California Tries to Stem the Unemployment Insurance Chaos: Week 27 of U.S. Labor Market Collapse

Even Fitch weighs in on the data chaos.

By Wolf Richter for WOLF STREET.

California’s Employment Development Department (EDD), which handles unemployment claims, has been getting hammered for months by reports about its huge backlog of processing unemployment insurance (UI) claims; about people not being able to get through to even start their UI claims; about people being on hold for hours and then giving up; about people who, when they finally got through to someone, weren’t being helped because the newbie at the EDD couldn’t actually help them…. This led to under-reporting of the number of people seeking UI.

According to the EDD’s press release of September 19, the EDD has “a backlog of nearly 600,000 Californians who have applied for UI more than 21 days ago and yet their claims have not been processed, and an estimated 1 million cases where individuals received payments but subsequently modified their claim and thus are awaiting resolution.”

Then there were reports of large-scale fraud, particularly with the federal Pandemic Unemployment Assistance (PUA) claims, established under the CARES Act, for gig workers where employment cannot be verified because they weren’t “employed.” And these fraudulent claims showed up in the UI claims data and inflated the unemployment rolls.

“Two-Week Reset Period”: Processing of claims is now paused for two weeks.

Part of the problem is that the EDD has hired so many new people to process the tsunami of claims in past months that the experienced people, who could actually process the claims, are now tied up training the new people, and nothing is getting done. This was one of the many points revealed by the EDD’s “Strike Team,” established by Governor Gavin Newsom some time ago to sort through this chaos and “to create a blueprint for improvements and to modernize technology systems at the EDD.”

The Strike Team’s assessment was released on September 16. On September 19, the “Recommendations to Set Path for Reform at the Employment Development Department” was released. These recommendations included prominently a two-week “reset period,” and during those two weeks, the EDD would “pause” processing claims, as the EDD then said in its press release, to “help expedite new claimant payments, reduce fraud and tackle backlog issues moving forward. This two-week pause in processing claims started on September 19.

The 49 other states are all grappling with the tsunami of claims, ancient data-processing systems for these claims, and the federal programs under the CARES Act, including the vast PUA program, that didn’t integrate into the state processing systems and caused more chaos.

Fed’s Powell struggles with this data chaos.

When Fed Chair Jerome Powell was asked during the last FOMC press conference how he would reconcile the jarring discrepancy between the nearly 30 million people claiming UI under all state and federal programs, amounting to over 18% of the labor force, and the 8.4% unemployment rate reported by the Bureau of Labor Statistics, he did one of his infamous dodges that included a reference to how the BLS classifies certain non-working people, and when you add those back in, he said, the unemployment rate would be three percentage points higher. So over 11%.

And that’s what it has come down to: data chaos. People, such as Powell, are trying to add or subtract numbers in their struggle to get a sense of what is really going on.

I – like many people, probably including Powell – have come to grips with the fact that unemployment is still historically terrible, that it has gotten somewhat better since the worst moment a few months ago, that it has shifted, with millions of people having been hired back, especially lower-paid workers at restaurants, the lodging industry, and retailers, and that a second wave is now tangling up higher paid workers at all kinds of other companies that were spared during the initial wave.

And every week, we’re still getting a huge wave of initial UI claims by people who were newly laid off and got through to their state’s system and got their claims processed, mixed in with claims that the state employment agencies finally caught up processing. All these claims, including the PUA claims, are reported to the US Department of Labor, which then releases the data every Thursday.

So the Department of Labor reported this morning that total continued claims for UI under all state and federal programs fell by 3.7 million from last week to 26.04 million (not seasonally adjusted), driven by a plunge in, yes, California of 3.01 million continued PUA claims.

This 3.01-million plunge in California’s PUA claims more than reverses the two huge surges, as I noted on September 3, of 2.3 million continued PUA claims, and as I noted on September 10, of 1.55 million continued PUA claims.

And more data chaos: Florida, which has been reporting a very small number of PUA claims on a weekly basis, is still reporting zero continued PUA claims. This likely understates the continued PUA claims.

These 26.04 million people who continued to claim UI under all programs as reported by the Department of Labor translate into 16.2% of the civilian labor force of 161 million:

Blue columns – continued claims under state programs:

The number of people who continued claiming UI under state programs fell by 176k to 12.3 million (not seasonally adjusted), along the downward trend line since May.

Red columns – continued claims, federal & other programs:

The number of people on UI under all federal programs established by the CARES Act and some other programs fell by 3.55 million to 13.78 million (not seasonally adjusted).

  • Federal PUA claims dropped by 2.96 million to 11.5 million – entirely driven by the 3.01-million plunge in California’s continued PUA claims (see above).
  • Federal PEUC claims rose by 104k to 1.63 million. The Pandemic Emergency Unemployment Compensation program, established under the CARES Act, covers workers not covered by other programs.
  • State Extended Benefits jumped by 59k to 280k.
  • State STC / Workshare claims fell by 20k to 220k.
  • Federal Employees and Newly Discharged Veterans were slightly down at 13k and 13.5k continued claims.

Newly-laid off workers: UI initial claims:

Initial claims under state programs rose a smidgen to 870k (not seasonally adjusted) in the week ended September 19, having remained in the same historically high range now for seven weeks:

Initial claims under the federal PUA program for contract workers declined by 45k from the prior week to 630k in the week ended September 19 (not seasonally adjusted).

Friday next week (October 2), the BLS will release its survey-based unemployment report for the month of September. It will be its last jobs report before the election, and it will likely show spectacular improvements in the official unemployment rate.

Fitch Ratings weighs in on the data chaos.

So I will conclude with a note from Fitch Ratings about this unemployment data chaos. Fretting about states’ fiscal situation, and given the unreliability of the official unemployment rate, Fitch has come up with its own “Fitch-Adjusted Unemployment Rate” for each state. And here’s why:

There has been an unprecedented decline in the labor force count this year, and to gauge the full effect of the pandemic-driven recession, employment recovery cannot be measured by just the official unemployment rate. Employment recovery is a key factor driving overall economic and tax revenue recovery for states. The pace of the recovery for each state depends in part on how quickly exited workers are able to return to the labor force.

