S1: It's time for Midday Edition on KPBS. Today we're talking about employees and something called The Great Detachment , plus the real life impact of unemployment benefit scams. I'm Jade Hindman with conversations that keep you informed , inspired , and engaged. We'll lay out what the great detachment is and explore the why.
S2: I think there's been a big breakdown in trust , and I think that's what's causing some of the the angst amongst employees here.
S1: More about that. Then we'll switch gears to talk about the impact of scammers emptying the accounts of people receiving unemployment benefits. That's ahead on midday Edition. In 2020 , many workplaces were transformed by the start of the pandemic. For some , those morning traffic jams turned into zoom meetings from home. Also , many workers change jobs and careers and what became known as the Great Resignation. But that's all been replaced by a new phenomenon called the Great Detachment. According to Gallup , workers today are feeling increasingly dissatisfied with their employers and , quite frankly , stuck. We wanted to dive more into why workers are feeling disconnected and explore how our work lives have changed in recent years. I'm joined by Ben Weigert. He is director of research and strategy with Gallup. Ben , welcome to midday.
S3: Thanks for having me , Jade. It's a pleasure to be here.
S1: So glad you're here. Also , Kate Lister , who is the president of Global workplace Analytics in Carlsbad. Kate , welcome to you.
S4: Oh thank you. Great to be here.
S1: Great to have you both here. So Ben many of us remember the great resignation from a couple of years back. Your research suggests we've now moved into something called the Great Detachment.
S3: So the great detachment is a concerning issue we're seeing across the US workforce , where employees are feeling increasingly detached from their employer. This detachment is signified by two key trends. First , employees are looking for a new job at the highest rates since 2015 , with 51% of employees watching for or actively seeking new job opportunities. And at the same time , we're also seeing that employees overall satisfaction with their employer has returned to a record low in 2024 , with only 18% of employees being extremely satisfied with their employer today. Now , Jade , what's especially unique about these trends is that they are not yet leading to higher turnover rates like we saw during the Great Resignation , like you mentioned. Instead , despite employees frustrations , a challenging job market and economic uncertainty have left many employees feeling stuck in their current job with this discontent.
S1: Well , dig into that a bit more. I mean , what what is happening in the job market that's creating all of this uncertainty ? Yeah.
S3: So I mean , I think at at surface level , when you look at things like inflation and job opportunities slowing down in the market , that's giving employees pause and they're hesitating to take a new opportunity. Also , if you think about the great resignation , people saw , others get all called them really good jobs , but let's at least say , um , higher paid jobs and maybe promotions and things like that. Those opportunities aren't as prevalent now. So it feels like new jumps are difficult to find , and maybe more often they're more like lateral moves. I've heard some people even describe it as trading down. I think that might be a little bit extreme , but it has caused some hesitation in their job search.
S1:
S3: I think retentions may be the bigger issue for employers is retention and hiring high quality workers , especially in difficult to fill positions. It's not that the positions aren't available , and it's not that employees don't want to work , it's the match just isn't always quite there. The aspired employee and the aspired job someone's looking for isn't exactly synced up. Hmm.
S4: Hmm.
S1: Well , Kate , can you explain a bit more about that ? I mean , we're talk we're looking at pre pre pandemic then pandemic. And today how is it that people are unable to find jobs and move on from their current one.
S2: Well what we've been seeing for years is people saying that if the organization was going to pull back on um , remote and hybrid , they would quit. So there was like 40% of people said they would quit. There was another 20 or 30% that said they would continue to work there but be unhappy. And so I think part of what we're seeing is that the early leavers , who the research shows from , I think Gallup and I know also from um , a number of other organisations shows tend to be the top performers and women. And so those top performers , the most marketable have already left. And so now we're sort of in general in kind of that second tier. So the , the in addition to the job market being soft , um , the , the folks that are looking for the jobs are not as marketable as they might have as the ones that left a year ago. Hmm.
S4: Hmm.
S1: Well , I mean , so then we've got this great detachment happening. How does that surface in work performance ? Mm.
S2: Well , when people are not engaged , They don't work as hard as they would otherwise. You know , the people that said that they would stay but be unhappy are not really the the people that you want in your office. I think there's been a big breakdown in trust , and I think that's what's causing some of the the angst amongst employees , and that stems from watching their companies lay people off , watching them use return to office mandates as an excuse for or is a guys layoff , uh , lose feeling like they've lost the trust of their employer who wants them to come back in largely because they want to be able to monitor them. They want to be able to watch them. And , you know , they feel like I've given myself to this organization for the last several years , and , and I'm really productive and I'm working well , and they have no data to show that I'm less productive or that our culture has declined or any of the other reasons. And yet they're calling me back. Um , that's not fair. And that that is a breakdown of trust. And , you know , trust goes two ways. Mhm.
S4: Mhm.
S1: Well , Ben , let's talk about that more. I mean what do we know about remote work and its effectiveness. Yeah.
S3: Yeah. So certainly there's a balance in remote work. There's been a lot of good things and advantages that have surfaced from remote and hybrid work. You know in particular both employees and employers would agree that it's improved work life balance and flexibility. It's improved more efficient use of people's time. It's given them more autonomy and generally been good for the wellbeing. You know , on the positive side , it helps people work the way they work best. Um , gives them that opportunity to also fold in or work in life in a more cohesive way. On the flip side , it's also created some challenges , especially for teams. So the biggest challenge is that employees who are hybrid or fully remote would call out as it can make collaboration more difficult. It can make people feel less connected to their culture. It can be more difficult to build relationships and get the resources you want. And that's not to say you can't do those things , but it requires a lot more intentionality. So organizations have to invest more in how they're supporting remote and hybrid work. Otherwise , it can work well for the individual , sometimes at the expense of good teamwork or organizational effectiveness.
S2: Yeah , you just hit the nail on the head , Ben. I mean , I think what's really going on is that if we were working with a company before the pandemic and they were going to roll out a hybrid program , we would be doing that with a lot of change management , with a lot of training , with a lot of new practices and processes. But the companies that just sort of had to do it overnight , it kind of worked okay. And so they didn't go and do that kind of training. And I think where we are now is that some of the cracks are starting to show in the , in the facade. Uh , the the mistrust among um , managers of their employees , which has always stemmed from , you know , not being able to see them , not having them presence , not managing by results rather than , you know , butts in seats. Um , and , you know , it's kind of like when we got cell phones , we would only use them in the house for a while because that's where we used cell phones. You know , we weren't used to being able to to do whatever we do could do with them , uh , wherever we wanted. And it's the same thing now. We're we're working in new ways , but we're working with old practices and processes. And so the things that you just brought up , the connection to culture , the connectivity , the teamwork , all of those kinds of things need to change. Um , we just completed a whole new set of courses around this , you know , how do you create team norms ? How do we how do we collaborate when we're not together ? When do we actually come together ? what's best to do in the office , what's best to do at home , what's you know what ? All those things we need to get down in writing. So there's not this ambiguity around it. And so that we're we're adopting new ways of doing things rather than just , as I say , ignoring the fact that things have changed. Yeah.
S4: Yeah.
S1:
S2: They understand the job that they have to do , and you get out of their way. It's mastery. It's it's purpose , it's autonomy. That's the kind of thing that that intrinsically motivates an employee. And when you tell them you have to come in here and I'm going to watch you work. That just makes no sense at all. Particularly because before the pandemic , the largest shopping time on Amazon was during working hours. So just because they're there does not mean they're working. But as I said , we've known since the 50s that this is the way to manage , and it just hasn't happened in part because managers aren't trained to do their jobs. We did a survey earlier this year and found that 75% of managers had not been trained to manage remote workers , 75% of employees had not been trained , 75% of companies had not adopted team norms or communication norms. And so there's this tension of companies leaders wanting their people back in the office for whatever reason , right or wrong , they want them back in the office. And so they're looking for that excuse where they feel like culture has declined , or they feel like productivity has declined. And the first thing they're going to blame it on is remote work or hybrid work. And that's been proven in in studies. Mark Marr at University of Pittsburgh found that the companies that have done return to office mandates tend to be run by older white males with , um , a strong sense of power , and that the returns did not lead to higher results to better results in the organization.
S1: And Ben , like , I would imagine that for a manager who's not been trained on how to manage people remotely , that it could start to feel like their job is not necessary. Perhaps. And maybe that is why there's this push for people to come back into the office. Um , talk a bit more about training and the work culture that's put us here today. Yeah.
S3: Yeah. So , sure. Um , you know , Kate was digging into this a little bit , but prior to the pandemic. Simply engaging people and giving them a moderate amount of remote flexibility went a long way. It elevated wellbeing , and people would even work more hours and have higher wellbeing because they could work. They could work through the processes and management techniques they had back then in that extra little bit of flexibility went a long way. Whereas in today's new world , where so much of work is done remotely or hybrid , you have to be very intentional. As a manager , you cannot just manage when people are in person. You have to be able to coach people up remotely when they're online , you have to be able to lead team meetings where some of the participants are on a TV screen and some are in person. And as Kate mentioned , the majority of managers have not received any training on how to do this , nor have the majority of employees. So it's really important that we reteach managers some of the basics. When you think of performance management basics around clearly setting expectations and priorities , coaching on progress , helping people remove barriers and achieving those things and recognizing them for success. That's more important than ever. So is ensuring we're developing people. So those essentials haven't changed. In fact , our research at Gallup shows that one of the single most important things that manager can do is to have a weekly , meaningful conversation with their employee. And that increases engagement by four fold , regardless of where they're working for. So from that perspective , like good management , it's good management. But the big twist now going forward , as Kate mentioned , is managing hybrid and remote takes more intentionality , new techniques we really have to think about when we're bringing teams together , for instance. So if you're hybrid , when your team comes in , they shouldn't just be sitting on zoom , they should be having lunch and coffee together. There should be some plan collaboration sessions and teaming , and we've seen that really boost things. I mean , yes , as a manager , you have to go into your workday assuming there needs to be a plan and rules and norms for how we collaborate. But then you also have to make that happen in a very productive and engaging way. And you also have to think about these are things we need to check in on as a team. So throughout the year , we should be doing a check up on what our teamwork looks like and how we can optimize our approach to hybrid and remote work.
S1: Coming up , more on worker satisfaction and why so many people are detached from their jobs.
S2: We really want some control over how and where and when we work.
S1: Hear more when KPBS Midday Edition returns. Welcome back to KPBS midday Edition. I'm your host , Jade Hindman. We continue our discussion on why workers are feeling so disconnected and what workplace trends may be coming in 2025. I'm speaking with Kate Lister from Global Workplace Analytics , along with Gallup researcher Ben Weigert. Kate Ben mentioned the importance of flexibility.
S2: We talk a lot about the people that are working hybrid and remote , but we don't talk about the people that are left in the office. For whatever reason. They have to be in the office. The essential workers that we called them during the pandemic , or the 30% of people who say they want to work in an office. Again , if we were working with a company before the pandemic , it would have been to create a pallet of flexibility so that there's something in it for everyone. So maybe it's something as simple as being able to come in ten minutes late because you had to drop your your child off at school or leave for a parent teacher conference in the afternoon. Uh , the research shows that just offering the flexibility is enough to improve engagement and employee satisfaction , even if they don't use it. You know , we just we we really want some control over how and where and when we work. Um , and so we need to consider other possibilities like the four day work week , like , uh , part time work , like , as I said , changing the the work hours if you need to. Uh , and not just be so focused on hybrid and remote.
S4: You know , I like that.
S1: That sounds great , Ben. Go ahead.
