Competitor for title of Federalism's Ugliest Fiscal Duckling: UI

So , therer were 900,000 new claims for unemployment compensation this past week. This "recovery" from the Greater Recession of 2020-2021 sure is looking like a relapse for so many of our fellow Americans who aren't blessed with continuing earned income from jobs they can perform from home or unearned income from comfy retirement savings.

I'm a bit embarrassed that I named Medicaid the preeminent ugly duckling of fiscal federalism a few postings ago without mentioning that there is actually stiff competition for preeminence in that dubious honors category.

The stiffest competition for the ugliest position is on view in all 50 states; the US Unemployment Insurance program which has been a kludge since it's enactment as a shared federal state responsibility by the Social Security Act of 1935 and which is badly failing in the midst of the pandemic-driven recession. By leaving such key terms of the insurance benefits as maximum weekly benefits, length of time over which benefit payments may be made up to state governments, the sponsors were able to secure passage in a widely split Congress as recounted in the excellent book by Ian Shapiro and Michael Graetz The Wolf at the Door - the Menace of Economic Insecurity and How to Fight It, but that program design also all but guaranteed that states states competing for jobs by appearing to be more business friendly, would do so by adopting the most restrictive possible eligibility criteria and the lowest weekly benefit caps and shortest benefits payment periods in order to allow their version of the program to fund themselves with the lowest possible tax rates on business owners. So as Eduardo Porter and Karl Russell remind us in todays excellent NYTimes column "How the American Unemployment System Failed," we now have 50 embarrassingly varied systems: "In Florida, only one in 10 unemployed workers gets any benefits. The state is notably stingy: no more than $275 a week, roughly a third of the maximum benefit in Washington State. And benefits run out quickly, after as little as 12 weeks, depending on the state’s overall unemployment rate."

In another example of how this federal-state partnership design actually impacts state administrative practices and how those practices hammer unemployed people, Porter and Russell cite the programs in two other states: "In Arizona, nearly 70 percent of unemployment insurance applications are denied. Only 15 percent of the unemployed get anything from the state. Many don’t even apply. Tennessee rejects nearly six in 10 applications."

The the nation's workforce support and development needs come into glaring focus as the nation tries to climb out of the Greater Recession of 2020. Here's hoping that the new Administration of President Biden and the new Congress will take up and execute on ideas like those floated by thought-leaders like Graetz, Shapiro and others to nationalize the Unemployment Insurance system and combine it with a properly beefed-up TAA creating a "universal Labor security and adjustment system" so that all workers in all fields can keep up with a labor market that is likely to be changing ever more rapidly for the foreseeable future.