So next time when a reporter confronts Powell about the huge discrepancy between the still dismal UI claims data and the spectacularly improved unemployment rate, he’ll get to perform another one of his elegant dodges.

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  142 comments for “California Tries to Stem the Unemployment Insurance Chaos: Week 27 of U.S. Labor Market Collapse

  1. LifeSupportSystem4aVote says:

    The all knowing Fed weighs in (Reuters 9/24/20):

    “It is unreasonable to expect a second wave of coronavirus infections to push the U.S. recovery off track given the steady progress in tamping down deaths from the pandemic, St. Louis Fed President James Bullard said on Thursday.”

    There you have it, straight from the horses’ mouth (or should it be the other end?) – the absolute, best recovery ever will not be stopped and employment or lack thereof is not even mentioned.

    Color me disbelieving…

    • Harrold says:

      Oct 1st is when the loans become grants and layoffs can commence.

      • Joe Saba says:

        only a few hundred thousand by biggy corps
        AA – 19,000 or was that 59,000?
        so many I can’t keep track any more
        to bad executives don’t go 1st

        THEY RECEIVED(exec) bonuses

      • fromks says:

        And there will be no stimulus during a SCOTUS fight…

    • M says:

      My understanding in LA is that they are trying to get people off unemployment by not mailing them the form to continue their claims. Then, they prevent them from logging in to continue their claim online by changing/corrupting the required, logged in passwords and information, so they cannot log in and technical support has been rendered unavailable until the end of October.

      I suspect that the goal is to get the “technical” unemployment rate down, because after the unemployment benefits run down for many, they will not qualify again and not applying, may not be considered in the computed rate of “unemployed.” I understand that a lot of the population has given up on getting jobs, but by these tricks are not counted among the unemployed. See “Don’t Be Fooled By Official Unemployment Rate Of 14.7%; The Real Figure Is Even Scarier”

      Things will only get worse with this rate as the weather cools. More people will be inside, sharing air containing this airborne virus. Rising infections and deaths (with joint flu and coronavirus infections probably increasing the death rates) will result in more and more business closures. That will result in rising numbers of unemployed.

      That will result in their spending less, which in turn will result in more businesses, like small restaurants, seeing less take out business and other business. This is a vicious circle that is about to start again.

      The CDC’s order staying evictions also will only be effective while it is in force. At some point, huge numbers of Americans will not be able to pay the accumulated rent/lease payments owed and will be evicted. Without homes, less and less spending will occur by them, which will start another vicious circle.

      Needless to say, I would not bet on any long term decrease in the unemployment rate anywhere in the US mainland given how this pandemic was managed here. A national lock down of at least large portions of the country may ultimately be necessary next year.

      I hope the incompetence with which this coronavirus has been handled will not cause foreigners to stop using the US dollar as a reserve currency. I suppose that the fact that so many foreigners’ debts are in US dollar will keep the demand for dollars high in the short term, at least.

    • Dave says:

      Recovery of what? STOCKS, jobs or economy? Stocks!

      V-shaped Recovery of what? STOCKS, jobs or economy? Stocks!

      Look at the charts.

  2. andy says:

    There are like hundred data companies in California. Snowflake just IPOed at $70 Billion. Combined market cap is probably a $Trillion.
    No one can fix the data?

    • Petunia says:

      Six programmers and some free food can fix the problems, but you can’t charge $100M for that, plus it makes a lot of people look bad.

      • Joe Saba says:

        lots of gig workers availalbe
        many no longer get unemployment
        and they are NOT FINDING OLD JOBS(40 hours per week) very prevalent – many now get 10-15 hours per week

    • TanTan says:

      The absolute best comment to date regarding the data collection/analysis imbroglio

    • MCH says:

      It doesn’t tie a single company. It takes a village…

      🤪

    • Lol says:

      Hahaha
      No!! They are all unemployed!!
      Lol

    • Trailer Trash says:

      These systems are probably not fixable. Expect to find no accurate documentation, lots of spaghetti code, obsolete hardware with no manuals, miles of network cable that no one knows where it goes, etc. etc. Make one wrong change and everything quits.

      Here is an example of an “unfixable” problem one might encounter: every new claim in a batch is assigned a unique number. The counter is only four digits, so the system can process 9999 claims a day. That was plenty of capacity in 1980. When claim # 10000 is entered, everything blows up. Oops. These kind of design limits are very common.

      Remember the panic over Year 2000? I do. It was a profitable time to be retrofitting software, but we had years of warning and plenty of money to work with, so nothing bad happened.

      My first programming job was in 1974, and I’ve seen it all. If I wasn’t retired, I wouldn’t touch those systems for a million dollars a day. Anybody foolish enough to actually work on them will only make them worse.

      I feel very sorry for unemployed people in the US. They are well and truly f’d.

  3. Paulo says:

    And then an Axios article said this today:

    Few expected a rebound this fast and this steep. Back in June, when coronavirus cases were declining quite quickly, the Fed expected that we would end the year with unemployment at 9.3%, and saw the economy shrinking by 6.5%.

    Today, with coronavirus deaths still at their June levels, the Fed is much more optimistic. It sees 2020 ending with unemployment at 7.6% and an economy that has shrunk by just 3.7%.
    In real numbers, that works out to almost 3 million extra jobs, and $600 billion in economic activity, over and above what the Fed expected just three months ago.

    Every day I read conflicting articles and statements. I’m going to rely on just this one thing. If there was any hope for the unemployed, or any actual foundation for a sound economy going forward, we would not have zero interest rates. I have a mtg tomorrow at my Credit Union. I need to put some cash on ice, but want to be able to access it without penalty. It will fetch .35%. A 5 year GIC, cashable on anniversary returns 1.25%. With inflation we are falling behind, everyday. There’s no economy left to absorb the unemployed and no chance to earn any return on being prudent.