S3: Yeah , I'll just add to that. I mean , Kate's spot on when we , um , surveyed frontline workers on what they wanted , uh , for more flexibility and perks and benefits , the top thing was more PTO and more , um , flexibility around flex time when they come and go. So some of those really essential things are important to them. It's important they can adjust their schedule within reason. It's important they can have time with their family or just time off to decompress.
S1: And , uh , I understand you get daycare at your work.
S4:
S3: A wonderful benefit. You know , I've , I've worked all , all of the locations. I have worked fully on site. I have worked hybrid. Um , I've worked fully remote and for extended periods of time. Um , daycare is a game changer for me because going to work and taking my child to school are one and the same for me. Um , now there's complexities where you have to pick up your kid when they're sick and still take some time off for their activities , but it sure makes things easier , you know , and I have I have to tell you , J2 , I get a I get to watch many working mothers come in each day to. And you can really appreciate how that makes their day better. They don't have to do an extra drop off. They can make that earlier morning meeting and they can stay for a little bit later meeting. So I mean , things like onsite daycare can be a complete game changer , and especially if it's something that affects your population. We like to joke about with the younger people who work here , that doggie daycare would be the perk. They would add. It's not. It's actually not so different in their lives.
S1: And I bet you it'd be a hit.
S3: Our our first dog was our first child , so I would strongly agree with that.
S2: We have to think about things like elder care too. You know , this is the the opposite end of the workforce or I guess right now sort of the middle level of the workforce is sandwiched between this child care and elder care issue. So some companies are looking into , um , offering elder care benefits to take some of the the strain off of the people that are trying to navigate these issues. And that number is going to continue to grow , uh , as the demographics change across the workforce.
S1: Wow , that is so true. And an idea that I have not heard before.
S2: Uh , a great deal of variety around the not so much age but life stage of the workforce. So it is the time where they're just getting out of school. There's a time where they're having children , and it may not follow the way it did in prior generations. But the study I mentioned earlier that we did with a company called Tech Smith , we were looking at meetings and preferences around which meetings people liked and disliked , and spoiler alert , they didn't like any of them. But for a variety of reasons and , um , and very differently across the generations. So the most people hate update meetings. I mean , it's like one of the most hated of meetings because just send me a memo. I can read it myself , right ? But it turns out that the youngest generation , they're not that tapped into what's going on in the organization. So. So they actually like those meetings. Mhm. Um , and at the other extreme , the more senior employees like them too , because they've perhaps gone beyond where they're getting the day to day updates of what's going on in the organization. Um , the younger generation just got out of school and , and , you know , some of them went right into the pandemic , had no social life , um , and didn't really get to meet the people that they were working with. Um , and they , you know , that's your social network , uh , when , when , when they want to come to the office more than the other generations. Uh , because it's , it's part , you know , what's where you meet your spouse , where you meet your , your girlfriend or your boyfriend. Um , and , you know , you've probably just cut ties with the people that you went to school with. You've maybe moved away from your family. So that's a very important part of their culture , as well as getting to understand the ins and outs of the organization and even things as simple as , how do I act at a meeting ? How do I dress ? Uh , you know what ? Some of the team norms and meeting norms are specifically about , you know , when do you speak up and when don't you speak up ? And how do you speak up ? Um , and how do you make it equitable and make sure that you're not , um , excluding certain people in the room ? Uh , it's interesting because we found at the beginning of the pandemic , the folks who had already been working remotely felt much more engaged because now everybody was in the same boat. Everybody was remote. I think there's lessons that we need to take from that because we we adapted with things like meeting chat that gives people that don't like to bust into a meeting or , you know , break into a conversation , a way to express their thoughts. We've started working on asynchronous documents. So following the meeting , there's this word document that we can all continue to contribute to , and that's brought new voices into the room traditionally. I mean , let's let's be honest , it's been the loudest voice in the room that gets heard for the most part in meetings. And so now we're bringing in the introverts. We're bringing in the neurodiverse , uh , we're bringing in the younger people because they may not have felt as comfortable speaking up. Uh , there's a lot of good things that we need to incorporate , you know , regardless of whether people are remote or not. I mean , whether they're working nine floors , nine miles or nine time zones away , they're already working remotely. So this is just the this is just skills we need for the to adapt to the future , not necessarily for just distributed work. Wow.
