ESD for being slow to fix performance issues exacerbated by the pandemic. The agency has disputed some of those criticisms, but has also promised big changes, including a new $4.5 million phone system due online in April.
But the deeper problem, some state legislators and worker advocates say, is that Washington's entire unemployment system today is trying to do too much with too little money — and so far, state budget writers haven't come through with needed funding.
Start with the workload. The good news: fewer Washingtonians are filing new jobless claims — just 6,835 last week versus 8,950 in the same week in 2020. But the unemployment system's workload is actually higher now thanks to a slew of problems left over from the pandemic era of Feb. 2, 2020, to Sept. 4, 2021, when federal pandemic benefits ended.
Anti-fraud measures added after the $650 million impostor scam in 2020, for example, have slowed payments because ESD has to more thoroughly scrutinize claimants' identities.
Rita Santiago, a former city of Seattle contractor, said her November claim was delayed by a verification process that, ESD staff told her, was taking six to eight weeks. Her benefits finally arrived in January, but not before Santiago, 67, found herself "living on savings."
An even larger pandemic hangover: so-called overpayments.
ESD has identified an eye-popping 136,000 claimants who collectively owe $1.2 billion in pandemic-era benefits they may not have been entitled to, often due to complicated eligibility rules claimants didn't know they were breaking. A total of $21.6 billion was paid out during the pandemic period.
Some claimants have been asked to repay $30,000 to $40,000 or more, said John Tirpak, executive director of the Seattle- and Spokane-based Unemployment Law Project, which represents workers in unemployment disputes. Yet many facing repayment are "working people who don't have money" to cover such a debt, Tirpak said.
Some, like Bates, have appealed their overpayment case — only to bog down in another pandemic hangover: a backlog of nearly 28,000 appeals, mostly over pandemic-related benefits disputes, at the state Office of Administrative Hearings.
That's down from a peak of more than 46,000 last April, according to the hearings office dashboard, but still more than eight times the average pre-pandemic queue. The average ESD appeal now takes seven months to be heard, up from around 30 days before COVID.
Chelsea, a South King County resident, is appealing her October claim, which ESD denied, and was told she wouldn't get a hearing until the end of the year. "So I haven't been getting any benefits this entire time and won't until the appeal goes whichever way," said Chelsea, who asked that her last name be withheld to protect her privacy.
Some of these pandemic hangovers can be eased by federal and state policy changes. ESD officials say "tens of thousands" of claimants won't need to repay the overpayment funds, thanks to emergency federal waivers.
But determining who qualifies for waivers means more work for a system that arguable lacks the money for its current workload.
Federal funds cover most of the cost of running ESD's unemployment insurance program. (Benefits themselves are typically funded via employers' state taxes.) But because federal funding is tied in part to a state's new claims volumes, federal dollars soared during the pandemic but have since fallen back.
That has led ESD to slash the customer service staff, from 964 in late 2021 to just 271 as of the end of December — in the middle of the winter surge in unemployment claims. (Ditto at the hearings office, where staff dedicated to ESD cases has fallen from a pandemic high of 60 last spring to around 45 today.)
Those cuts are causing trouble across the unemployment system.
Over the last six months of 2022, just 73% of claimants received their first benefit payment within 21 days of filing, according to U.S. Department of Labor data. That's a big improvement from the pandemic era, but still well short of the second half of 2019, when the agency saw around 16% more claimants but paid 90% of them within 21 days.
Cuts have also affected the way ESD connects with claimants. Nearly 85% of calls to ESD received a busy message in December, compared to under 20% in early 2022, when the agency also saw high call volumes.
Among those unable to get though was Seattle resident Keith Rickards, who tried repeatedly, and unsuccessfully, to reach ESD after filing a claim in November before finally giving up.
Although ESD's website says that agents who can't answer a claimant's questions right away will schedule a callback for the following day, "I haven't even been able to speak to anyone to schedule a callback," Rickards said in late December. His claim was finally approved Jan. 11, nearly two months after he was laid off.
ESD's lagging performance is raising concerns not only over current workloads, but also over the possibility of an economic slowdown widely expected later this year.
State forecasters expect unemployment to rise to 5.2% by 2024, versus 3.7% last year, which would mean tens of thousands more Washingtonians looking for work by then, and, presumably, filing for benefits.
"That's definitely something that we are preparing for as best we can," said ESD spokesperson Clare DeLong.
For example, to cover some lost federal funding, ESD asked for an extra $21.2 million in Gov. Jay Inslee's proposed 2023-2025 budget. That included $12.6 million for 55 additional staff to fight fraud, which ESD sees as a major factor in claims delays.
Of the $21.2 million, however, Inslee's budget proposal included just $2 million, which is intended to maintain ESD's current 50 anti-fraud staffers.
"We have to weigh multiple competing priorities across state government such as K-12 and behavioral health," Jaime Smith, a governor's office spokesperson, said in an emailed response to questions about ESD's budget request.
But Smith allowed that "the governor's proposal is a starting point for discussion with legislators" during the budget process in coming months — and some legislators says ESD could still end up with more state money.
"Our role ... now is to make sure we can get [ESD] the funding they need to do the jobs we're requiring [the agency] to get done," said state Rep. Liz Berry, D-Seattle, one of dozens of lawmakers who pushed for upgrades in the state unemployment system in 2021.
Others worry that the urgency to fund ESD isn't as sharp as it was a year ago, when lawmakers were swamped with emails and calls from desperate constituents. "So it is probably not a super hot-button topic in most legislative offices right now," said Joe Kendo, lobbyist with the Washington State Labor Council. But, he added, if the economy sours, unemployment would quickly become "a big deal" again.
For now, ESD thinks it truly can do more with less. Agency leaders are emphasizing system improvements over additional staff, including new technologies, such as the phone system and a new, AI-powered virtual assistant. The latter "needs more work," said JR Richards, director of unemployment insurance customer support.
At the Office of Administrative Hearings, the constraint is less about money than about hiring and retaining temporary judges in a tight labor market, said Lorraine Lee, chief administrative law judge. The agency is bringing on four more judges this month and hopes for another four by March.
Some legislators are skeptical. State Rep. Gerry Pollet, D-Seattle, who chairs the joint committee overseeing performance audits, says ESD hasn't been sufficiently forthcoming with metrics that lawmakers could use to gauge the agency's improvements. ESD has disputed that criticism and also says more metrics will be available when the new phone system launches.
Pollet also wants ESD to activate at least some members of an emergency staff reserve that the agency recruited at the behest of state legislators. ESD says activation likely would require federal funding, which wouldn't be available unless the state sees a significant jump in claims.
But Pollet wants ESD to lobby now for state funds for that reserve, and he worries that ESD may be swamped again if the predicted slowdown leads to "an upsurge in claims."
In the meantime, some claimants, still ensnared by the lingering effects of the pandemic recession, may look elsewhere for assistance in the next one.
That may include Bates. "If I would have known the amount of stress and chaos this was going to cause me, I never would have applied" for the benefits in the first place, she said.