    Congress better get a stimulus enacted before people lose everything and there is a place in hell for Chairman Powell

    • Steve says:

      You are correct. Zero interest rates means an expectation of zero economic growth and zero inflation. ZIRP and QE only mean big trouble in the banking system, i.e. balance sheet destruction, money lending (money creation) only to the highest credit worthy businesses and governments (not you). The Fed doesn’t create money, banks do by making loans. The Fed doesn’t create jobs. New businesses do, with loans from banks. None of which is going to happen now, apparently for years to come. You are right to hunker down with your cash savings and abhor risk. Wait for the fat pitch in the equity markets, perhaps. Be patient and learn to do nothing, until there is something worthwhile to do. Could be a long time waiting

      • Joe Saba says:

        wow kind of missed boat(ship) on that one
        ZIRP is ONLY REASON merica isn’t bankrupt today
        1% rate = $260,000,000,000 annual interest
        5% rate = $1.3 TRILLION govt annual interest due to investors/banksters/1%
        remember real GDP(private taxable business) is only $13T
        govt makes up over 40% of GDP-ie TAXES and NEW DEBT

        • Steve says:

          Right. It should be plainly obvious by now that the only way the Federal Government stays in business is that the Fed is suppressing interest rates. Otherwise, the interest on the debt would wash out the entire budget. It’s a doom-loop, circling the drain kind of thing. After 12 years of this, it’s pretty depressing to have to consider it’s starting all over again. 12 more years of near zero rates and 2 trillion dollars more each year in debt to get back down to 4% unemployment, with hardly any of that desired inflation along the way. At least Fed governors have nice paying jobs, I suppose. Good for them.

        • rhodium says:

          Yes, the doom-loop. The Fed owns a massive chunk of that though. It takes the interest that the treasury pays it and just credits it back. It’s a wash. Fake debt. All those dollars are simply permanently in the money supply now.

          The questions are, who owns the dollars, and what are they doing with them?

      • QQQBall says:

        Real rates have been negative for years and inflation has been understated. The whole idea of a basket of goods was to track changes, but when the results were ugly, enter substitution and hedonic adjustments.

        • Steve says:

          Yes, the official inflation rate is politically motivated. They could easily show a consistent 3 to 5% or more inflation if they wanted to, if it served their purposes. We know they fake it lower. This sounds like I am contradicting myself from above, with respect to ZIRP and QE creating low inflation expectations. It’s hard to clarify in a comment, but we need simpler paradigms in order to function financially. As Paulo said, everything we read is conflicting, and we need to rely on just one thing, perhaps, or just a few things to make better decisions. In that regard, trust your instincts. If what’s going on smells bad, then it’s rotten. Act accordingly. Interest rates, debt, inflation, unemployment — they smell pretty awful right now.

        • Dave says:

          ding ding ding, we have a winner! QQQBall

      • Frederick says:

        Only Gold is money Fiat Federal Reserve notes are currency Steve

        • Steve says:

          lol, you got that right, and a “note” represents a debt. Gold has been debt-free money for over 5,000 years and still going strong. However, during very uncertain times, zero interest cash still has liquidity value and remains a desirable asset. But over very long periods of time, gold wins. That $20 gold piece and those silver dollars I imagine my grandfather carried in his pocket as currency in the 1920s is what has really held its value over the past 100 years, on average, with long pauses, but large bursts upward along the way. The value of every fiat currency eventually drops to zero.

        • Lisa_Hooker says:

          There are many forms of money. Foldable paper is not one of them.

    • Optimist_Tim says:

      Paulo,

      When I was parking cash for a few years, I used an ETF called VSB. It invests in short term, high quality Canadian Bonds. For the last 5 years, it traded between C$23.50 and C$24.50, while yielding at least 2% and sometimes a bit more. The management expense ratio (MER) is only 0.10%, about as low as you can get. Morningstar rates it 4 of 5 stars.

      If interest rates went up and bond prices fell, the ETF price would fall, but you can decide if that is a risk during the time you are parking cash. You don’t have to buy Vanguard, but an ETF like this is easy to get into, easy to sell on the Toronto Stock Exchange in seconds and might help you keep up with inflation better. It pays monthly.

      I don’t own it anymore and this isn’t investment advice. There are options that yield more than what your Credit Union or the neighborhood banks are offering.

      • Paulo says:

        Thanks Steve and Optimist. (I’m an optimist too).

        I am only parking the cash to buy some property. It hasn’t come on the market yet, but when it does I would like to be able to use the cash for purchase. Otherwise, I will have to arrange interim financing. The place in question used to be part of my property about 50 years ago. Previous owners subdivided and I want to add it back. We can have two houses on a property here. Anyway, it looks like it will be coming available, but not sure exactly when.

        I’m not complaining because I have nothing to complain about. I just think using cheap debt to keep the economy supposedly growing is wrong, and dangerous. Okay for a boost for a year or two, but relying on it will have dire consequences.

        I’ve been unemployed before and under employed in the ’80s. Broke and busted, so they say. My heart goes out to those going through it right now in a pandemic. I cannot begin to imagine the frustration and fear the article touches upon. One in twenty/thirty million doesn’t make it easier. regards

    • Brant Lee says:

      It used to be compounded interest to reach a goal. Now it’s compounded inflation until the money disappears.

      • Joe Saba says:

        well 100% of PUBLIC PENSION FUNDS USE nice rates of return
        7-8% avg COMPOUND RATE
        talk about FRAUD

        and when(now) it doesn’t happen – they’ll come taking from taxpayers

    • Old School says:

      Congress plus the Fed has added about $25 trillion in stimulus the last 20 years, basically the foot has been on the gas nearly the whole time. We are going to end up like France where government is 60% of the economy if we are not careful.

      • Frederick says:

        Replace “ The Government” with the “ FED” and I would agree

      • USG goes broke and hands their business over to Wall St. This is why stonks keep going higher, despite joblessness, political sedition, and rampant disease. Corporate America smells a takeover and they are not going to let the country go down the tubes.

  4. Lou Mannheim says:

    How many of our tech overlords split CA for the pandemic? I have to think that’s a lot of AGI that’s left the state tax rolls.

  5. Tony22 says:

    The state is relying on 30 year old computers running COBAL.

