AI and Cloud Could Make Getting Unemployment Insurance Easier in the Next Recession

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According to a 2021 survey of state-level CIOs, the pandemic has highlighted the value of technology and how it is critical to the delivery of government services and the productivity of public officials. The survey also revealed that the biggest driver for state governments is the need to digitize: “better online experience for citizens.”

Perhaps nowhere is this more true than with unemployment agencies. Clearly a black swan event, many states have had major problems processing unemployment claims during the pandemic. The reasons for this are varied but include an inability to perform the necessary work from remote locations, outdated legacy systems unable to process an unprecedented volume of claims, overloaded telephone systems, an inability to detect large numbers of fraudulent applications, and a lack of funding for staff and system upgrades.

Since the start of the pandemic in 2020, states have tried to both catch up and prepare for the future. At least for some, it remains challenging. An opinion piece in a Nevada newspaper noted that the state had not yet completed processing claims from nearly a year ago and said, “If they were employed in the private sector, those who run Nevada’s unemployment system would been unemployed a long time ago.” Although in fairness, if it were the private sector, it is likely that more resources would have been provided. Nevada is hardly alone in this experience.

The need is urgent as another round of jobless claims could come with fears of a recession mounting.

States are attempting to undertake the necessary upgrades, but talent and funding are often obstacles. This is a significant challenge as state unemployment agencies must jump from legacy systems to new cloud-powered models powered by disruptive technologies, including artificial intelligence (AI). For example, Oregon is in the midst of replacing systems and software that date back to the 1990s.

Fortunately, modern systems are available to help unemployment and other public sector agencies using cloud, AI, blockchain and data management technologies. AI-driven systems are especially essential for government agencies to best serve their constituents’ needs, automating responses to user questions in real-time, distributing checks more quickly, and identifying complex claims for humans to review. Advances with AI-enabled software are now able to transform the unemployment insurance experience—from making a claim to uploading weekly proof of active job search—regardless of the device an applicant connects to. These next generation systems can also help the unemployed find new jobs. New York recently implemented a new AI platform to create rapid reemployment as well as enable long-term career planning.

One tactical option chosen by states during the pandemic to quickly update legacy systems was to modify existing code, move the user interface to the cloud or develop a new interface using low-code tools, people add to use the phones and support for dated applications. While this may have helped some and may have been the only short-term option available, the approach was equivalent to a mortgage and did not work very well. This approach is certainly not a viable long-term solution to a massive problem.

The only real solution is to replace existing systems with modern technology. Some states may choose to build it themselves, but lack of available talent and time are not on their side. They are better off acquiring commercial applications that run in the public cloud and are designed by those with expertise in designing and implementing government unemployment solutions. By running natively in the cloud, these systems will be nearly future-proof and extremely scalable to manage through a future extreme event. Expanded use of AI and automation within these new unemployment systems will better enable states to manage staffing constraints, improve efficiency and stakeholder service and support.

Pennsylvania and other examples of this approach appear such as in Hawaii where AI, administrative data and cloud computing are harnessed to generate customized recommendations and job matches. Indiana has taken a similar path. Before helping people find new jobs, updated unemployment systems will proactively inform and update assistance applicants to ensure they always know the current status of their claim – where it is in the process and what the timeline for decisions and payments is. A modern system also offers a high degree of self-service so that an applicant cannot just submit their claims online. They could also see the status of their claim at any time, as well as engage with chat or other resources to get answers to their questions to eliminate confusion and worry. At the same time, these systems will use AI to detect fraudulent applications to both facilitate the processing of legitimate claims and reduce waste.

Leveraging the latest technologies to provide modern, scalable, responsive and future-proof unemployment systems is something that is currently possible. If society is to avoid the unemployment system debacle of the pandemic, it would be well served to provide states with the resources to replace old hardware and software with modern AI-powered, cloud-native applications. The good news is that Congress provided the Labor Department with $2 billion in pandemic relief funds through the US Rescue Plan Act of 2021 to help states upgrade their unemployment programs. Now the question is whether there will be a recession that will add stress to current systems before those new programs are implemented.

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About the author

Bhanu Prasad Narayana – AVP, Head, US Public Sector, Infosys Public Services – has 25 years of IT experience working in many global locations and industry sectors. In his role leading Infosys Public Sector Market for North America, Narayana advises CIOs and senior agency leaders in federal, state and local markets on emerging industry trends and innovative solutions to solve problems for citizens and constituents.