May 1, 2020 / 10:20 AM / in a month

As U.S. jobless claims surged in March, some states lagged with payments

(Reuters) - Fewer than one in five Americans who filed for unemployment benefits in March received their first payments before the month was over, shedding light on how states struggled to distribute initial benefits after facing an unprecedented wave of claims caused by the coronavirus.

FILE PHOTO: People who lost their jobs wait in line to file for unemployment benefits, following an outbreak of the coronavirus disease (COVID-19), at Arkansas Workforce Center in Fort Smith, Arkansas, U.S. April 6, 2020. REUTERS/Nick Oxford

Nationally, just 14.21% of the nearly 12 million people who filed initial jobless claims in March received their first payments that same month, according to Labor Department data released this week.

In some states, the share of people receiving benefits was significantly lower, showing that newly jobless Americans in some parts of the country are facing much longer waits for benefits than others.

“They are struggling with the demand and that is very frustrating to people,” said Andrew Stettner, a senior fellow at The Century Foundation, which published an analysis on the state trends on Wednesday. “This data gives you a sense of it.”

Under federal rules, states have up to three weeks to make initial payments from the time a claim is filed, Stettner said. Since many states did not put lockdowns or stay-at-home orders in place until mid- to late March, it’s possible some states caught up with payments in April.

In Indiana, Arizona, Minnesota and Florida, less than 3% of people filing claims for the first time in March had received payments that month, which could cause them to understate the number of jobless people in the state by some estimates.

Rhode Island, in contrast, paid benefits to 51% of the 60,000 people who filed initial jobless claims in March. West Virginia and Virginia were close behind, paying benefits to about half of workers who filed claims.

More than 30 million Americans have filed for unemployment benefits since March 21. The sheer volume of claims has overwhelmed some state filing systems, which were not built to process such a high volume of applications.

(Graphic: Unemployment rolls surge in many states - here)

State labor departments are hiring additional staff to help process claims and answer questions. States are also revamping their websites and trying to manage the traffic by asking people to file claims on certain days of the week based on their names.

Still, a survey by the left-leaning Economic Policy Institute found that for every 10 people who have successfully filed unemployment claims, three or four people have been unable to register and another two people have not tried to apply.

In recent years, several states have cut unemployment benefits and made it more difficult for people to apply. “They’ve been more throwing up barriers to people getting assistance,” said Stettner.

Other factors may also be at play. For example, some states with smaller populations, such as Rhode Island, may have an easier time processing claims than states with more people, he said.

The states that are having trouble processing claims may also be undercounting the number of people who have lost jobs, by some measures. Consider the insured unemployment rate, which measures what share of the total labor force is receiving unemployment benefits.

FILE PHOTO: People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, U.S. April 6, 2020. REUTERS/Nick Oxford

Florida, for example, had an insured unemployment rate of 2% as of mid-April, but it was also severely behind in processing claims as of March - making payments to only 2.4% of people who filed initial claims that month. Rhode Island, which paid benefits to more than half of people filing claims in March, had a higher insured unemployment rate of nearly 17%.

(Graphic: But the picture is uneven - here)

Reporting by Jonnelle Marte; Editing by Dan Burns and Aurora Ellis

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