- Americans have been forced to figure out how to pay their bills as unemployment insurance ends.
- Now states are demanding that people pay back their unemployment benefits.
- It's creating a situation where people are wondering how they're supposed to live.
- Eoin Higgins is a journalist in New England and a contributing opinion writer for Insider.
- This is an opinion column. The thoughts expressed are those of the author.
Brandel Cook lost his job during the pandemic and had to go on unemployment. Now the state of Missouri wants him to repay $4,500.
"They want me to repay $900 for the state benefits, that was $67 weekly, and the Federal Pandemic Unemployment Compensation of $3,600, the $300 a week," Cook told me in a recent interview.
Cook's tale of woe is one of many. For months now, people have complained of unfair demands for repayment on their unemployment benefits as the country has tried to put the COVID-19 pandemic behind it.
In February, the TikTok user thatgirlkelsie_98 went viral for a video in which she expresses disbelief over a demand from the state to recoup $4,620 of the $10,000 they paid her in benefits. As she put it, "how is anybody ever supposed" to live in a system that makes debt a way of life, even during a pandemic?
It's not just the human cost of the repayment demands that's causing instability and pain around the country. The US economy is poised to suffer lower consumer demand, a direct result of the unpredictability of the virus and the cash crunch from the premature shutting down of unemployment benefits.
As the Delta variant continues to surge across the nation and the government turns to more strict mandates to get the pandemic under control, many working Americans are left with uncertainty and worry over their financial situation. Telling them they have to pay back some of the benefits that kept them afloat during the pandemic is just making things worse. I talked to people facing these repayment demands — here's what they told me.
Less money, more problems
Many state unemployment systems use outdated technology and were overwhelmed by the sudden flood of unemployment claims made when the pandemic broke out. Now, months or a year later, these same flawed systems have gone back and flagged some of these payments as supposedly incorrect or said the application was accepted "in error."
According to a July report from the Government Accountability Office, $12.9 billion worth of overpayments went out from the Treasury during the pandemic — just 2% of all unemployment funds sent out during that time. According to the same report, only a small fraction of that overpayment is attributable to fraud; a large majority was simple accounting or clerical errors.
But instead of erring on the side of going after the fraudsters and reasoning "well, that may have been too generous, but it was helpful for the economy," the government is demanding that workers — many of them still in precarious financial positions — pay the money back.
Cook, who lives in the city of Neosho, Missouri, was working as a bartender at a local movie theater when COVID-19 swept through the state. The pandemic put him out of a job, but state and federal unemployment got him through the worst of it. But on March 27, Missouri determined Cook was ineligible for the benefits he had received because of limited availability.
"In the overpayment determination, they said that this is the result of my unintentional error or omission," Cook said. "I honestly have no idea how this could have happened, and I'm sure I filled out the weekly application form correctly."
Cook added that he wasn't contacted over the error, but he did receive a email at 2 a.m. telling him he had new correspondence from the unemployment office.
He has until September 23 to appeal.
But appeals take awhile, as Jennifer Reyes, a restaurant worker in Ohio who is dealing with her state's attempts to recoup unemployment benefits it paid her, found out. Reyes was out of work only briefly — from March 16 to May 26 in 2020 — but the benefits she was provided to survive were essential. Now she's being told to pay it all back.
"They claimed I owed 100% of my UI back, which is about $5,000," she told me. "My job was actually shut down, and I'm high risk."
After calling repeatedly, Jennifer got a link to appeal online, and the motion is now being processed. She hopes it goes her way, but it's a "pain" that she believes that's on purpose, she said.
"I think the state is just hoping enough people freak out about all the warnings about garnishments and just pay it back so the state can recoup some money," Reyes said.
An unfair demand
Unemployment insurance has been a constant political issue since the beginning of the pandemic. The life-saving financial aid helped keep people afloat as COVID-19 spread around the country, but as the economy began to reopen, some employers and conservative politicians have called for doing away with the benefits to force Americans back to work.
"The extra unemployment benefits need to be immediately ended," James Gop, the owner of the catering business Heirloom Fire, wrote on Facebook in June. "Businesses are suffering badly."
While Gop — a farm-to-table innovator who has appeared with Martha Stewart and on Netflix's "The World's Most Amazing Vacation Rentals" — and other business owners may find the idea of people continuing to use benefits abhorrent, the life-saving aid has helped keep the economy going, and the absence of the benefits has made their importance even more clear.
Insider reported in August:
The impact of cutting off those benefits was a 20% reduction in weekly spending for individuals — which comes to about $145 every week. And those jobless workers also saw a big hit to their wallets, losing $278 in weekly benefits, with weekly earnings only up $14.
All told, the researchers found that for every dollar in benefits, spending went down by $0.52 (and each dollar lost only saw an accompanying $0.07 rise in new income). Across the states, that translated to a $270 million increase in earnings — but consumer spending fell by $2 billion.
But the economic pain isn't isolated in the cuts in benefits. Jobs numbers for August fell well short of expectations, which raised concerns about the economy's recovery as the Delta variant raged around the country and a small but statistically important minority of Americans refused vaccines.
Even as the pandemic continued to devastate regions of the country, the federal government's Pandemic Unemployment Assistance, already cut from $600 to $300 a week, expired on September 5. Without aid, without job prospects, and with states demanding repayment for benefits already disbursed, workers are set up to be even worse off this year than they were at the height of the pandemic.
Reyes, the server in Ohio, told me that the drop in aid had a noticeable effect on business at the restaurant she works at.
"Now that the enhanced unemployment is done, we have had a significant drop in business," Reyes said. "I mean, servers are making at least $100 less a shift than we normally do. And we no longer have waits on Fridays and a very short wait on Saturday. We are fully staffed, but people aren't coming in."
Rather than demand Americans repay the benefits that kept them whole during a once-in-a-lifetime crisis, states should be demanding the federal government ensure that the pandemic assistance that expired is restarted. The human cost of cutting the benefits off and forcing Americans to pay them back might not be enough to move the needle — but the economic cost might.