Unemployment claim delays mount despite Oregon’s low jobless rate; fraud is one reason why (2024)

When Brent Sutton lost his job at a food market on the Oregon coast earlier this year, he filed for jobless assistance and promptly started receiving benefits. Then, almost as quickly, the money stopped.

The Coos Bay resident said his third week of benefits didn’t arrive, and that the employment department told him someone had submitted a direct deposit form to reroute his money to their account. Payments stalled for several weeks while the employment department investigated the apparent fraud, leaving Sutton struggling to make his car payments and pay his rent.

“For it to be able to be put on hold like that, it’s crazy to me. It can really affect someone’s life. I called in every week and they just told me to wait and wait,” said Sutton, 33. “I can wait, but my car payment won’t wait. It’s really upsetting.”

Oregon’s unemployment rate remains near a record low at 3.6%, but many laid-off workers are having to wait much longer for assistance. The share of jobless claims processed within three weeks fell sharply beginning in August, from more than 90% to around 75%.

The delays are reminiscent of the agency’s pandemic breakdown, when Oregon was among the slowest in the nation at paying jobless benefits. But the reasons for the new delays appear very different.

Three years ago, Oregon was coping with an unprecedented number of jobless claims and a dysfunctional agency that had endured a succession of leadership failures and had repeatedly postponed structural reforms. The state notoriously delayed replacing the employment department’s obsolete computer system despite receiving more than $80 million in federal funds to pay for an upgrade in 2009.

The new computers are still a work in progress – they aren’t due to begin processing claims until next year. The employment department says it has diverted staff to prepare for the new computer system, one reason claims processing is slowing.

The department says bigger factors in the slowdown are a decline in federal funding and a deluge of fraudulent claims.

“When those fraudulent claims come in, it does create workload for us,” David Gerstenfeld, the employment department’s director, said on a media call earlier this month.

The agency says it’s receiving a high volume of fake jobless claims from cyberthieves, forcing it to delay payments for some unemployed Oregonians while it works to ascertain whether their applications are legitimate.

“We can’t quantify how many days of work it adds to the average processing, but I can say that it’s a significant effort that many teams in our agency work on,” Gerstenfeld said.

The employment department says its own systems haven’t been breached. Instead, it says the issue is that identity thieves are using personal information about Oregonians that they gathered elsewhere to submit fake claims.

The result is long delays for some laid-off workers while the employment department sorts through the claims in search of fraud. It’s hindering the launch of the Paid Leave Oregon program, also administered by the employment department, which is encountering high volumes of fraudulent claims.

The employment department won’t say how many fraudulent claims are coming in and won’t specify what tools it is using to separate legitimate applications from fake ones. Gerstenfeld said the agency is concerned about providing information thieves might use to modify their approach.

But he said the agency is sending out “a significant number of letters” to verify people’s claims for jobless and paid-leave benefits.

The current delays aren’t nearly as bad as those during the pandemic. At times in 2020, the vast majority of claims took longer than three weeks to process and thousands of people had to wait months for financial assistance during the deepest economic downturn in Oregon history.

The most recent problems don’t affect nearly as many people for the simple reason that there aren’t nearly as many people out of work.

Moreover, Oregon’s performance today isn’t much worse than the national rate and it’s considerably better than some states, like Washington, where nearly 40% of claims take longer than three weeks to process.

Employment department spokesperson Rebeka Gipson-King said a decline in federal funding is another major reason why Oregon’s performance declined beginning this summer, even more significant than fraudulent claims.

But federal funding for state employment agencies dropped off across the country as pandemic-era stimulus programs expired yet few other states experienced the same declines in timely payments that Oregon has.

Nationally, the rate of timely payments has hardly budged in 2023 despite the changes in funding levels. Gipson-King said it’s possible Oregon benefited from other, temporary funding programs that enabled it to keep staffing higher than elsewhere, for longer.

As they wait for their aid, laid-off Oregonians are spending a lot longer seeking answers. Most callers to the employment department are on hold for at least 10 minutes and many spend at least a half hour waiting to get through.

The employment department attributes those delays to the decline in federal funding, too. The agency said it’s talking with the Oregon Legislature about creating a permanent source of funds so it can process claims faster and improve communication with those seeking benefits.

In Sutton’s case, he ultimately reached someone at the employment department through its Facebook page who promised to speedily resolve his claim. He’s optimistic his payments will resume before his savings run out but said he doubts others would fare as well.

“If I didn’t have money saved, I would have lost my place, I would have lost my car,” Sutton said. “If this happened to a regular person who didn’t have money saved, I can’t imagine.”

-- Mike Rogoway | mrogoway@oregonian.com |

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