S4: Wow.
S1: Well Ben , Kate , you both have shared so many great ideas in this conversation. Um , I'm curious to know what workplace trends you'll be watching for in 2025.
S3: You know , I'm thinking about three stats in my head right now that are particularly important , and one is related to all things I write AI at work. And what's been interesting is despite all the momentum behind AI , the adoption in workplace practices has been slower. So , for instance , only about half of white collar workers are currently actively using AI at work , and that number shrinks to 15% when we look at how many people use it on on a weekly basis.
S4: Now , what about.
S1: What about blue.
S4:
S3: About 20% of blue collar workers use it at all. And weekly that number drops down to about 11%.
S1: And you also mentioned wellbeing. How how do you see that playing out in 2025.
S3: That's a really concerning trend right now. Jade. Right now we're seeing record lows in people's life evaluations , and that takes into account both their current evaluation and their hope for the future. So right now , only about 50% of employees are thriving in life , if you will. And that's a it's a record low for us for as long as we we've measured that. At the same time , I look at metrics like people's daily emotions , and I look at some of the negative emotions like stress , worry , anger , sadness. And that has continued to extend the levels beyond what we were seeing pre-pandemic. Now , naturally , early during the pandemic , those levels were very high for obvious reasons related to health and larger concerns. But beyond those spikes , we're actually seeing those negative emotions continue to increase today. And we can actually pull all this back to how it impacts both the employer and the employee at the same time. Employees are not feeling like organizations care about their well-being , Wellbeing , so that can relate back to some of this discontent they're harboring toward their employer , which in the end is actually a great opportunity in in 2025. If organizations can lean into that need around improving workplace wellbeing in a way that really resonates with employees and I think really addresses the job and how people experience work , not just perks and benefits , I think that is a good turnaround point for both employees and organizations.
S4: And , Kate , what.
S1:
S2: Uh , the incoming president has already formed a team that says they're going to do away with remote work in government. Uh , the government actually led the charge to remote work more than 20 years ago. So , you know , just as we see in the when the media has a story about one of the big employers that has a mandate for return to office. When that press starts to hit , other CEOs may feel more empowered to do the same thing themselves. But I think the over time , what they're going to see is a much higher rate of turnover. We've already seen this , Ben. I know your work , uh , proves this out , that , uh , after a mandate , turnover goes way up , Glassdoor ratings go way down. Uh , Net Promoter score ratings go way down. And so it's really going to be about if you want the best talent you've got to have , you've got to offer some kind of flexibility. But I think that's probably going to take maybe all of next year to to play out.
S1: And my final question here , because what I'm hearing from you both is that hybrid work and even just work from home , it's really beneficial to both the employer in terms of the productivity that they get and to the employee , because it's less stress , offers more flexibility.
S3: And we've seen the organizations that had more practice every mode and hybrid work pre-pandemic handled it better throughout the pandemic and coming out of it. So if you think about a global organization with 500,000 employees that already works around the clock and works remotely , they have a lot of muscle memory behind how they do that. So it's more dealing with the density of their days and getting people on the same page. On the flip side , if you think of like a midwest insurance company that had no flexibility prior to the pandemic , um , today things look very different to provide any flexibility , let alone a lot of it. So I would say that there are multiple remote and hybrid models that will work out there. And you really have to think about what's going to work best for your business and culture. And I think the biggest challenge for organizations in having some hesitancy here is there's not a playbook out there that may perfectly fit their needs , but they need to find the right starting place and be willing to adapt over time and think about what really does enhance their productivity and their culture and their long term growth.
S4: In Kate.
S2: I picture a CEO standing in the middle of the room saying , because I want them back.
