PD Editorial: Unemployment fix must come before new state agency

California’s Employment Development Department continues to struggle with a backlog of unemployment claims. The problems might have been festering long before Gov. Gavin Newsom took office, but now they are his to fix. Alas, he hasn’t managed much progress.

Newsom inherited a stressed system that was vulnerable to fraud. When the pandemic hit and the lockdown threw millions of Californians out of work, the system broke. The department tried to both prevent fraud and get payments out quickly, but failed at both efforts.

State officials confirmed $11 billion in fraudulent unemployment benefits. At the same time, millions of Californians with legitimate claims waited months to receive badly needed assistance.

Efforts to resolve the backlog have not succeeded. The number of claims not paid after 21 days remains above 1 million and is increasing. Too many Californians who call for help report jammed phone lines at EDD.

“This month, my office has been receiving countless calls from desperate constituents, many of whom are in tears, some of whom are on the brink of homelessness and even some who have threatened suicide,” said Assemblyman David Chiu, D-San Francisco.

Given that failure, state lawmakers made the right call when they rebuffed Newsom’s proposal to create a new Department of Better Jobs and Higher Wages under the California Labor & Workforce Development Agency. EDD is also part of that agency, and 1,600 EDD employees would have been shifted to the new department.

The state’s nonpartisan Legislative Analyst’s Office panned the proposal, saying, “In our view, the administration’s decision to move forward with a complex reorganization during the pandemic poses a potentially serious risk to the state’s ongoing efforts to eliminate the backlog of unemployment insurance claims.”

The Assembly budget subcommittee on state administration agreed, unanimously voting against creation of the new department after a recent hearing. The full budget committee should affirm that decision.

Creating a new department to improve working conditions and wages in the state might be a good idea at some point, but not in the middle of an ongoing unemployment crisis that shows little sign of being resolved.

It’s important to note that much of the backlog — about 84% — consists of claims waiting action by the claimant not EDD. But claimants say that busy phones and bureaucratic red tape have made resolving those issues far more difficult. Assembly Budget Committee Chair Phil Ting, D-San Francisco, said that people are spending hours trying to reach the EDD call center, without success.

More than two years into his tenure, much of Newsom’s time and energy has been spent dealing with crises, especially the pandemic and wildfires. He might have earned a pass on unemployment problems — or at least easier grading — if he had delegated reform to leaders who could demonstrate progress by now. Such improvement remains elusive.

We suggested back in February that the EDD crisis is a “crucial test” for Newsom. Between the failure to make progress resolving the backlog of delayed claims and the push for a new department that would distract from those efforts, we can’t say that Newsom and his team have done much to pass that test.

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