Tech meltdowns kept millions from obtaining unemployment aid last year. Now, a senator has a $500 million plan to fix it.

“Unemployment began in the 1930s, and not that much really has changed,” Wyden (D-Ore.) said ahead of the bill’s introduction. “And certainly unemployment insurance services have not kept up with the times.”

Wyden’s measure is backed by fellow Democratic Sens. Sherrod Brown (Ohio), Catherine Cortez Masto (Nev.) and Mark R. Warner (Va.). It marks a direct response to the technical glitches last year that slowed unemployment websites, left government phone lines clogged and marred the U.S. government’s economic response to the coronavirus, as millions of Americans who unexpectedly lost their jobs struggled to stay current on their bills.

Over a roughly month-long span at the start of the pandemic, roughly 21.5 million Americans filed for unemployment benefits, according to an analysis at the time by the Economic Policy Institute (EPI). But researchers said the number should have been much higher, estimating that as many as 12 million people did not apply for jobless aid because they faced such difficulties in obtaining it. As a result, only half the Americans eligible to receive unemployment checks actually were able to cash them by the end of April, EPI estimated.

Adding to the difficulties, it took some states months to implement some of the most critical stimulus programs Congress authorized as part of the $2 trillion Cares Act last March, which increased jobless benefits by an extra $600 each week and extended support for the first time to Uber drivers and others in the so-called gig economy. States also struggled to battle back a flood of fraudulent claims for their unemployment relief. These local governments ended up cracking down so severely that thousands of innocent workers ultimately had their much-needed benefits halted once again as local watchdogs investigated.

The myriad deficiencies came as no shock to many of the organizations that advocate on behalf of out-of-work Americans. A September 2020 report from a trio of groups — Philadelphia Legal Assistance, the Century Foundation and the National Employment Law Project — found that unemployed Americans for years have “paid the price” for their states’ failed efforts to upgrade their technology, resulting in delayed benefits and unfounded fraud allegations well before the pandemic took hold.

“The technology used by states to run their unemployment systems is failing workers,” said Julia Simon-Mishel, supervising attorney of the Unemployment Compensation Unit at Philadelphia Legal Assistance and an author of the report.

Modernizing the country’s unemployment insurance technology now counts among the top priorities for Wyden, who assumed the chairmanship of the Senate Finance Committee when Democrats took control of the chamber this year. The government’s ability to calibrate its future economic stimulus programs hinges on states’ ability to deliver the money promptly, said Wyden, stressing the 53 different systems in place across states and territories “just defies common sense.”

Wyden’s bill specifically would task the Labor Department with leading an effort to craft a “modular” unemployment system — a series of pieces including a consumer-facing website and back-end technology to process applications for jobless aid. Unemployment insurance is overseen by Washington yet managed by the states, so it would be up to these local officials to decide to what degree, if any, they adopt the technology that the Labor Department commissions, then customize the technology to fit their needs. Wyden’s aides say they expect the states would ultimately participate because they could save money.

Wyden’s bill proposes to test and service these systems regularly, seeking to avoid the sort of meltdowns that plagued states such as Florida that tried, and failed, to modernize on their own. The state’s Republican leaders invested $77 million in an unemployment insurance system that Florida watchdogs later flagged repeatedly for deficiencies that wrongly denied people benefits even before the pandemic began.

In doing so, Wyden’s bill seeks to ensure that the federal government’s unemployment benefits tools don’t deploy algorithms that make decisions about who can and cannot obtain aid as a result of biased programming. The concept borrows from a bill he introduced in a prior session of Congress that targeted companies such as Facebook, fearing that their powerful hidden algorithms essentially allowed advertisers to discriminate based on factors such as race, religion and disability status.

“We looked at the history here, and Black and Hispanic workers historically have been far less likely to get benefits,” Wyden said. “Here is a concrete case, something you could hope to address with modern technology so it doesn’t continue to happen again and again.”