S5: Because the.
S2: Offices are empty. And that's truly the reasons they're giving. You know , I haven't seen a single shred of evidence that shows that , that they're doing it because they say they're doing it because productivity is down , but it's not. They say they're doing it because it's hurting engagement , but it's not. In fact , people are more engaged when they have choice. The literature , the research and innovation and in the contribution to culture all point to the fact that it's better with hybrid , it's better with choice , it's better. Everybody likes to make this poll or it's remote or it's in office. But the point is , you know , if you're a CFO came to you and said , hey , I'd like to buy this company. They wouldn't expect to just say , oh , okay , go ahead. Now , you'd want to see what the metrics are. You'd want to see a what do they do ? What are they making. How does it how does it fit with what we're doing. But in this case we're just saying we're taking the most important asset of an organization. And we're just saying , oh , we're just going to do this because we feel like it. And we know from the statistics that it's going to hurt our performance , and it's going to hurt our ability to hire people and to retain people. It just doesn't make any sense. We just have to start listening to the research and making decisions based on that , rather than just what what somebody feels , because I think this is symptomatic of a larger problem. Management. Senior management is becoming has has been becoming far more polarized from the actual worker over the years when when you run the surveys , they're pretty happy that the senior manager and they think everybody else is just like them and they're not. These are all the , you know , the biases that we have , but we just have to overcome.
S4: Well , this.
S1: Has been an excellent conversation. I've been speaking with Ben Weigert , director of research and strategy at Gallup. Ben , thank you so much for joining us.
S3: It's a pleasure to be here. Thank you for having me , Jade.
S1: Also Kate Lister , president at Global Workplace Analytics in Carlsbad. Kate thank you.
S2: Thank you Jade. Always great to talk to you.
S1: Still to come the unemployment scams leaving the Ed and thousands of people in debt.
S6: So I know these are huge numbers , but the overall picture is that we are in the red and unfortunately there isn't a very clear path to getting out of it unless we change course here.
S1: More when KPBS Midday Edition returns. Welcome back to KPBS Midday Edition I'm Jade Hindman. The California Employment Development Department is supposed to be a vital lifeline for people looking for work or for those living with a disability , but in recent years , the state's unemployment system has faced numerous problems. And a report released earlier this month , the state's legislative analyst office pushed for action , calling the system broken. Joining me now is Lauren Hepler. She is an investigative reporter with Calmatters. Lauren , welcome to midday.
S6: Thank you so much for having me.
S1: Well , we're glad you're here. Your story centers on the experience of Carlsbad resident Kim Tanner , who you introduced as something of a fraud detective. Tell us about her and her experience filing a disability claim. Yeah.
S6: Yeah. So Kim is a marketing consultant from Carlsbad. And basically what happened ? Like you say , she never expected to become a fraud detective of sorts , but she filed for disability earlier this year with the Edd , and in mid-July had kind of a panic attack when she logged into her online account with the state's debit card contractor , a Georgia company called Money Network , and realized that over $3,000 had disappeared. Uh , according to the complaints that she went on to file with Money Network , the Edd and several federal regulators. Um , the money was transferred out of her account to a bank account she did not recognize , and she was never even notified that this activity was happening on her account. Um , it is something we looked into and saw that there's been at least 74 federal complaints about this issue this year to the Federal Consumer Financial Protection Bureau. Though I will say that both Money Network and the Ed are trying to stress that this doesn't appear to be fraud on the scale of some of the issues folks may have heard about during the pandemic.
S1:
S6: There are others in other states.
S4: Given that.
S1:
S6: I talked with people from the Bay area , from the Sacramento area , from LA , and they all had very similar stories in terms of issues with the online debit card accounts and then the money being transferred out without them knowing. Um , and then kind of what happens next varied a bit from case to case. Some people said they got ping pong back and forth between the Edd and Money Network , trying to figure out who is responsible , who could help them get a refund. And then some people like Kim , really spent a lot of time digging into this and filing complaints , and they were ultimately made whole. There are others , unfortunately , who are still fighting that battle to get their money back. Wow.
S1: Wow. Well , it sounds like Kim went through great lengths.
S6: It took about a month and a half. And like I say , that's after she really went to the extremes of filing complaints with more than six federal financial regulators. It was ultimately the Consumer Financial Protection Bureau that kind of intervened on her behalf and facilitated , like a back and forth with the company to get her her money back. And I did think it was interesting to note she opted to be paid back by paper check. She really didn't want anything to do with the debit cards with online transfers. She's worried about the security of her information. Wow.
S1: Well , is there anything that people can do to protect their information so that this doesn't happen ? Definitely.
S6: So Money Network advises people to first call the number that's on the back of their debit card. The Edd also has its own system for reporting fraud online. If you search Ed fraud , you'll find that pretty easily. Um , and I think the question moving forward is , you know , uh , how much follow up do folks get ? Will we start to hear more about how much this is happening , how widespread of an issue it is ? I think these are some of the big questions. Yeah.
S4: Yeah.
S1:
S6: So that was where a lot of fraud was concentrated. Um , and because of that , I think there's been a little bit of a push to be like , oh , well , this issues in the past , that was a pandemic thing , when really stories like Kim's showed that there are these remaining issues for folks. Um , and the other interesting part here is that it's not fully limited to Edd , the state's food assistance programs , college financial aid systems have also , uh , seen increasing fraud risks. There's been some reports from state auditors and regulators talking about millions of dollars being lost to those systems as well. And I think the question is how seriously the state is going to take this like , um , you know , the the risk in the past has been that if you get too panicky about fraud , you can overcorrect and start to try to crack down on access. And that just ends up hurting people who are legitimate claimants. It's like the pendulum swings back too far in your suspicious of everyone , and that holds up real workers from getting their money. So it's definitely kind of a balancing act to get it right. But folks concerns for now is that they just feel like they don't have a lot of information. And if there is an issue , it can be a very uncertain path to getting it resolved. Hmm.
S4: Hmm. Well , did.
S1:
S6: Like in Kim's case , she says that she was told someone had actually directly logged into her account , so that would suggest that they had somehow got gotten or guessed or used software to guess her passwords and usernames. So another tip here is to , you know , take advantage of all the information that's out there about cyber security , make sure passwords are very secure and things like that. But even beyond that , what we learned during the pandemic is that this fraud is getting very sophisticated very quickly. There are scammers out there that buy personal information on the dark web or other places and use that to , to try to attack the system. So again , while we don't know specifically what's going on with Money Network , we do know that there's a range of of different types of fraud risks out there. And it really is kind of something that at this point is on the consumer to try to do as much as you can to protect yourself. Mhm.
S4: Mhm.
S1: Well , you know , on top of the issues with fraud , the system also faces what you call a financial cliff. Tell me about that. Yeah.
S6: Yeah. So we know to start that California had to borrow $20 billion from the federal government just to keep paying out unemployment benefits during the pandemic. But what normally happens after a shock , like a recession , is that okay , we might dip into the red for a while , but as people go back to work and businesses keep paying unemployment taxes. That levels out and we pay off the debt and we can move on , build reserves for unfortunately the next time something goes awry. But that's not happening this time. The Lao pointed out in their new report that they said , this is really an unprecedented situation where California's unemployment tax system , which really dates back to like the 1980s , a lot of other states have modernized their since then , but we have not. And they said that basically the system is just so far in the hole that it's no longer working. This debt is continuing to grow to the point that the state's general fund. So , you know , our general pool of taxpayer money that we all contribute to is spending $1 billion a year on interest alone to deal with this unemployment mess. So that's like more than the state spends each year on child welfare. So that's one issue. And the unfortunate news is that we aren't bringing in enough revenue to even cover our unemployment expenses now. So we're looking at , on top of that , like another $2 billion a year or so in losses. So I know these are huge numbers , but the overall picture is that we are in the red , and unfortunately , there isn't a very clear path to getting out of it unless we change course. Wow.
