Why Millions of Unemployed Workers Never Claim the Benefits They’re Owed

A photo to accompany a story about why people don't apply for unemployment benefits Courtesy of Amy Wong
Amy Wong, 39, lost her job as a stylist in spring of 2020, but didn't apply for the unemployment benefits she was owed. Now, she helps women find their personal style via her blog.

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Amy Wong was working as a part-time stylist at Stitch Fix in spring 2020 when the company announced it was moving workers out of California to cut costs. Which left the 39-year-old San Francisco resident out of a job. 

Wong didn’t panic—nor did she rush to California’s unemployment website to claim the benefits she qualified for as a part-time worker under the Pandemic Unemployment Assistance program (PUA)

Because in order to get those benefits through California’s unemployment system, she’d have to undergo a process she says was “just not worth it at all.” Having gone through the process after losing a job years prior, Wong knew weeks of waiting, a difficult-to-schedule interview, and constant, ongoing paperwork lay ahead of her.

“It’s just really inconvenient and such a hassle for only a couple hundred dollars,” Wong says, “When you could spend that time actually looking for a new job.”

Wong is not alone in this feeling. As many as 59% of unemployed people never apply for unemployment benefits, according to a recent survey from Joblist, a job-posting site. Nine percent were deterred because the process seems too difficult or complicated. The majority (54%) of respondents cited ‘I don’t think I’m eligible’ as their reason for not claiming. “Unemployment insurance benefits are severely underutilized,” the study concludes. 

It’s an issue that’s been ongoing since the start of the pandemic. Last April, the Economic Policy Institute reported that for every 10 people who successfully filed a claim, an additional two people didn’t try because it was too difficult. In all, the report suggested, millions more people would have filed for benefits if the process were easier.

Here are the factors keeping eligible workers from claiming benefits, and what you can do if you’re unemployed now: 

Why People Don’t Apply For Unemployment Benefits 

It’s Hard

Plain and simple. Applying for unemployment benefits requires organization, diligence, and persistence. Even then, it could take months to actually receive any payment. Many people, like Wong, would rather put their time and resources elsewhere. 

“There are difficult administrative hurdles to apply in the first place, and people get lost in the process,” says Nicole Marquez, director of social insurance at the National Employment Law Project (NELP). Accessibility is also restricted in communities where language and literacy levels are prohibitive, says Marquez. 

Eligibility Confusion 

Eligibility requirements for claiming unemployment benefits are very restrictive, Marquez says, and you have to have “a certain level of income, age, job eligibility, and worker classification to qualify.” 

On top of that, rules vary in all 50 states. Things got even more complicated after the CARES Act made more people eligible to receive benefits. In addition to part-time workers like Wong, self-employed workers, independent contractors, gig workers, farmers, and those who previously didn’t have sufficient work history were suddenly able to qualify. 

Other potential claimants may be misclassified. There are many people who are classified as employed, but absent from work due to pandemic-related business closures, says Elise Gould, a senior economist at the Economic Policy Institute (EPI). Some workers who should be classified as ‘unemployed’ are mistakenly classified as ‘employed, but not at work’. 

Worker misclassification contributed to approximately 636,000 missing workers who could have filed for unemployment benefits in March 2021, according to the EPI. “People were thinking they would get called back to work, but they’re actually unemployed,” says Gould. 

Awareness

Many people are unaware that they could even qualify for unemployment benefits in the first place.

“There’s not enough information from employers. They’re not notifying workers on termination that they’re eligible,” says Marquez. “And there’s no communication from the [unemployment] agency to workers to encourage them to use the resources they have.”

What You Can Do if You’re Unemployed

If You Think You Might Qualify, Apply

If you’ve experienced any income loss, you should apply for unemployment insurance, experts say—even if you’re confused about whether you’re eligible. As long as you complete your application truthfully, there’s no penalty. If you don’t qualify, all they can say is no.

The perceived stigma around applying for unemployment benefits could be holding people back, Marquez says. She cites many unemployed workers’ worries that their history of unemployment will follow them to their next job appointment. “That really comes from this narrative of ‘Who deserves [unemployment insurance]?’ There needs to be a narrative shift.” 

And that stigma isn’t just a financial stressor, but also a mental one. Dr. Alex Melkumian, a financial psychologist, recently told NextAdvisor, “It really takes a toll on the mental health of anyone who is trying to survive but at the same time is not able to make ends meet.”

Unemployment insurance is there to help you should you need it, and should be viewed as a tool instead of a crutch. 

If You Need Help, Look Local

Because the process of applying for unemployment insurance is incredibly localized and dependent on where you live, look for resources from local groups that are available to help. 

For example, Working America has spearheaded a campaign in Philadelphia to increase utilization of unemployment benefits among Black workers. The group helps individuals through the application process to make sure anyone eligible receives benefits.

Also consider joining a state-specific unemployment Facebook group where people who have gone through the process can help answer questions and provide guidance. You may also get through to someone more easily by calling an unemployment office, rather than reaching out online. 

As a last resort, some have found success in reaching out to their state or local representatives for assistance. 

Here are state-specific sites where you can find more unemployment resources: