Howard & Marshall: State should quickly pay out unemployment
Editor's note: This column has been updated to reflect the most recent number of unprocessed unemployment claims, as reported by the Oregon Employment Department.
As Oregon enters yet another month incapable of processing unemployment claims for 44,000 independent contractors, it's time for Gov. Kate Brown's team to expand its focus beyond simply fixing the Oregon Employment Department (OED) computer system. Their primary focus at this point should be to pay families what they are owed.
The problem is no longer that OED is overwhelmed — the problem is that 44,000 Oregon families are suffering. Hence, the first priority should be getting those families the benefits they need and are entitled to. By shifting priorities, the state — like the federal government — has the opportunity to partner with the private sector, which is technologically and culturally designed to move faster. Despite all the high-profile abuses, the recent emergency SBA bailout program did result in money moving from the federal government to small businesses in a matter of weeks. A similarly structured effort for laid-off workers here in Oregon could take only days.
The governor should move immediately to provide legal guarantees to all private lending institutions willing to provide rapid, interest-free loans to the 44,000 Oregonians who have filed but not received benefits. Creating a unique, simple online loan application should not take most banks more than a day to accomplish. Each applicant already has proof they filed an application; the state can easily confirm they are Oregon taxpayers and each applicant can be asked for a 2019 1099 form(s) verifying their income from the previous year. It would not take much to identify what total amount is owed based on the start date identified on the applicant's original application, since the federal unemployment benefit is set at $600 per week and the matching Oregon amount is $151 to $648 per week depending on income. The state could guarantee the loans with state "rainy day" funds, not federal COVID-19 funds, thereby exempting the banks from any burdensome or time-intensive federal requirements.
Will there be fraud? Yes, some. At this point, we'd wager, the vast majority of Oregonians would prioritize helping their friends and neighbors over whatever loss an emergency loan program might experience. Moreover, to mitigate the possibility of financial losses, the state could limit each loan guarantee to just 75% of what is estimated to be owed to each of the 44,000 applicants. Additionally, every applicant could opt to have the state pay the banks back directly once OED gets its computers fixed. Lastly, the banks are experts in fraud prevention, hence each would undoubtedly have ideas on avoiding potential losses without significantly slowing down the process of getting loans out the door.
In every crisis there is opportunity for leadership and innovation. Given the crisis at hand and the continuing OED debacle, a solution needs to be found immediately. Thousands of Oregonians are needlessly suffering through no fault of their own. While all of us are navigating an unpredictable and unprecedented level of challenges during the COVID-19 pandemic, a failing computer system should not be one of those challenges. By shifting focus and thinking creatively, Governor Brown has the opportunity to immediately provide 44,000 Oregon families the benefits they are owed and, simultaneously, shore up everyone's dwindling faith in government.
Shaley Howard is the owner of Scratch 'N Sniff Pet Care in Portland. Mike Marshall is a Portland-based public affairs consultant.
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