California’s unemployment crash

Illustration by Adriana Heldiz, CalMatters; iStock

Behind the scenes at the state Capitol, California is launching an unprecedented $1.2 billion overhaul of its battered job safety net. Its Employment Development Department — better known as the EDD — is attempting to rebuild its unemployment and disability systems as it recovers from a pandemic that left millions of workers waiting for payments and tens of billions of dollars missing to suspected fraud.

A year-long CalMatters investigation finds that the state was primed for disaster by years of missed red flags and failed reforms. Once COVID hit, public records and interviews reveal that California’s system was initially friendlier to scammers than to many real workers — and then the state got so aggressive that many workers struggled to prove their own identities. New financial reports requested by CalMatters show that amid the chaos, the EDD and its unemployment payment contractor Bank of America split a half a billion dollars in revenue, though the bank says it ultimately spent more to cover fraud losses. Another large EDD contractor, Deloitte, made more than a quarter of a billion dollars on tech contracts and emergency contracts to build systems that state reports say buckled during the pandemic.

The question for the EDD now: Will history repeat itself, or can California finally lead a nationwide quest to reinvent unemployment?

California’s unemployment crash was reported and written by Lauren Hepler. Photography and visuals by Adriana Heldiz, Miguel Gutierrez, Julie A Hotz, Alisha Jucevic, Caitlin O’Hara, Eric Lee and Laure Andrillon. Design and data visualization by Jeremia Kimelman, Vasuki Sunder and Sapna Satagopan. Audience engagement by Anna Almendrala, Robin Cortez and Sonya Quick. Audio by Mary Franklin Harvin. Production and project management by Liliana Michelena.

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