Special Report: Pennsylvania failing the unemployed in not meeting standards with claims

The backlog in appeals is “pretty much the worst it’s ever been” for non-pandemic times, said Sharon Dietrich, the litigation director for Community Legal Services of Philadelphia.

Dietrich said there have been four or five unemployment backlog crises since she began working with the agency in 1987, and the current backlog is worse than it was during the Great Recession.

“And unlike the Great Recession, our unemployment rate in PA is 3.4%,” she said. “So what are we going to do if there’s another recession or even a slight worsening of that number?”

Julia Simon-Mishel, the supervising attorney for unemployment compensation at Philadelphia Legal Assistance, said she worries that “folks will … drop out of the system, that they will just give up on that claim because it’s taking so long to get to the next stage.”

Officials from the state Department of Labor and Industry and advocates for unemployed people say the backlog started during the COVID pandemic, and the state has made good progress in clearing the backlog in initial claims.

Dietrich, Simon-Mishel and other advocates for unemployed people say the state needs to make more progress with initial claims and appeals.

State officials say they’re working on it.

“The Department is committed to reducing the appeals backlog and is exploring good faith solutions to improve the services available to workers, employers, and other members of the public,” said Danielle Woods, a spokesperson for the department, in an email.

Unemployment backlogs have a bigger impact on Black people

Backlogs in unemployment claims and appeals are likely to have a greater impact on Black Pennsylvanians because Black people are disproportionately represented in unemployment statistics, said Timothy Welbeck, director of the Temple University Center for Anti-Racism.

National statistics show that the unemployment rate among Black people in the United States has been roughly double that of white people for decades.

In 2023, Black people were slightly disproportionately unemployed in Pennsylvania. About 15% of people who received unemployment benefits were Black, according to an actuarial report from the state Department of Labor, while Black people make up about 12% of the population.

“When you look at wealth inequality, in a statistical sense, the average Black family does not have similar resources to rely on if they lose their means of employment, whether that’s savings or being able to rely on a family member,” Welbeck said.

“Studies have demonstrated that the average American is not prepared for an emergency upwards of $500. So this is something that could impact many people, but it’s going to disproportionately impact the Black community.”

Unemployed without compensation

Paul waited five weeks before his unemployment claim was approved.

The 36-year-old Chester man, whose full name the Tribune has agreed to withhold due to the sensitive nature of his situation, lost his job as a food and safety quality assurance specialist at the beginning of October. He said he had suffered some injuries in an automobile accident and struggled to work as efficiently as he did before the accident, so the company he worked for terminated his employment.

He applied for unemployment compensation soon after he lost his job, but didn’t hear anything for days and couldn’t get through to the unemployment office on the phone. Days turned into weeks.

While he waited, he struggled to pay his bills and got notice that he was being evicted from his home. He said he has nowhere else to go if he’s evicted.

“It almost puts you in a situation where, you know, you’re in a crisis. You don’t want that. Nobody wants that,” Paul said.

“It’s just me. But I can’t imagine if I had children or something. Then, it would be even worse.”

Paul contacted the Philadelphia Unemployment Project, and the team there was able to help him sort out the issues that were holding up his claim. He finally got approved in the middle of November.

He was lucky he didn’t have to file an appeal, or he might still be waiting.

Pennsylvania’s record low unemployment rate

Pennsylvania’s unemployment rate dropped to 3.4% in April 2023 and has been hovering around that number since, according to data from the U.S. Bureau of Labor Statistics. It’s the lowest the unemployment rate has been in over a decade, and the longest streak of low unemployment since 1976.

The state unemployment rate is lower than the national unemployment rate, which was 4.2% in November, according to data from the U.S. Bureau of Labor Statistics.

Even with the record low unemployment rate, Pennsylvania paid out $1.66 billion in unemployment benefits in 2023, according to an actuarial report from the state Department of Labor. The average payment was $453.22 per week. Data for 2024 is not yet available.

Pennsylvania not meeting federal unemployment payment standards

State and federal officials look at backlogs in unemployment compensation claims and appeals in terms of timeliness — how long it takes the state to issue a first payment or issue a decision on an appeal.

The Social Security Act requires states to pay out unemployment benefits “when due,” and federal regulations elaborate on that to mean “with the greatest promptness that is administratively feasible.”

States like Pennsylvania are in compliance with federal regulations if they issue first payments of unemployment benefits within 14 days for 87% of claims, and within 35 days for 93% of claims.

For much of this year, Pennsylvania was nowhere near meeting those standards.

