Insight

“Massive tech layoffs, slowing growth boost fears of possible recession,” reads a recent PBS News headline describing layoffs in the tech industry. It’s one of a slew of articles citing inflation, rising interest rates, and lower sales in digital advertising as reasons for tens of thousands of layoffs this year. And tech's white collar workers aren’t alone—experts have observed several indicators of an impending recession that could exacerbate unemployment, which historically impacts low-income workers the most. 

Many states are still reeling from the influx of unemployment insurance claims that came in during the pandemic. Now, states might not be prepared to handle the fallout of a recession, according to research from The Century Foundation (TCF). One of the biggest problems is low unemployment insurance recipiency rates—or the percentage of jobless workers receiving benefits—caused by restrictions on eligibility. TCF found that the share of jobless workers receiving unemployment insurance benefits has shrunk from 76 percent last year to 27 percent this year.

Moreover, unemployed people may not be utilizing the unemployment benefits they are entitled to. Researchers at the University of Illinois Urbana–Champaign found that as many as 50 percent of eligible jobless workers never apply for unemployment insurance, most often because they don’t believe they are eligible. 

Those who do apply for unemployment insurance may face long wait times to receive benefits. States are falling short of federal guidelines for timely payments of benefits, according to TCF. As of August 2022, only 15 states met the requirement to pay out at least 87 percent of eligible claims within 21 days. 

Equity is at stake, too. Unemployment insurance benefits vary state-by-state, and of the 10 states with the largest Black population, four rank in the bottom ten for unemployment insurance benefit’s wage replacement rate. This means that unemployment benefits in these states replace a smaller portion of wages compared to states with a higher white population, according to TCF. 

In an effort to address problems like these, President Biden issued an Executive Order late last year on improving customer experiences, which states that making government services easier to use is essential for improving equity in access and restoring trust in government. If state and federal governments wish to honor these directives, modernizing unemployment insurance programs is a prime place to start. Two years ago, we wrote about the importance of modernization executed through a human-centered lens. Shortly after we published that article, New America released a playbook that delineates what more robust unemployment insurance systems could look like and what it would take to get there. 

Since these resources were published, we continue to work with California and New Jersey to revamp their unemployment insurance systems. Our recent work has only solidified our stance that agile development and human-centered design—facilitated through community engagement practices—can help state governments build unemployment insurance programs that detect and prevent fraud, ensure timely payment of benefits, and promote equitable access. 

User research can help teams meet stakeholders’ needs more efficiently

User research is crucial when designing essential aspects of unemployment insurance programs, including identity access/management systems, claim filing systems, eligibility screeners, and recertification tools. In our work supporting California and New Jersey as they modernize their systems, we’ve leveraged user research to build tools that truly meet peoples’ needs.  

During the influx of unemployment claims due to the COVID-19 pandemic, Nava partnered with the state of California’s Employment Development Department (EDD) to rapidly build a certification tool so people could confirm their employment status for unemployment benefits, after filing their claim. We used Ethnio to screen, recruit, and schedule a diverse group of eight user research participants from 225 volunteers. When identifying research participants, we bore in mind the importance of including underserved populations in our research. The team then directly observed and learned from how participants interacted with our certification tool prototype. 

Our research revealed that 88 percent of research participants didn’t understand what a required piece of information—a unique customer number called the EDDCAN—was or where to find it. So, with a green light from our partners at EDD, we removed that requirement and replaced it with a date-of-birth identifier. This small adjustment made the sign-in process significantly easier to complete.

It’s important to include all stakeholders in user research, which is why our teams continually solicit feedback from government partners. While supporting New Jersey as they revamp several aspects of its unemployment insurance system, our team traveled to Trenton, New Jersey to visit our primary stakeholders’ offices and better understand their needs and workflows. 

The team spent over five hours at an unemployment insurance call center, watching agents take calls and use systems to process claims. This gave the team a tangible view into the common issues claimants call about and how civil servants use the systems to process claims. 

During our site visit, we also began honing our modernization strategy by soliciting feedback from stakeholders on how we can replace the state’s 40-year-old mainframe system, which is the backbone of New Jersey’s claims processing. This feedback process helped build trust with our partners, who will be directly engaged with and impacted by our work. “So many things came out of yesterday’s session,” said one of our stakeholders. “We identified challenges [in your approach] and now can put thought towards it.”

Using agile development to build technology in a crisis

Agile development can help states quickly roll out unemployment insurance benefits while continually iterating and improving upon existing technology systems. Agile development is a set of project management and software development practices that shortens feedback loops and relies on constant feedback, iteration, and collaboration. It can improve products and help teams quickly, safely, and cost-effectively build modular software—or building a complex system out of smaller parts—that meets people’s needs. 

