As California wraps up two weeks of not accepting new unemployment claims while addressing fraud and backlog, how to address every issue without further disruption in benefits for legitimate claimants remains unclear.
New claims were scheduled to be accepted again Oct. 5, with new identification verification technology, but the reform process will be ongoing.
At the direction of Gov. Gavin Newsom, a strike team led by Government Operations Agency Secretary Yolanda Richardson has been conducting an emergency audit. The team’s report with detailed assessments and recommendations was released Sept. 19.
“Clearly, extensive fraud is troubling because it diverts scarce resources away from the families that desperately need the support,” Wayne Winegarden, Ph.D., senior fellow in business and economics at the Pacific Research Institute, told the Northern California Record by email. “The fraud also demonstrates the flaws in how the federal and state governments have responded to the Covid-19 recession.”
“Instead of creating programs that focus exclusively on the families and businesses that require help, the politicians are throwing money in every direction without proper controls or consideration of who is receiving these funds,” Winegarden said. “The result is that we have implemented a less effective response to the recession, but will bear a larger future burden due to the incredibly large debts that have been incurred.”
The economic impact amid the COVID-19 pandemic will create immediate and far-reaching consequences.
“The excessive near-term costs are the most important impact because families that deserve support will be unable to receive this money in a timely fashion. For many families, support that is too late is, by definition, too little.” Winegarden said.
“Long-term, the wasteful expenditures will impose the same future burden on California’s economy, but without the near-term benefits. Ultimately, this means that California’s recovery will be hampered, particularly if the financial pressures created by this waste leads to even greater pressure to raise taxes in the future.”
EDD Director Sharon Hilliard told Newsom in a Sept. 18 letter how the EDD plans to implement the strike team’s recommendations to fix the system.
“By taking the actions EDD is making significant progress toward improving the customer experience and addressing the backlog,” Hilliard said.
Winegarden described as “herculean” the task ahead.
“We have to learn the right lessons from the failure of these programs,” Winegarden said. “The fraud and necessity to pause the support programs demonstrate that the current social safety net is ineffective, and requires a fundamental overhaul.”