Lives on hold, literally, laid-off in Pennsylvania can't get jobless benefits

Anita Salvato had barely said hello when she began to cry.

"I'm sorry," she said, between sobs. "It's got me in a tizzy. I'm usually self-sufficient. It is scaring the hell out of me. I'm so afraid. I'm so frightened."

What has Salvato in a tizzy is the near-collapse of Pennsylvania's unemployment compensation system.

In mid-December, the state closed three service centers and furloughed 521 workers, or a third of the people who deal with unemployment compensation. Since then, calling the number on the state's unemployment website has been an exercise in frustration with endless busy signals, dropped calls, and hours spent on hold.

Salvato, an executive assistant, lost her job Feb. 13.

It took her eight weeks to get her first check, despite intense effort and no opposition from her former employer, a Philadelphia hospital.

This week, when legislators return from recess, the House may vote on a measure that would apply $15 million to temporarily fix the mess and rehire some of those laid off. A Senate version, SB 250, passed by 39-8 on March 29, with Sen. Scott Wagner (R., York), a potential gubernatorial challenger, voting no. His fellow Republicans say the Pennsylvania Department of Labor and Industry is poorly run, evidenced by its costly failure to modernize its computer system.

The measure won't permanently resolve problems of running the state's unemployment benefit system, say advocates for the unemployed. A new funding source must be found. One idea? Shift some of the unemployment taxes that employees pay from benefits to administration.

Salvato will be watching. After working for decades, she's behind on the mortgage for her South Philadelphia rowhouse. She thinks she'll lose her car. Luckily, she qualified for food stamps, although so far, she has received only $100 worth.

"I manage," she said. "I have soup or something."

The current debacle stems from a political dispute between Wagner and Gov. Wolf, but its roots reach back to at least 2002, grounded in how states fund unemployment compensation.

The federal government pays unemployment administrative costs, including call centers, software, and website. Under federal law, only unemployment insurance payroll employer taxes can fund benefits. In Pennsylvania, employee taxes could finance administrative costs, but traditionally, have just paid for benefits.

In 2002, the U.S. distributed $41 billion in surplus unemployment trust money to the states; Pennsylvania received $337.6 million, according to a report by Sharon Dietrich, Community Legal Services of Philadelphia's litigation director.

Some was allotted to modernize Pennsylvania's unemployment computer system, which, even by 2006, was still using COBOL, an early programming language, Dietrich said.

In 2006, IBM landed the modernization contract.

"After years of unsuccessful work, the IBM project was abandoned in July 2013 … more than $60 million over budget," Dietrich wrote. "The magnitude of the IBM disaster in Pennsylvania may be unmatched."

That colossal failure influenced Senate Republicans in November, when they nixed appropriating $57.5 million to supplement federal contributions to unemployment administration. Layoffs followed.

On March 9, Pennsylvania's Department of Labor and Industry sued IBM in Common Pleas Court: "Despite being paid $170 million, IBM never delivered the modern, integrated computer system it committed to build, instead delivering failed promises and a failed project," the suit said.

The suit "underscores the concerns we have had all along and the questions we have been asking about [how Labor and Industry] is using and spending the resources that have been allocated," Jennifer Kocher, spokeswoman for Senate Majority Leader Jake Corman (R., Centre), told the Pittsburgh Post-Gazette.

IBM spokesman Clint Roswell said in a statement that the state's claims "have no merit" and that IBM would "vigorously" defend itself.

The situation is dire for clients of Julia Simon-Mishel, staff attorney at Philadelphia Legal Assistance.

Not only can't they file claims readily, but many referees who adjudicated contested claims have been laid off. Even people calling to repay an overpayment can't get through, leaving them vulnerable to fraud charges.

Given the dropped calls and busy signals, many, including Salvato and laid-off chef Eric Lawrenson, 47, turned to one sure way to talk to a human being about unemployment: Use the "bat phone" at a Pennsylvania CareerLink office.

It's not a "Batphone," of course, but it does connect directly to a person, an employee of Pennsylvania's Department of Labor and Industry, who picks up the phone — no holding, no hang-ups, no busy signals. The result? Long lines to use a single phone at each CareerLink office on Mondays, Tuesdays, and Thursdays, the only days someone answers those phones.

Lawrenson said the system's website might be adequate for ordinary cases, but for anything tricky, "it doesn't work." So, at 9 a.m. one Monday in early April, Lawrenson, of South Philadelphia, went to CareerLink's office at Suburban Station, and received a ticket — number 40.

Lawrenson, who lost his job Feb. 28, had gotten just $49 worth of work from a friend. The friend wrote a payroll check, causing Lawrenson to lose his benefits. So, after many failed calls and online efforts, Lawrenson joined the phone line.

By 3 p.m. that Monday, only 18 people had gotten to use the phone, but not Lawrenson. The next day, he returned, even earlier.

Salvato also tried the bat phone, after she spent days hitting redial after each busy signal, after being on hold, and after calling two Pennsylvania legislators, who advised her to fax her information to unemployment headquarters in Harrisburg, where it disappeared into a bureaucratic abyss.

"It looked like the bread line during the Depression," she said, describing the phone line at CareerLink.