S4: Wow.
S1: We I mean , it's , uh , it sounds like it is definitely a layered problem. You know , I mentioned earlier this report from the Legislative Analyst Office. Can you tell me more about what the report said and what action they say needs to happen ? Yes.
S6: So the Lao was really focused on this issue of the debt. So the fact that California still owes the federal government $20 billion , this is now costing taxpayers a lot of money. And we we don't have a clear path forward since the system is still in the red. And so they really focused on not just identifying that problem , but thinking about what do we maybe do from here ? And it's an interesting area because , you know , everyone thinks of California as a very high tech state , like costlier to do business here than in other places. But that's not necessarily true when it comes to unemployment. So what I mean by that is like , right now , California pays out $450 a week in maximum unemployment benefits. There are other states , like Massachusetts , that pay a maximum of up to like over $1,000 a week. And part of the reason our benefits are lower is because we don't tax businesses in the same way. Um , this gets a little technical , but basically right now , California businesses only pay unemployment taxes on the first $7,000 that a worker earns each year , and that's the lowest figure in the nation. So the law suggests that we raise that to taxing the first 46,000 Thousand or so in a worker's earnings , and that would be higher than some neighbors like Nevada , but also still lower than other neighbors like Washington , Idaho , Oregon. Basically , the point is that we need to bring in more money so that the system doesn't continue to lose money faster than it spends it.
S1:
S6: I think that's part of the reason this tax system hasn't been touched since the 1980s , because this would require navigating a very intense business versus labor divide. As we alluded to , there's already opposition from business groups who say any sort of tax increase is a job killer could put hiring at risk. That's long been their contention. But then on the other side , you have labor groups that say , we just saw during the pandemic how important it is to shore up these systems. And that's even before you think about things like how high our housing costs here , grocery costs. And I think the really interesting thing to watch moving forward will be how state lawmakers kind of think about that tension when we're at this moment where a lot of California swung pretty far to the right in this past election , there's a lot of concern about costs of either being a consumer or being a business in this state. And I think how our lawmakers kind of way those tensions will be fascinating to see. Mhm.
S4: Mhm.
S1: Has anyone ever been held accountable for this fraud. No.
S6: No. We still don't know even how much fraud there really was during the pandemic. Um , the estimates have varied for California alone from about 10 to $30 billion. And part of the reason that issue has sort of just disappeared is because the federal government agreed to just absorb a lot of those losses to kind of move everyone forward. And , you know , there's you can make arguments for or against that. But the thing that I think folks are still concerned about is if we don't even really know what happened , like how badly things went wrong , how can we be prepared the next time around ? Um , and one thing that's happening , sort of in parallel with that conversation is a lot of emphasis on the Eds own technology. And how can we shore up the systems ? So Bank of America , the EDS debit card contractor at the time , has said , we're totally getting out of this business. It's too messy. We don't make money on it at the end of the day. So Bank of America left and the state hired Money Network instead. Um , there's also major contracts out now with companies like Salesforce and Amazon to redo ed websites and phone systems that we heard about a lot. Um , and there's going to be the biggest part of this major $1 billion effort to rebuild. The Ed called Ed Next will actually be coming up this year in 2025. They've got a rebuild the claim system that workers rely on to try to help people when they call in and need assistance with their account. And it will be intriguing to see who who wins that contract , how they work through that , because that's really kind of the backbone of these systems that a lot of people , you know , don't see day to day. But when you turn to them , it's in a moment when you , you know , really need support and reliability. Yeah.
S4: Yeah.
S1: Well , I look forward to your continued coverage on this issue. I've been speaking with Lauren Hepler and investigative reporter with Calmatters. Lauren.
S4: Thank you , thank you.
S1: That's our show for today. I'm your host , Jade Hindman. Thanks for tuning in to Midday Edition. Be sure to have a great day on purpose , everyone.