    “On top of California’s backlog of nearly 1 million unemployment claims, the state has experienced longstanding issues at the Department of Motor Vehicles — whose offices only began accepting credit card payments last year. Meanwhile, the Covid-19 data snafu at California’s health department not only embarrassed Newsom, but hamstrung counties in responding to infections and resulted in the resignation of the state’s public health director this month.”

    “California’s IT problems stem in part from chronic underinvestment in new technology and mismanagement of the money it has put into upgrades. Paradoxically, California’s state services also suffer from the wealth of technological know-how in their own backyard. ”

    There HAS to be plenty of money with the 12%+ state income taxes we pay, to and including capital gains, which are treated as regular income.

    • MarMar says:

      CA state income tax only hits 12+% at half a million for the year.

      But yes, the California “Personal Income Tax” provides almost 70% of the state’s revenue.

      • Joe Saba says:

        didn’t CA try to roll out new PC based system like decade ago
        only to find the $bilions went down sink hole and blamed on poor programming

    • MonkeyBusiness says:

      “California’s IT problems stem in part from chronic underinvestment in new technology and mismanagement of the money it has put into upgrades.”

      Same story in every state especially with the mismanagement part. Take for example the state of Florida. Sometime back in 2014(?) the state had deemed the new unemployment system developed by Deloitte to be a failure, and yet when it came to bidding for a brand new health care system, Deloitte was allowed to participate and they even won the contract.

      That’s failure by design. With friends like that, who needs enemies?

    • roddy6667 says:

      The computers are so old that you pour kerosene into the filler on the back and kick start them.

    • California Bob says:

      Your comment would carry more weight if you got the name of the language correct; it’s COBOL, short for ‘COmmon Business-Oriented Language.’ It was created by the late Admiral Grace Hopper, and is considered the first of the ‘second-generation’ computer languages, one step above assembly language (which itself was a step above machine language). It is a rigid and somewhat cumbersome language, and requires more rigorous coding practices than many contemporary languages, which are mostly scripted and not compiled. Though awkward and somewhat slow in execution, the programs have been vetted for decades–which is why many banking application written in COBOL are still in use–and many institutions are loathe to tamper with them.

      • Socal Rhino says:

        Agreed – the big accounting engines at the heart of the financial industry run on COBOL. Enormous intellectual capital there. In my opinion not replaceable using offshore and H-1B contractors. Not because there’s an absence of capable people but the lack of continuity that’s built in today.

        My own TBTF buys application firms and tries to bolt them on because the alternative would be hard.

    • JC says:

      it’s COBOL and there’s nothing wrong with it. It’s from a time when something worked it worked … very much unlike the consumer-grade garbage that’s peddled today with javascript this and DOJO that and hadoop whatever and openstack blah blah blah…

      • Zantetsu says:

        The stuff that “worked” back then was maybe 6 orders of magnitude simpler than what has to work now, as evidenced by the fact that the activities you and everyone else participates in digitally now are vastly, vastly more complicated and intertwined than they were in the 1960’s. A college student by themselves could write a simple tabulating system like they used to write in COBOL in the 1960’s.

        • SoCal Rhino says:

          There are major investment managers and banks using COBOL systems that are still being enhanced as we speak.

        • CodeWizzer says:

          I made a fortune in 1999, fixing COBOL and FORTRAN programs to handle the year 2000. We used to say that FORTRAN and the cockroach will be around forever. lol

        • fajensen says:

          Definitely Not COBOL:

          The COBOL language has about 500 keywords, the upstart Python has about 35.

          The idea back then was that by giving every “standard business operation” an English named keyword, programming would become like writing a memo, which every manager can do.

          Obviously this didn’t work out, but because bad ideas cannot die, we had Frameworks inflicted upon us for 4 decades afterwards trying to do the same as COBOL!

        • Trailer Trash says:

          I used to get writer’s cramp from all those stupid MOVE statements. Filling in the coding sheets was followed by seat time at the keypunch.

          Compiling and testing had to be done after hours. Each compile run took a looong time, so I got pretty good at desk-checking my work. I guess desk-checking and printed listings are unknown concepts today. But I’m not in favor of bringing back 80 column punched cards.

          The Good Ole Days. They weren’t really good – let’s not bring ’em back.

      • Lisa_Hooker says:

        COBOL works just fine. It was built for business accounting, not websites. It has continuously updated, the latest update to the standard was 2014.

    • MCH says:

      To be clear, CA does not have a problem. You (by that I mean the residents of California, including myself) have a problem. It is like that old saying about the amount of money an individual owes the bank and which party in turn has the problem.

      Because when CA is broke, it has a solution, it’s called taxes, want police, want services, you have to pay for that. No taxes, no services.

    • Lisa_Hooker says:

      It’s COBOL. No “A”s involved. “Common Business-Oriented Language”

      • 91B20 1stCav (AUS) says:

        Lisa-could it be there’s a COBOL CABAL at work, here?

        may we all find a better day.

  6. Petunia says:

    This software induced chaos is not a good look for Silicon Valley. It doesn’t inspire confidence in “American Ingenuity” even if there are few Americans in their midst.

    Who’s going to hire American software companies with such obvious disasters on full display. I would be short tech at this juncture.

    • MarMar says:

      Part of the problem, ironically, is that it’s hard for the state to hire great software people because there’s so many highly-paid jobs nearby.

      • fajensen says:

        You can hire or contract all the smarts you like but all is futile when the relevant legislation cannot be explained to the developers!

        I Denmark, we have about 30 years of world-beating experience with IT-failure and we will keep on doing it because when you are, per-definition, the very best in the world at everything, then you don’t have to learn anything because that would taint your inherent perfection.

        • Implicit says:

          I bet a good hacker counts on that premise!

          Good novel by Tim Washburn-“Cyber Attack” It begins when a terrorists group grooms (gifts, scholarships to US schools etc..) young intelligent males that have had family members killed by drones. These killings are considered accidents of war.

          Excerpt
          It begins with a computer malfunction. A 737 passenger jet drops from the sky from 34,000 feet. Then another. And another. At the same time, the unthinkable happens in our nuclear power plants. Water pumps fail. Nuclear cores melt. Untold millions could die . .

