WILMINGTON – An overwhelmed Delaware Department of Labor has been dealing for several weeks with an unprecedented tidal wave of unemployment claims, spurred by state-mandated closures of businesses amid the spread of the virus, that is quickly depleting state funds as it awaits federal help.
In all of 2019, DOL processed about 37,000 claims, according to Delaware Department of Labor Secretary Cerron Cade. In the last three weeks, the department has processed more than 48,700 claims, including 18,863 initial claims in the week ending April 4, according to the most recent U.S. Department of Labor data.
Those figures mean that more than 10% of Delaware’s workforce has filed for unemployment since the crisis began, roughly matching nationwide statistics. Another roughly 18,500 people were already unemployed as of February, according to state data.
Those numbers may continue to rise at a dramatic rate when self-employed, contract and so-called “gig economy” workers are eligible to be added to the unemployment roll in coming days. They are covered under the federal stimulus bill but haven’t been able to apply through state labor departments due to a lack of eligibility guidelines.
“We averaged about 530 claims a week [before the pandemic] and now we’re at a point where we’re averaging over 15,000 the last two weeks,” Cade said during an April 7 conference call with the Delaware House Small Business Caucus.
Facing a deluge of claims, the department has been transferring staff within its divisions to man the call center and has hired some contractors to deal with the necessary paperwork, including some 8,000 emails and more than 75,000 calls, Cade reported.
DOL is also reportedly negotiating agreements with private companies to help address callers’ general questions regarding the unemployment insurance program. Among those companies is Wilmington-based loan servicing company Navient, Cade said.
When contacted by Delaware Business Times about those negotiations, a Navient spokesman declined to comment.
Because unemployment is a federal system, non-public employees are restricted in the type of information to which they can have access. Cade said that such outside help would be limited to responding to routine questions regarding eligibility and benefit allocation, allowing state employees to handle more sensitive calls.
Among all claims, an estimated 65% are processed without issues, Cade said, while the other 35% typically have errors in an address, dates or other fields, he explained. With no online system for an applicant to fix those errors, it forces that applicant to call in with the thousands of other callers whose issues may be more general, he said.
Not currently included in those figures are likely thousands of self-employed or contract workers who have been put out of work by the virus’s impact. Because the state’s Unemployment Trust Fund is paid into by state employers, such independent workers have never been covered by unemployment insurance.
However, under the CARES Act approved by Congress in March, new guidelines make those workers eligible for unemployment benefits. Among the issues to be sorted out is how to quantify their income though, since many contractors likely only report their revenue to the Internal Revenue Service, a federal agency that DOL does not typically consult.
“A lot of those individuals are experiencing frustration and I understand it,” Cade said. “The U.S. Department of Labor has yet to really issue guidelines [for those workers]. I would just say for individuals who are awaiting that unfortunately you’re going to have to wait a little bit longer.”
DOL is also depending on federal funds from the CARES Act to come through to bolster the state’s Unemployment Trust Fund, Cade said. While that fund held $159 million as of mid-March, it is set to be emptied by the avalanche of claims by May 1, Cade said.
The first two coronavirus aid bills approved by Congress established federal loans for states that will tide over their Unemployment Trust Funds for three months. Until that money arrives, hopefully in the next 10 days or so, the state must rely on its established funds, Cade said.
If those newly covered workers began to receive unemployment benefits today, with the state’s fund still awaiting its federal support funding, the Unemployment Trust Fund would be exhausted in about a week, leaving all claimants without benefits for several weeks, Cade said.
“We’re weighing worse and bad options here,” he added.
By Jacob Owens
jowens@delawarebusinesstimes.com
