California’s unemployment system collapsed on Julie Su’s watch. Is she ready for Biden’s team?
The Biden administration on Wednesday nominated California Labor Secretary Julie A. Su to be deputy secretary of Labor to help shape the president’s jobs agenda and economic recovery effort.
It’s a big assignment, even if it’s not the top Labor post, and it’s not accidental that the president is, yet again, looking west to fill important positions in his administration. Leading a department in a state of California’s size, complexity and influence provides good training for the national stage.
What is a bit surprising about Su’s appointment, however, is that she comes with heavy baggage that is sure to weigh her down during the confirmation hearings.
On paper, Su is a great pick for Biden. She served eight years as the labor commissioner in California before Gov. Gavin Newsom tapped her as Labor and Workforce Development Agency secretary in 2019. Before moving into government, Su was a longtime and well-respected labor lawyer who fought for better working conditions for low-wage workers and immigrants.
But her glowing resume has been substantially dimmed over the last year by the epic failure of the Employment Development Department, which administers unemployment benefits in the state. Under her watch, the EDD’s ineptitude caused incalculable harm to more than a million desperate Californians whose unemployment checks were delayed or claims frozen. Even while the agency was failing people with legitimate claims, it was handing fraudsters as much as $11 billion in taxpayer money, nearly 10% of the $118 billion paid out since March. The fact that the scale of the scam is still unknown is another black eye for the agency.
The full accounting of EDD’s failures over the last year would take a book to catalog. The short version, as outlined in two state audits released recently and a four-hour legislative oversight hearing, is that the COVID-19 pandemic triggered a cascade of missteps at an agency that was already struggling with antiquated technology, a shortage of staff and an overly bureaucratic culture. As business shutdowns forced millions of people out of work and Congress offered benefits to many more people than usual — gig workers, contractors and self-employed Californians — the agency was hampered from the start and couldn’t keep up. Even its call center didn’t have enough staff to answer more than 1% of the inquiries it fielded.
These problems certainly aren’t all Su’s fault. She didn’t run the EDD from day to day. That is the job of the department’s director, a position held by a succession of people during Su’s tenure. Nor was California the only state to have breakdowns in its unemployment system.
Nevertheless, as the state official overseeing the agency, the buck stops with Su. Senators must demand that she answer for her role in the EDD fiasco before she can be trusted to play a key role in the nation’s economic recovery.
Foremost, Su must explain how the EDD was so poorly prepared for this moment. Of course, no one would have been completely prepared for the sudden onslaught of unemployment claims in March. But why did it take California so long to identify and respond to the problems? As the audit points out, EDD officials had known for a decade about the call center’s limitations but didn’t start adding to its staff until a national crisis blew up the system.
Furthermore, why didn’t Su make modernizing the EDD’s online system for unemployment claims a top priority as soon as she took office? As millions of Californians found out in recent months, the confusing and cumbersome setup penalizes claimants, even locking them out of receiving benefits if they make an honest mistake.
And we need better answers about how the fraud went undetected. How could EDD fail to notice that it was sending claims to people incarcerated in state prisons and jails? Su has blamed the federal government for lacking safeguards in the expanded benefits, but according to the audit, EDD removed safeguards that might have detected fraud and then took months to put anti-fraud measures in place.
The EDD’s pandemic meltdown may have already cost Su the nomination for the top job at the U.S. Department of Labor, which ended up going to Boston Mayor Marty Walsh. But it isn’t necessarily disqualifying for the No. 2 job — if she is forthcoming about her role in the agency’s failures.
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