Anna Shvets, Creative Commons via Pexels
Our Full-Employment Division

Our Full-Employment Division

Why didn’t California’s unemployment office heed past audits? Because real efficiency means fewer jobs.

The report last week that the state Employment Development Department had paid $20 billion in bogus jobless benefit claims, including $810 million to convicts, added to the view that EDD is the government equivalent of a dumpster fire. It came days after a Sacramento Bee report that found that thousands of legitimate applicants for jobless benefits who left out key information might have to wait as long as six months to be interviewed by agency officials to clear the way for them to get benefits.

Those inclined to be charitable might say it was no surprise that massive job losses during the pandemic would overwhelm the agency. But hold on, says State Auditor Elaine Howle, who is retiring in December after 20 years on the job. In reports dating back to the Great Recession in 2008, Howle’s office has consistently pointed out problems with EDD.

In January, she said the agency had a long history of a sluggish response to any higher level of claims, not just the massive surge seen last spring, and had never adopted common best practices. She said that EDD never completed changes in how operators interacted with callers that she recommended in a 2011 – basically, tracking the reasons for the calls. Having such data could have allowed the agency to revamp its website to provide detailed information that would  answer many of the questions often posed by callers, freeing up operators.

But Howle’s most important point was noting that EDD had made no progress on automating claims processing at a time when some government agencies and much of the private sector has been able to use software to sharply improve efficiency in handling such tasks.

Why didn’t EDD go after this low-hanging fruit? Why didn’t Govs. Jerry Brown or Gavin Newsom? The answer is obvious:

In a state where government unions play such a key role in the Democratic juggernaut – supplying contributions and foot soldiers to political campaigns – there is simply no appetite for such reforms. Why? Because increased efficiency can lead to the loss of government jobs.

The story of EDD’s foot-dragging on automation is nothing new for Sacramento. Dr. Keith Richman – the maverick, moderate Northridge Republican elected to the Assembly in 2000 for the first of three terms – was passionate about expanding the number of low-income children enrolled in free state public health programs. An estimated one-third to one-half of all eligible kids weren’t enrolled.

I interviewed Richman, who died in 2010, about his proposed reform: making it simple and easy for parents to sign up their children for the health programs online. He was quickly and flatly told the idea was a non-starter because it would lead to a loss of government jobs.

To paraphrase Monty Python’s Eric Idle, “Every government job is sacred, every government job is great. If a government job is wasted, God gets quite irate.”

Yet government unions and their political allies are right to assume that making public employees more efficient would mean fewer such employees – and fewer employees means reduced union dues revenue. They’re fully aware of the years of reports from the McKinsey Center for Government, part of the global McKinsey think tank. The reports have long argued that the productivity revolution seen in much of the private sector beginning in the late 1990s could help local, state and federal governments get much more bang for taxpayers’ bucks.

Fifteen years ago, the McKinsey Center touted bureaucratic record-keeping, claims and payroll processing, and inventory management as areas where private-sector tactics could improve efficiency and cut costs. But in 2017, the center said that gains in digital technology and much more refined data analysis tools could yield huge new efficiencies in government-provided health care – one of the biggest areas of state and federal spending.

Alas, don’t expect those running the show in Sacramento to heed any of these McKinsey insights any time soon. They’ve got 238,000 state government jobs to protect.

Meanwhile, there’s proof that many of those jobs could easily be trimmed even without better use of tech tools.

Remember, in late 2008, Gov. Arnold Schwarzenegger began requiring periodic unpaid furloughs for most state workers to reduce spending. Court challenges and the opposition of then-Controller John Chiang sometimes blocked the furloughs. But the state Legislative Analyst’s Office reported that the average state worker had to take 79 unpaid days off before the furloughs were canceled for good.

The predictions that this would lead to huge new problems at state agencies never came to pass. As far as most of the public was concerned, for the most part, the agencies just remained their mediocre selves.

Now, a dozen years later? Same as it ever was.


Chris Reed is a contributing editor to California Policy Center, and an editorial writer and columnist for The San Diego Union-Tribune. You can follow him on Twitter at @calwhine.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!