        • Trailer Trash says:

          Implicit, no cyber attacks are needed when brand-new 737s fall from the sky due to corrupt corporations.

          No cyber attacks were needed to meltdown all those nuclear reactors in Japan either. Incompetence and greed do the job better that hackers could ever dream of.

    • Intosh says:

      Software tech at governments and traditional enterprises and software tech from “Silicon Valley” are still very different, distinct, worlds.

      • Petunia says:

        They think they are the best and the brightest in SV that’s the distinction, but when the normal business world looks at this, it’s an American failure, which points straight at SV.

      • MonkeyBusiness says:

        There’s no point trying to convince a bitter person who got booted out of industry.

        And these people still wonder why there’s justifications for H1B.

        • Petunia says:

          You sound #triggered.

        • 2GeekRnot2Geek says:

          Monkey Business,

          I’m not bitter, and still in the industry. ; )

          The real justification for H1B is a lower salary and the fact that the employee is attached to the company by the umbilical Visa for years, sometimes decades. The tax savings to a company are substantial also.

          To comment on a different thread, agile development does work well if it’s implemented well. But most companies don’t put in the time or effort to make that happen. Without lead time for design, and doing the work required to create effective teams it’s usually GIGO.

          The other major problem is the lack of understanding of how important KISS is. (for non-coders the acronym is “keep it simple stupid!”) Monolithic (spaghetti) code is rampant out there. Developers want to prove how clever they are, or just don’t have enough experience (and guidance) to know better. Elegant, secure code is scarce now.

        • 91B20 1stCav (AUS) says:

          2Geek/ Well-said. Akin to ‘…engineering for its’ own sake/if something works really well, it doesn’t have enough ‘features’, yet…’. Makes great art for the cognoscienti, but too often a Swiss Army hammer in actual practice.

          may we all find a better day.

      • Brant Lee says:

        Hire Google, Facebook, or China to get the state work done. Their tech is superb and they have already collected the absolute latest data and records on everyone.

    • California Bob says:

      FWIW, I have a BS in Computer Science and worked in various engineering and management positions in the SV for 35 years. My take, if it matters, is the widespread adoption of ‘Agile’ technologies, which translates to “Let’s slap something together as fast as we can, keep tinkering with it until we have something close to what’s needed, then foist it on the customer/public and let them do the final testing.” This works OK for a website of little consequence that can be fixed on-the-fly, but does not work so pretty good for installed critical applications (like flight control software, finance, etc.). We appear to be in a race to the bottom on the cost/benefit calculus when it comes to software development.

      • Petunia says:

        Agile is a total waste of time. I think it was created to make managers appear relevant.

        The real problem is the canned software in the libraries of these scripted languages. These programs get huge really fast, so stepping into that code is too time consuming. They use more library function calls to fix the damage from the last call. You don’t notice it when you’re ordering on a website, but it’s crazy to use these languages for critical applications.

        • Lisa_Hooker says:

          Exactly. The problems really started with the push to object oriented programming, late 80’s-early 90’s. You inherit and override from poorly written (and especially poorly tested) code modules that bring along all kinds of hidden problems. With C pointers you can shoot yourself in the foot. With OO programming you can blow off both knees.

      • Alku says:

        @Bob

        are you really saying that waterfall is much better?

        • SoCal Rhino says:

          The people matter more than the paradigm in my experience. But i personally like rapid prototyping and storyboarding and analysts working directly with coders.

        • California Bob says:

          Like Rhino says, it’s the people and the process that matters. To answer your question, would you be comfortable flying on an airliner with flight controls coded in an ‘agile’ environment, with final testing being performed by pilots (with a plane full of passengers)?

          We got to the moon and back–several times–with ‘waterfall’ design and development. Kelly Johnson built the world’s reigning speed and altitude record-holding aircraft–the SR-71–back in the 60s with waterfall; I think it can still be employed successfully. I suspect ‘agile’ was involved in the 737 MAX debacle–it’s the management buzzword du jour–but can’t say for a fact (there were sooooo many issues with that bird).

        • Lisa_Hooker says:

          @CB – that’s why military flight codes are written in Ada and they use SDL for X.731 state machines.

        • Lisa_Hooker says:

          @CB – Oh, and you’re wrong about Kelly Johnson. The whole Skunk Works shop was very hands-on and iterative. Engineers went down on the shop floor and worked with machinists/craftsmen. They would prototype until it worked right, then they’d make drawings.

        • Lisa_Hooker says:

          … release drawings.

        • California Bob says:

          “Engineers went down on the shop floor and worked with machinists/craftsmen. They would prototype until it worked right, then they’d make drawings.”

          But did they have Scrums & Standups?

          Anyway, thanks for the info. I didn’t know Ada actually made it into ‘production;’ last I’d heard the military had offered $150K bounty for a certifiable compiler–back when that was more than a quarter’s salary for a Google engineer–but the spec wasn’t filled for a year or two and I lost track of it. I saw it mentioned with LISP, which I dearly loved.

    • MCH says:

      I am surprised that in the valley, with its plethora of talent that all believes in equality, no one has donated their time and software expertise to help the state. Shocked honestly… that with tens of thousands of very talented software engineers working at Google, Facebook, etc, no one has volunteered their services to help the mass number of unemployed during their time of urgent need or to help the state during such unprecedented times.

      But fortunately, those same thousands of talented individuals have time to tweet and blog about equality, and the availability of free snacks on campus.

      • Lisa_Hooker says:

        Creating a very complex software system and managing many design groups of multiple developers is not quite the same as volunteering to help hand out packages at the local food bank.

  7. Rowen says:

    The best thing about hiring back low-wage service workers is that you don’t have to guarantee them any hours!

    • Jeremy Wolff says:

      Chicago past a law requiring advanced notice of hours or changes to schedules or employers face severe penalties… but it’s on pause because of Covid.

  8. David Hall says:

    Pelosi is designing a bill amounting to $2.4 trillion more stimulus.

    FRED published the employment/population ratio. This ratio peaked in 2000 at about 64.6% of the total population working. It is currently about 56.5% of the total population working.

