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The recent surge in federal layoffs has raised concerns about delays in unemployment benefit payouts, with many states struggling to process claims effectively, according to Axios.
Tens of thousands of probationary federal workers were unexpectedly terminated without severance, leaving many in financial distress.
A lawsuit filed by multiple state attorneys general asserts that the chaotic and unnotified nature of these firings has created significant strain on state unemployment systems, which are already underfunded and under resourced.
These layoffs have notably been driven by Trump’s and Musk’s “Department of Government Efficiency” — which has had a ripple effect across various industries, including those involving federal agencies.
Unlike private employers, who fund unemployment insurance through payroll taxes, the federal government reimburses states for unemployment benefits only after the claims are verified, a process that has become increasingly cumbersome due to the suddenness of the layoffs.
The scaling back of federal workforce spending has compounded financial pressures on both workers and state unemployment systems.
The scale of the issue is already evident: In Maryland, the state is seeing 30 to 60 new unemployment claims every day, compared to just 189 federal worker claims in the first quarter of last year.
The sudden surge in claims is putting immense pressure on state agencies, impacting not just unemployment insurance but other areas of state business as well. This spike comes at a time when the overall jobless rate is low, further stretching the already limited resources of these agencies.
The unemployment process for federal workers differs from the private sector in that the federal government is responsible for reimbursing states after the claim is filed and verified.
Because the firings came with conflicting reasons — some citing performance issues, others restructuring — unemployment investigators must take extra time to verify the circumstances of each claim…a process that is proving to be both time-consuming and complex.
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Many state agencies are reporting difficulties in getting timely responses from federal agencies, which has further delayed the investigation and processing of claims.
As an example, Jacob Bushno, a veteran fired from his position at the U.S. Forest Service, filed for unemployment insurance immediately after his firing on February 18 but is still waiting for an interview with the state agency, according to Axios.
His experience highlights the ongoing struggles faced by workers to secure unemployment benefits during this chaotic period.
The financial gap created by the delay in unemployment support could be significant, leaving many workers without the essential income they need during a period of uncertainty. While some workers are still hopeful they might be reinstated to their positions, others face an uphill battle to secure the benefits they are entitled to.
