States paying unemployment to gig workers, self-employed workers

As the number of Americans without jobs continues to rise, more states are providing unemployment benefits to gig workers and those who are self-employed. 

About 4.4 million new workers applied for unemployment in the week ending April 18, bringing the total number of out-of-work Americans to about 26.5 million over the past five weeks, the Labor Department reported Thursday. 

Fifteen states are currently paying out unemployment compensation under the new Pandemic Unemployment Assistance program, which specifically covers business owners, self-employed Americans, gig workers and independent contractors who are out of work or have significantly reduced hours as a result of the coronavirus pandemic. 

This new disaster relief unemployment benefit was put in place as part of the $2.2 trillion coronavirus stimulus package Congress passed in late March to help those who may have limited work history or others not usually eligible for regular state benefits. 

Alabama, Colorado, Iowa, Kentucky, Louisiana, New York, Rhode Island, Tennessee, Texas and Utah have implemented the PUA program and started paying benefits, a spokesperson for the DOL tells CNBC Make It. North Dakota, Pennsylvania and Vermont have also started accepting PUA unemployment applications, according to Michele Evermore, senior policy analyst for the National Employment Law Project. Maryland and North Carolina have announced they will open PUA application processes starting on April 24, 2020, with more coming online soon. 

Under the PUA program, eligible out-of-work Americans can get up to 39 weeks of unemployment benefits through December 26, 2020. They’re also eligible to receive the additional $600 weekly payments from the Federal Pandemic Unemployment Compensation program, which 44 states have started paying eligible out-of-work Americans as of April 22. 

Why is it taking states so long to implement the PUA program? States first had to wait for the Employment and Training Administration at the Labor Department to issue guidelines, Evermore says. Then, each state had to set up their own policies and procedures.

Next, states had to reprogram their unemployment filing systems to handle new applications and formatting for those applying for PUA benefits, Evermore says. Only about 16 states have fully modernized unemployment systems and websites — most are still running on mainframes from the 1970s, she says. It takes time and resources to update.

While the federal government has said it will reimburse any administrative costs the states take on to implement PUA, most unemployment agencies went into this strapped for money for staff and technology.

“Basically, they’re walking, chewing gum, and writing a doctoral dissertation all at once,” Evermore says. 

At the end of the day, some states are trying to expedite payment of PUA benefits as efficiently as possible, without adding in extra hoops and verifications not required by federal law, says Andrew Stettner, a senior fellow at the Century Foundation and a leading unemployment expert. “Others, unfortunately, will take longer.”

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