    • VintageVNvet says:

      Please to everyone here, this kind of data is SO distorted by politics now and for at least the last 50 years, probably 70…
      Working with BLS data as presented the last 4 or 5 decades to predict labor costs on many millions of construction projects for local municipalities and mostly federal, it seemed way out of true at all of those times, and not to be relied on without guarantees of subsequent ”adjustments” which did happen.

      • Lisa_Hooker says:

        Speaking of “adjustments” we can always save money by not paying for “as built” updates to the original drawings.

    • roddy6667 says:

      If you are a 55 year old engineer who got laid off and is working as a janitor to pay the mortgage and eat, you are employed. Your situation is considered as good as when you were working as an engineer.

  9. Seneca's cliff says:

    I think this is more than just Covid. We are at an awkward point in time when we are no longer rich enough to afford most of the population employed in shuffling paper, recreation, tourism , video distractions etc. But until our energy, resource and technology base drops down a few more notches we won’t need the majority of the population to grow food. Solving this problem will be the defining feature of our age.

    • Paulo says:

      Correct Seneca. Cheap energy was replaced with cheap debt. WTI is $39 today (in the middle of a Depression) and companies go broke producing it and need $70-$100/bbl to survive and develop new production. Unfortunately, the economy cannot afford $100 oil for very long. Our economy exploded at $5/bbl. Gee, wonder why? Free energy, or just about is pretty heavy fertilizer.

      We are now stuck and starting to spiral around the drain.

      I know you make/design implements for BCS. Coincidentally, I bought my walk-behind BCS when oil was at $147/bbl. Haven’t regretted it but hope it isn’t the future. Small scale food production is very hard work. As I write this I hear my wife shelling/saving seeds in the background. The dried pods make a ringing noise in the stainless mixing bowl.

      We’ll know we’re there when no one bats an eye at family gardens replacing lawns. My old place used to have a swimming pool. I was going to turn it in to a trout pond and raise rainbows. Aquaponics meet fly fishing. Instead, we moved.

      • No Expert says:

        Arguably Jack (bean stalk guy) had the right idea swapping shiny metal for seeds able to produce and replicate themselves

      • pbfurn says:

        What is a BCS? I cannot help but to think it would be nice to include everyone in the conversation, rather than impressing us with your acronyms. Just sayin’.

        • Frederick says:

          I was wondering the same thing What the heck is a BCS ? Paulo

        • BuySome says:

          Apparently….BioReactor Composting System.

        • VintageVNvet says:

          BCS is a brand of small farming equipment.
          Very well thought out and engineered and expensive but good ”’value” for sure.
          If you ever had the original Troy Built ”horse” tiller, imagine it set up to accept all sorts of ”add on” devices, and you will get the concept of the BCS.
          BCS is available in gasoline and diesel, so actually would be the preference for anyone really concerned with the possibility of what is referred to as peak oil and the decline thereafter of availability of petro fuels, as the BCS could certainly be run on biodiesel, maybe already is in some places.
          BTW, acronyms abound on here, and the use of them is part of the fun; I have found most, or all so far, defined on web.

        • Seneca’s Cliff says:

          BCS is an Italian Company that manufactures all of their products at three factories in Italy ( with exception of some attachments from Canada, and the ones I build in Oregon. The source of the BCS name is a bit obscure and I had to look it up. It is the initials of the three founders.
          “In his project, the Engineer Luigi Castoldi involved Camillo Bonetti, a manager at the tax authority of Abbiategrasso, and Severino Speroni, an excellent mechanic. The abbreviation ‘BCS’ comes from the initials of their surnames. “

    • 91B20 1stCav (AUS) says:

      Seneca/Paulo-sagacious, as usual.

      may we all find a better day.

  10. Fat Chewer. says:

    Petunia is absolutely correct. This is a terrible look for California and Silicon Valley. Never in my wildest dreams did I think it was possible for the government computer systems to be so awful. COBOL? In Silicon Valley? Unbelievable! Yes, I am aware that these ancient mainframes are still active because they do the job, but surely it cannot be so difficult to migrate to a modern platform? The very fact that the original programmers of these krufty systems are retiring should be a screaming message to modernize them. But no, we get a medieval notion of punishing the unemployed for being unemployed and woeful computer systems are sufficient for such a task.

    • Anthony A. says:

      Maybe the state can hire Amazon’s software guys to upgrade the systems. I’m guessing in a couple of weeks it will run like a Swiss watch!

      That’s who the Fed Gov should have used when they published the ACA website (and we all know how that went!).

    • Lisa_Hooker says:

      Sheesh. COBOL has been continually updated. Last update was 2014. COBOL works fine at tasks for which it was designed.

      • Dave Kunkel says:

        In 1999 I took a course in COBOL in case I ended up having to remediate some old COBOL code. I changed jobs and never had to actually use it, but I liked it as a programming language.

        If you want a real headache, try debugging someone else’s Perl code.

        • Lisa_Hooker says:

          At one time my resume contained the line, “Will repair/edit Perl. Will not author new Perl codes.” I left a department because they decided to standardize on Perl; I was writing Python, pushed hard for it to no avail. This was late 2000’s. They had a department-critical Perl script that was thousands of lines. “The horror, the horror.” – M Brando

    • 91B20 1stCav (AUS) says:

      Fat Chewer/When the official paradigm is that the ecomedy is ‘great and fantastic’, how the heck are you going to convince anyone with responsibility for raising (tax) revenues that expenditures to upgrade a UI system is, or will be, necessary? After all, almost everyone’s working, and will be working in the future, according to the ‘official’ numbers (or, at least until Wolf’s lamp is focused on them…).

      may we all find a better day.

      • 91B20 1stCav (AUS) says:

        ack-typo-‘…ARE, or will be, necessary…

        apologies.

        may we all find a better day.

  11. Paranoid says:

    Don’t kid me, COBOL is great. I remember when we stuck the brass rod in the pack of cards to separate out the ones we wanted. Heck I’ve still got some of the 10 inch floppies; just waiting for them to come back

    • Anthony A. says:

      I’ve still got a few stacks of punched card programs from my Fortran and Cobol college class days in the attic packed in a storage box. Since they were punched in 1973, they may be too delicate to run through the card reader! LOL!