Agile development has been key as we work with the state of New Jersey. One of the New Jersey team’s main tasks is migrating claimant data away from the mainframe system to a modern system hosted in the cloud. The years-long project will help New Jersey respond to unexpected spikes in unemployment claims, such as the 28-fold increase New Jersey saw during the first three months of the pandemic, by offering more flexible and scalable technology.   

To tackle such a large project, we are taking a phased approach. We’ll begin by launching a new front-end system that still relies on the mainframe for agents who make claim decisions. This will give us insight into the work processes we’ll need to build into the new cloud-hosted claims processing system. In parallel, we’ll use a modular approach to replicate how the old system works by building, testing, and releasing components iteratively. As the project moves forward, we'll continue to collaborate closely with a range of New Jersey stakeholders to refine the new agent experience. 

Fostering trust through transparency and plain language

In order to build trust among unemployment insurance claimants and reduce administrative burden for civil servants, it’s important to give transparent claims status updates using plain language. 

It can be frustrating and scary to submit an unemployment claim and only receive a “pending” or “filed” status update. Likewise, it’s common for call center staff to get inundated with inquiries from claimants about their claim status.

That’s why we worked with California EDD to build an online claims status tracker. When designing the tracker, we kept an eye toward transparency, personalized updates, and simplicity. Our tracker includes a Claim Status section summarizing the claimants’ overall status with a list of next steps for both the claimant and EDD. Below that, the Claim Details section aggregates disparate claim data, making it easier for claimants to understand how the next steps outlined for them relates to their claim status.

While we weren’t able to provide an exact date for when a claim would be processed, we instead provided a date range—skewed toward an upper range—for when the claimant would receive word on their claim. This general date range proved helpful to claimants and, according to our user research, discouraged them from feeling like they had to take the time to call EDD's contact center. 

After our claims status tracker was launched, EDD noted a decrease in calls to the call center. EDD also saw many examples on social media of claimants noticing the claim status tracker and referencing it as a source of truth about their claim. Through transparency and the use of plain language, we helped build trust with claimants by offering insight into why decisions were made and who is responsible for next steps. 

A robust unemployment insurance system can benefit everyone

In addition to these recommendations, we believe in starting small to eventually build out a robust, national unemployment system. We were excited when we heard about Senator Ron Wyden’s bill introduced in 2021 to upgrade the technical underpinnings of the country’s unemployment systems. In response, we gave recommendations on identity and access management, claim filing and eligibility determination, document verification, fraud protection, ongoing certification, and data migration options.

Expanded unemployment insurance during the pandemic demonstrated the merits of a more robust system. Pandemic-related unemployment insurance helped 5 million people avoid poverty in 2020 and 6 million in 2021, according to the Center on Budget and Policy Priorities (CBPP). And these benefits helped the national economy, too. CBPP estimates that pandemic-era unemployment insurance increased GDP by 1.1 percent, while think tank The Hamilton Project estimates that consumer spending among workers receiving unemployment benefits increased by 20 percent. 

An expansive unemployment insurance system could also advance financial equity. During the pandemic, unemployment insurance benefits reduced the poverty rate for Black households by 2.4 percentage points, compared to 1.4 percentage points overall. 

Emergency federal unemployment insurance offered expanded benefits for those who can’t receive benefits from many state programs, like low-income workers and gig-workers. In Georgia, Black jobless workers were denied at twice the rate of white jobless workers for state unemployment insurance, according to Bloomberg. But many of those denied were able to receive benefits through federal programs. For example, 91 percent of jobless Georgians who applied for Pandemic Unemployment Assistance (PUA) were approved, and the largest share of recipients were Black workers. 

While the reasons for this are complex, one big issue is that people who work low-income, or variable schedule jobs have a harder time filing for claims. “Advocates for reform of the U.S. unemployment system say that while eligibility rules are designed to ensure benefits go to workers who lose their jobs rather than more casual members of the labor force, they often discriminate against people stuck in low-income service jobs,” Shawn Donnan, Reade Pickert, and Madeline Campbell write in Bloomberg. 

As a recession looms, the U.S. Department of Labor and states are readying the nation’s unemployment insurance systems. At Nava, we’ll continue to follow incremental adoption paths so states can move towards human-centered systems that are designed for long-term flexibility and reliability. All of this, combined with agile development, user research, and transparency, has the potential to promote equity in the administration of unemployment insurance benefits, keep people afloat in a recession, and promote trust in public institutions.