Colorado’s unemployment system would struggle to meet Senate cap on benefits – The Denver Post
Senate Republicans want to cap state and federal unemployment benefits at 70% of prior wages in the next round of pandemic assistance under consideration, a move they argue would encourage more people to return to work than the $600 a week payment that ends in July.
But achieving that level of customization won’t be an easy task for Colorado’s strained unemployment system, which has received 664,532 claims for assistance and paid out more than $4 billion in benefits since March 29.
“Any level of customization is going to be more challenging in terms of programming than a flat rate. A flat rate would be easier,” said Jeff Fitzgerald, director of the state’s unemployment insurance division, during a news call on Thursday.
The Colorado Department of Labor and Employment currently replaces about 55% of prior wages on average for unemployed workers collecting benefits. The Senate’s HEALS Act proposal would pay out $200 a week in August and September in federal unemployment benefits until Oct. 5, at which time states would limit benefit payouts to 70% of prior income.
“Generally speaking, I am fairly confident that by October we would have the capacity to do the programming to get that into place, Fitzgerald said. “It would require us to drop everything else we are doing from a technology standpoint and focus on that.”
That diversion of resources could add to the frustration of claimants who have struggled to receive help. In May, the unemployment department was dealing with 16,000 unanswered calls a day, a number that had dropped to 8,000 by early July.
In recent weeks, CDLE has rolled out a digital assistant to answer questions from claimants or schedule in-person callbacks. It has also had to cope with a sharp rise in fraudulent applications under the federal program that pays out benefits to contract workers and the self-employed.
Fitzgerald said what complicates the calculation is that many workers not only earn traditional wages reported on a W-2, but also 1099 income as contractors, which the federal government agreed to assist with for the first time. Those claims are handled on two different systems in Colorado, which creates a programming challenge.
House Democrats, under their HEROES Act, had proposed extending the current $600 a week in federal unemployment benefits through Jan. 31, 2021.
Opponents of extending the extra $600 a week in federal benefits, which works out to $15 an hour, argue that about two-third of unemployed workers collecting benefits make more than they did before the pandemic, reducing their incentive to return to work and slowing the recovery. There are also concerns about the swelling price tag for pandemic relief and the impact on federal deficits that future generations will have to cover.
“It’s one thing to tide people over — it’s quite another to pay people more not to work than they could make working,” wrote Matt Weidinger, the Rowe Fellow at the conservative American Enterprise Institute, last month.
Supporters of extending the $600 a week argue there is little evidence that the extra payments discourage people from returning to work — though the state has terminated a small percentage of benefits from workers who refused to return to work — and they said ending them could derail the recovery and contribute to additional job losses.
“The spending made possible by the $400 that the Senate wants to cut is supporting 3.4 million jobs,” said Heidi Shierholz, a senior economist at the left-leaning Economic Policy Institute in a blog post on Thursday. “That $400 cut in benefits is not just cruel, it’s terrible economics.”
Those receiving more generous unemployment benefits are slightly more likely to have higher unemployment rates and return to prior jobs at slightly lower rates than those with less generous benefits, said independent economist Elliot Eisenberg.
The more pressing problem right now isn’t indolence. It is that there are far more unemployed people than there are job opportunities for them to fill.
“With 32 million unemployed and just 5.4 million job openings, the $18 billion/week unemployment boost and the added spending and growth it creates is appropriate,” he said.
In Colorado, there were 333,700 unemployed workers in June. Employers have filed complaints involving 4,100 unemployed workers who refused to return to work when asked. Of the 3,300 complaints the CDLE has investigated, it decided to terminate benefits in 16% of cases, Fitzgerlad said.
And in about 10% of those terminated cases, or just over 50 workers, the termination resulted because workers said flat out they weren’t returning because they were making more money on unemployment. Health concerns related to COVID-19 are the most often cited reasons for those refusing return-to-work requests in Colorado.
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