PD Editorial: California’s unemployment system is still broken

Californians looking for state government dysfunction can find it easily at the Employment Development Department. EDD handles unemployment payments for out-of-work Californians, and it’s been doing a terrible job for years. Now the Legislative Analyst’s Office, which advises state lawmakers, took a swing at the department. Will anything change?

A scathing report released this week found that during the COVID pandemic 1 million people did not receive unemployment benefits to which they were entitled. That meant that EDD improperly withheld between $500 million and $1 billion annually. Another about 5 million people had their payments delayed.

Many of the delays occurred because applicants did not reply to requests for additional information quickly enough. That’s a facile excuse to shift the blame as it misses the full context. People are slow to respond because the application process isn’t easy, and when one calls EDD for help, it’s often impossible to get through to a human being.

Last year, officials from the department admitted to the Legislature that things weren’t going well. Before that, the state auditor had issued its own blistering report about performance at EDD. Problems go back even before the pandemic. Everyone has known that EDD is broken, but no one has fixed it.

The California Unemployment Insurance program is supposed to provide a temporary safety net to workers who lose their job. The money helps keep people from falling into debt while they find new employment. In recent years, however, EDD has pulled that net out from under too many Californians.

“These failures caused hardship for unemployed workers and their families, held back the economy, and spurred frustration among Californians with their state government,” the nonpartisan Legislative Analyst’s Office wrote.

The office concluded that EDD focuses too much on preventing fraud and containing costs. It works so hard not to get cheated that it makes qualifying for benefits too difficult.

The report recommends several steps to make the experience more user-friendly and more accurate. For example, it suggests simplifying the application process and giving the unemployment insurance board authority to adjust practices that make it difficult to get benefits.

Change should start with Gov. Gavin Newsom, who has had a couple of years to make a mark on the troubled department by appointing people committed to reform. More than 1,500 EDD staff have fled in the past few years, and the department has had four directors since 2020. The current director, Nancy Farias, is a Newsom appointee.

The Legislature, with its ability to hold state agencies accountable, also can take a stronger hand.

The essential tension is balancing responsible stewardship of public resources with ensuring everyone entitled to benefits receives them. The Legislative Analyst’s Office sees heavy-handed fraud prevention. It wasn’t so long ago that the public was clamoring about EDD losing $20 billion or more to fraudulent claims during the pandemic. That money, at least, came mostly from federal benefits programs, not state unemployment insurance.

The public is ready to castigate leaders when the pendulum swings too far in either direction — too generous or too stingy. But a cranky — in this case justifiably so — public isn’t an excuse not to fix an obviously broken department that is leaving desperate Californians without the help they deserve.

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