      • Harvey Mushman says:

        Hah!
        In 1973 my dad brought home a calculator. He showed me how to do some simple calculations with it. Every time he made a mistake and wanted to start over he would repeatedly press the CLEAR button while saying “clear memory clear memory”.

        Now… 47 years later, every time I press the CLEAR button on anything I can still hear him saying “clear memory clear memory”.

      • Lisa_Hooker says:

        Anthony – if you need to update/edit any of your old work I have a goodly number of blank 80 column Hollerith cards (no hanging chads).

    • roddy6667 says:

      In 1979 I was an expeditor at Hamilton Standard in CT. One of my duties was to push a cart of punchcards over to IT at the end of the shift. This is how manufacturing was done back then. We made the space suits, parts for the Space Shuttle, environmental systems for 747, L1011, fighter jets and Space Lab. We also made the fuel control systems for most commercial and military engines back then. Oak tag cards with holes in them, not much different than the cards used in 1850. It worked.

    • VintageVNvet says:

      Yeah bro,,, it was a patented system called McBee cards,,, used it a couple of times after taking my place 8/24 x 7 days per week when the Nixon Justice Dept was trying to figure out IF to make every jurisdiction also a certified criminalistics lab, etc.
      Conclusion was not to do so, but we had a good stroke at generating enough data to make the conclusion at least comfortable, if not conclusive, and the result stands today IIRC.

      • Lisa_Hooker says:

        Gosh this is bringing it back! I still have a bunch of unused Royal McBee cards – and the hand punch! Remember them as aperture cards with microfilm windows?

  12. Michael Engel says:

    1) Don’t buy RE at beyond peak prices.
    2) Get your SS before gov propaganda recommended age. Don’t wait until u are 75/ 78, because SS is a con job. There will be nothing left when u are old. Squeeze now as much as u can.
    3) Deposed Japan Dr. Deming. // Dr. B. Mandelbrot will rule the waves, during the global chaos, because there are major global bottlenecks.
    4) Just in time : little real liquid assets to show the banks. When commodities prices are in free fall, business go BK because there is nothing to sell.
    6) At exuberant high prices, business operate at below cost. They cannot command normal markup, cannot replace old inventory, because the new inventory is too expensive and few can afford.
    7) When cash flow fall under operating cost, there is little inventory to liquidate, under Deming. Just in time don’t work in bad times.
    8) Premium assets are sold at too low markup. The move slowly. The rest, the defective and the bad items, have no turnover. They just don’t move.
    9) Fads, fakes collapse fast.
    10) Good quality assets are too good for most, in bad times. Plenty
    supply/ little demand. Banks will force memo. to kick the can down.

    • Wolf Richter says:

      Michael Engel,

      “SS is a con job. There will be nothing left when u are old. Squeeze now as much as u can.”

      Hahahahahaa… That’s hilarious. That’s exactly the dad of my high-school sweetheart told me in 1973. He eventually retired and drew Social Security until he died. Then his wife got the Survivor Benefits, and she’s still around and is still drawing them. Now I’m eligible for SS, and “full retirement age” is coming up shockingly soon, but I’ll wait till the last moment (70) before I draw on it.

      And you know what? Social Security is still there for me, and it’s the least of my worries going forward. I mean, it’s not even on the list of my Top 100 worries.

      Will it be enough to live off here in San Francisco? Of course not. Will inflation eat up a lot more than the cost-of-living adjustments? You bet. Is it a good deal? Only if you or your spouse live long enough, and I mean very long. But it’ll be there. And I’m not going to worry about it not being there. But feel free to waste your time on these kinds of worries.

      • Lee says:

        Wolf,

        As you are married to a Japanese national don’t forget that your wife can claim off you even if she had zero work in the USA and get benefits as well based on your earnings record.

        But she can only get them once you start……………….

        • Wolf Richter says:

          Lee,

          My wife has been working in the US for well over a decade and (unlike me) has quite a few years left before she reaches retirement age. When I kick the bucket, she gets to choose whether she wants survivor benefits based on my SS; or retirement benefits based on hers. Even better, she can claim my SS survivor benefits earlier, while still working and loading up her SS, and then when she retires and has loaded up her own SS, at 70 (she will have worked in the US over 30 years by then), she can switch to hers, whichever pays more. It’s a strategic decision to make at that time.

          However, my plan is to be still around and active on my wife’s 70th birthday. That’s the plan…

        • Lee says:

          “However, my plan is to be still around and active on my wife’s 70th birthday. That’s the plan…”

          Well we ALL HOPE to be active and healthy, but things happen.

          Good luck as IMO that’s what a lot life is about.

        • Wolf Richter says:

          Yes, agreed. I know that program. My parents (fit and healthy) died in a Boeing in 1976 in Turkey.

      • Lisa_Hooker says:

        Social Security is not a worry. They will print more. You will still get your $5 even when a Big Mac is $100. Fries will cost extra as usual.

    • Frederick says:

      I took mine as soon as I turned 62 and I’m glad I did. I live very well here with that and my rental income.I agree with Mr Engel and wonder how much longer they can keep this Ponzi going. I will get mine now and buy gold with it. You know bird in hand stuff

      • Petunia says:

        If you take it early and invest it you should be ahead. At the very least, the money is in your “estate” regardless of when you die.

        From what I can see they want to push out the retirement age to 70. That’s because nobody in DC actually works or commutes, so they think the rest of us live the same cushy lives.

        • Lisa_Hooker says:

          Yes, the goal is to keep as many people as possible from taking SS for as long as possible.

          Unemployed folks with bills will take SS when they have to, some may even try for SS disability.

      • Anthony A. says:

        Both of us are on SS now (me 76, wife 75) and have been actually living on it plus a pull from my IRA (RMD). Of course this is the great state of Texas and is affordable!

        We do have a paid off house to make life easier too.

        We took SS early and I continued to consult and make a few bucks up until full retirement age.

