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Michael Bernick
Adjunct Fellow; Counsel to Sedgwick LLP; former Director, California Employment Development Department
California and Human Capital and Labor
Michael Bernick, the former director of the California labor department, the Employment Development Department (EDD), joined the Milken Institute in February 2004, as a research fellow, focusing on job creation and workforce development projects.
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When it comes to unemployment payments, technology does the job
By: Michael Bernick
July 19, 2011
   
   
The Employment Development Department (EDD) announced last week that it would replace unemployment insurance (UI) checks with debit cards. The shift is noteworthy not only for the improved service it will deliver to California workers and employers but also for what it reveals about technology's role in California government.

Currently, the EDD provides unemployment checks to 1.2 million Californians. The number represents around 57 percent of the 2.1 million Californians counted as unemployed. (Adding "discouraged workers" who have quit looking and those who are involuntarily working part-time brings the number of unemployed to 2.6 million.)

For some years, the EDD has paid unemployment, up to $450 per week, by check. But the check system is subject to the vagaries of the Postal Service: Checks can be delayed, delivered to the wrong address or stolen. The new debit system transfers the payments electronically, enables claimants to monitor the balances and allows for direct deposit.

The debit system is being launched in the next week. The EDD provided this video (industrial strength but fun) detailing the mechanics of the rollout.

As EDD Deputy Director Loree Levy pointed out in the announcement, the debit card is the latest development in the UI system's migration away from a paper system. It follows the introduction in recent years of online claims filing and online certification.

Over the past three decades in state government, there have been numerous attempts to "reinvent" California government, spearheaded by good government groups and public policy schools. Hundreds of conferences have been held, reports written and legislative hearings sponsored. Few if any have had results, running up against the incentive structure of state government and the pluralism of Sacramento.

The main improvements in reducing the cost and improving the quality of service delivery over 30 years have been through technology. These improvements have been the result not of public policy analysts identifying a "problem," but of technology companies seeking to sell a product. At the EDD, technology has remade the tax system (filing and monitoring of tax filings online) and the disability insurance system (online filing and a debit card) as well as UI.

Levy estimates that the debit card will save $4 million in paper (check stock) and processing/mailing costs in the first full year of operation, and savings are expected to increase as the UI system moves toward paperless claim forms, due to be in place next spring.