PROVIDENCE, R.I. (WPRI) – Rhode Island has paid out more than $2 billion in unemployment benefits during the pandemic, representing a costly problem state officials hope to address in part with more job training.
Like most of the country, Rhode Island has experienced soaring joblessness since earlier this year, which has hurt its overall economy and come with a heavy cost to taxpayers and the business community.
Three-quarters of the $2.1 billion spent on unemployment benefits so far in Rhode Island has come from federal funds, namely the CARES Act. Rhode Island has covered the rest – about $474 million – by tapping its Unemployment Insurance Fund, an account financed in part by business owners.
Despite the increasing costs, R.I. Department of Labor and Training Director Scott Jensen said the state is still in relatively good financial shape, but only because its unemployment fund was healthy before the pandemic started.
“The reason the trust fund hasn’t gone into the red yet is because it was very robust, because the economy was so strong,” Jensen told Target 12. “We started this mess with a roughly $600 million trust fund, and we’re at about $200 million.”
The unemployment costs started climbing quickly in March when the public health crisis hit Rhode Island, pushing state leaders to shutter large parts of the economy. Hundreds of businesses closed, and people were laid off by the thousands.
The state’s unemployment rate ballooned from 3.4% in February to 18.1% in April. The rate far exceeded any month during the financial crisis of 2008 and subsequent Great Recession, a period largely seen as the worst economic downturn of a generation prior to COVID-19.
Rhode Island managed to push its unemployment rate back down to 11.2% in July, but reversed course in August with an increase to 12.8%, according to the most recent jobs report. By comparison, unemployment fell to 11.3% in Massachusetts and 8.4% nationally.
Jensen called it a “statistical anomaly,” arguing the state has done relatively well in terms of jobs gains in the face of a public health crisis that’s created unique economic challenges. Rhode Island estimates it has recovered about 55,900 – or 57% — of the 98,100 jobs lost during the pandemic.
“I’m not particularly worried about the exact number of unemployed folks, and therefore making judgment about Rhode Island’s economy and how strong it is,” Jensen said. “I’m worried that it’s high, and we know why it’s high – it’s high because of the coronavirus.”
To try and boost employment, Gov. Gina Raimondo in July launched a new $45 million program called “Back to Work RI,” designed to partner job-seeking Rhode Islanders with employee-seeking companies.
In an opinion piece published in The Boston Globe, Raimondo called the program “a paradigm shift.” But she has advocated for job-training programs since she entered office in 2015.
The governor for years has pushed a suite of economic incentive programs with job-training components, including Real Jobs RI, which has similarities to Back to Work RI. (In 2018, Raimondo proposed dipping into the Unemployment Insurance Fund to help pay for Real Jobs RI when the program was facing funding cuts.)
“If we embrace this opportunity and supercharge the collaborative approach to job training that has helped us rebound over the past six years, Rhode Island’s economy will be stronger, more equal, and more resilient than ever before,” Raimondo said of Back to Work RI in July.
The new program, funded by CARES Act money, allows state officials to partner with employers to create individualized job-training programs, apprenticeships, or even internships. Jensen said the idea is to give people a direct pathway to new types of jobs, especially if they’re coming from a different field – or lack an educational degree that’s typically required for that type of employment.
“The idea is to add value to companies by getting them talent and add value to working people in Rhode Island to give them the training and connections they need for a great opportunity,” Jensen said.
So far, roughly 1,300 people have filled out a form on the state’s website expressing interest, and 408 asked to be contacted, according to state officials. But the state is still developing the program’s so-called pathways with participating companies, meaning no employee has been partnered with an employer yet.
Regardless, Jensen said he expects that to change in the next couple weeks, and is so encouraged by the interest that he believes the state could ultimately place 5,600 people instead of the initial goal of 3,000 people.
If successful, the added jobs would come as a welcome additional to the state’s overall employment level. But Back to Work RI will not alone solve the state’s economic woes.
And with so many people still out of work, the state’s unemployment program continues to be inundated with calls from people filing claims and seeking answers. Jensen said there were some Sundays when his department would receive 250,000 calls from Rhode Islanders trying to certify benefits, which posed a major logistical problem.
“We had a phone system that could accommodate 5,000 people at once,” he said.
The state has since moved much of its operation online and has been largely successful in reducing backlogged claims, which peaked at 19,397 in April, before falling to about 200 toward the end of May, according to data provided by DLT.
But the number has begun to climb again in recent months, increasing from about 2,000 in August to 4,262 as of Sunday, as overall unemployment claims have started to soar again. And Rhode Islanders continue to report long-standing problems, such as issues re-certifying benefits, resulting in weeks without payment.
The state’s unemployment system has been further hampered by widespread fraud, which is plaguing programs across the country. Jensen estimated Rhode Island has paid about $13 million to fraudsters since the pandemic started, representing a roughly $1 million increase during this month alone.
R.I. State Police investigators have partnered with the FBI and the U.S. Treasury Department to try and track down the criminals, while Jensen said his department has been tasked with trying to identify and squash the fraudulent claims.
“It’s organized crime stealing from the nation’s unemployment system,” Jensen said, adding it’s a challenge to stop an ever-evolving scheme. “We’re getting better. They adapt. We get better, and they keep adapting.”
To further complicate matters, guidance from the federal government is continuously shifting. Jensen said the state is in the process of sending out the last of its federal FEMA money designed to give unemployed Rhode Islanders an extra $300 per week.
As the funds dry up, it remains unclear what that means for unemployed Americans in Rhode Island and elsewhere, which Jensen said concerns him.
“People are hurting,” he said. “Congress needs to figure out what they want to do in terms of these benefits.”