        This could not have happened if we still lived in Ventura County, CA.

    • ben says:

      excellent smartest comment i’ve read here)

  13. Anthony A. says:

    M.E.- Max age for SS benefit growth is 70.

    • Rosebud says:

      Sounds like we need a new global identification program, Wolf

      Instead of just political geography, create ID photos in front of perishable fruit and vegetables.

      Once everyone has their photo taken, they can eat.

      Use CA as the pilot program.

    • Zantetsu says:

      By 2035 the government will be paying out 70% or less of their social security obligations. M.E. is right, get as much as you can as soon as you can. That’s what I am going to do. I suspect most people in my generation – timed at just the right age to contribute the most to SS and yet get the least in return – will follow the same tactic and only the earliest ones will get to do it. Everyone else will get put back to the end of the line when the government stops allowing people to take anything out early.

  14. Michael Engel says:

    Anthony A : max SS, at no SS momentum, at deflating constant, because they wouldn’t let go. They can’t adjust, cannot cut, because 75 is too young.

  15. Kasadour says:

    In two weeks we will see a spike in claims both initial and continued as California picks up where it left off. And then some.

  16. Nik says:

    This Reply..will most probably get booted like a few of my others..lol However,I truly find it had to believe that anyone really thinks that ANY of the above Unemployment numbers are close to being real…? Since the largest populated State in the union’s ‘Bat-Shit’ crazy unemployment numbers are so lagging in current reality,its beyond comprehension..! aloha amigos

  17. Dennis Kaye says:

    Hi Wolf,

    You are the best! We need your posts every day. I like your videos even more; but I am a lazy reader.

    Dennis Kaye

  18. Lee says:

    Hey, just solve the unemployment problem like Australia does:

    1. Put them on a government program and pay them.

    2. Even if they work zero hours they are still employed.

    3. Viola!! The unemployment rate falls!

    • MCH says:

      And if they dislike it, throw them in jail for violating the C19 lock down.

      Especially those old people, they get very cranky when they are not locked down.

      • Lee says:

        And the current government here run by the proven liar and megalomaniac is trying to get a law passed so that they can arrest you if they BELEIVE that you are going to break the law in the future.

        Gee, MCH, we don’t think that you are going to comply with the law……….off to the klink for you!!!

        People are going nuts in the USA and here in Oz the cops ans the Labor government in Victoria is going nuts.

        This place has changed so much since I moved here that if I could I’d leave tomorrow I would……………..

        OOOPPPPPPPPSSSSSSSSSSS

        Can’t do that either – probably couldn’t sell the house for months as there are no inspections allowed and then I’d have to get approval from the Feds to leave too…………

        Few flights out of the country as well!!

        • BuySome says:

          Time to change your name to Max Rockatanski? Unfortunately, the “last of the MFP V8 Interceptors” is sitting in a museum in Florida! If it ain’t one thing, it’s another. There’s just no winning these days.

        • MCH says:

          Well, nice to have reversion back to the mean. Australia is going back to its original purpose. A prison colony for Britain… but I suppose the next logical step is a prison colony for the planet.

        • A notion of failed British criminals

        • Lee says:

          “Australians applying to leave the country are increasingly planning to stay overseas for more than three months to improve their chances of getting permission from the federal government.

          The Australian Border Force commissioner’s guidelines and operations directives, recently published for the first time, confirm that a person who “has a compelling reason and will remain overseas for at least three months” is likely to be approved for outbound travel.”

          Yep, one of the few countries in the world now where you need persmission to leave.

          Puts us up there with North Korea and Cuba.

    • Frederick says:

      We already did that. It’s called government employees Can anyone imagine what unemployment would be like if those people actually did anything and that goes double for politicians

  19. tommy runner says:

    I think the s/t report found that edds it systems, while limiting, have scaled quite effectively and they have been able to process significantly more claims than in the past. findings were that diverting 40%/up to 24k per day of new claims to manual id check where they languished waiting for an experienced employee that could process maybe 24 a day if they weren’t busy training, was limiting. also mentioned edd likes to keep fraud to 10% and they scored an 8% last time out. they ditched the manual id which only stopped .02% of fraud anyways, picked up a new id verification tool and suggested changes. good findings. lining up 10k a day new claims plus the back log waiting for implementation, expecting 3/4 mos to clear them.​ there are as many variations of unemployment figures as methods/motives. when your out of work, the unemployment rate is 100%.

  20. Mike says:

    There’s so much fraud going on in the program that I’ve seen multiple gang members from the midwest on social media flying out to california and suddenly waving tens of thousands of dollars in front of the camera.

  21. Randy says:

    Or… shutting down the UE application process is to slow the claim filing process until the cash flow gets better. Right now the state’s cash flow is approaching its lowest point of the year, and due to the covid lock-down, the state has limited resources; can’t open schools, can’t pay unemployment. Remember the UE bonuses people didn’t get? And, when Trump extended but reduced UE bonus Newsom complained the state couldn’t pay its 25% share? A two week shut down of the claim filing process makes a big difference in the cash flow.

    Recently the City of LA declared a fiscal emergency. Last week there was an unconfirmed rumor some of the forest fire fighters checks were returned NSF.

    The size of Aunt Nancy’s huge stimulus bill is about bailing out CA – and to bail out CA, the other states have to pay. Margaret Thatcher’s observation that the problem with socialism is that you ultimately run out of other people’s money is spot on. Newsom has a problem telling the truth. The state lost over $80 billion from March through June of the last fiscal year 2019-2020. Estimates are we’re short some $20 billion from July through September.

  22. c smith says:

    When the fraud is so bad that rappers are making videos about it…

  23. joe2 says:

    The issue is that business is bad and workers cannot earn the return that supports their pay. Period.

  24. Lisa_Hooker says:

    NOTICE TO RECENT GRADUATES – federally speaking, if you didn’t get a job you can’t be unemployed.

  25. Ultimately they are going to have to find some way to keep people going without unemployment benefits. What is the point if a lot of those jobs are never coming back, it’s like health insurance for the dying. Not sure why there are no WPA proposals out there? It is a presidential campaign?

Comments are closed.