In March, the state issued first payments within 14 days for only 38.05% of claims and within 35 days for 65.11% of claims, according to data from the U.S. Department of Labor. The numbers gradually improved throughout the year. And in November, Pennsylvania issued first payments within 14 days for 85.03% of claims and within 35 days for 93.89% of claims.

November was the first month that the state partially complied with federal regulations since April 2020.

Appeals are a bit more complicated. The state divides appeals into two categories: Lower-authority appeals are when an employer or unemployed person appeals the initial determination of eligibility or benefit amounts and a referee decides. Higher-authority appeals are when an employer or unemployed person escalates the appeal to the Unemployment Compensation Board of Review.

States are in compliance with federal regulations if they issue decisions within 30 days for at least 60% of lower-authority appeals, and within 45 days for 80% of lower-authority appeals.

Pennsylvania is not meeting that standard, and has not met it since February 2020.

Pennsylvania was closer to meeting standards earlier this year than it is now. In March, it issued decisions within 41 days for 49.13% of appeals, according to data from the U.S. Department of Labor. (Although the federal regulations set the benchmarks at 30 days and 45 days, they track data at 25 and 40 days.) The response rate has generally dropped throughout the year. In November, the state issued decisions within 41 days for only 36.06% of appeals, according to data from the U.S. Department of Labor.

Federal data shows that, in November, first-level appeals sat in the state system for an average of 70 days before a referee issued a decision.

The state is doing better with responding to appeals now than it was from 2021 to 2023.

Federal data shows that, in July 2022, state referees issued decisions within 41 days for only 17.32% of first-level appeals. At that point, the average age of appeals in the state system was 194 days — about 6½ months.

By October 2022, the state was issuing decisions on a greater percentage of first-level appeals, but the average age of first-level appeals in the system was 244 days — about eight months.

How the Pennsylvania unemployment backlog got so big

Pennsylvania’s unemployment rate reached a high of 16.1% in April 2020, as businesses closed and laid off employees in the early days of the COVID pandemic. The state received an “unprecedented surge in unemployment compensation claims,” state Department of Labor spokesperson Trevor Monk said in an emailed statement. That created a backlog in initial claims.

In those first few months, the Philadelphia Unemployment Project received hundreds of calls each week from people seeking help with getting their claims approved, said Adam Goldman, the organization’s executive director.

The Philadelphia Unemployment Project, Philadelphia Legal Assistance, Community Legal Services and other organizations across the state worked with state officials to clear the backlog in initial claims.

When state officials saw the number of people filing new claims for unemployment compensation decreasing in June 2021, they released a long-awaited upgrade to their computer system. It was full of glitches. People who had been approved for benefits in the old computer system got rejected by the new one. Other people were misidentified as incarcerated in the system, and therefore ineligible to receive benefits. Other people received notices of eligibility with future dates. And others saw payments stop because of past issues that had been resolved.

Monk and Woods did not answer questions about whether the glitches in the system have all been fixed.

Monk said the volume of appeals has grown in the past few years, and the Department of Labor received 45% more appeals in 2023 and 2024 than it did in 2019 and previous years.

What is Pennsylvania doing about the unemployment backlog?

Dietrich, Goldman and Simon-Mishel said they have seen significant improvement in how quickly the state processes initial unemployment claims since Gov. Josh Shapiro took office. They said officials have been responsive to feedback and implemented changes.

“I really do believe that leadership here is really committed to improving the program,” Simon-Mishel said.

But the backlog in appeals “doesn’t seem to be getting any better from what we can see,” she said.

Monk said the department has increased its staffing levels by 25% and continues to hire staff to help with unemployment compensation claims.

“However, it is important to note that the hiring and training process for referees is not an immediate solution,” he said. “It takes time to ensure our staff are adequately prepared to handle the complexities of appeals cases.”

Monk and Woods did not answer questions about whether the department has asked employees to work overtime to process claims and appeals.

Monk said the department also faces some legal and logistical constraints.

“For example, hearings are legally required to be conducted in person in the county where the claimant worked,” he said. “This limits our ability to reallocate work to areas with more capacity and also creates space challenges, as there are a finite number of available hearing rooms.”

Woods said another factor contributing to the backlog is “poor attendance” of employers and claimants at hearings. She said the state has held almost 70,000 unemployment hearings this year, and claimants have been absent from 38.85% of them.

Woods and Monk said the department will continue to work to clear the backlogs and disburse payments.

“Our goal is to ensure that every appeal is handled thoroughly and fairly within the constraints of the UC law,” he said.