Federal-State Partnership: How the Federal Government Should Better Support Its State Unemployment Insurance Offices in Times of Crisis

Abstract

In March 2020, the COVID-19 pandemic caused millions of people to lose their jobs and become dependent on unemployment benefits. State unemployment offices were not prepared for this sudden onslaught of claims. Offices could not increase staffing levels because they were not given money by the federal government to do so. As offices were overwhelmed, a scammer group named Scattered Canary took this opportunity to fraudulently claim millions of dollars from several states. Because the federal government supplies administrative funds to states based on average previous need, the system is not designed to support states’ increased needs during sudden economic downturns. This Note argues that the federal government should allot a portion of money within the currently existing Federal Unemployment Fund to create a source of emergency money for states during emergencies. These funds would provide as-requested grants to states to increase staffing more quickly than would otherwise be possible through existing emergency routes. Through the creation of this fund, the federal government would fulfill its part of the federal-state partnership and prevent widespread harm to states during economic crises.