How California EDD’s bureaucracy made the Bay Area housing crisis that much worse

Then the housekeeper and single mother of teenage twins realized it would be the third time her family had been uprooted in a two-year blur of unemployment red tape and searching for a stable, affordable Bay Area home.

“Here we are again,” Mathis said. “I don’t want to have to go through the eviction process, but I don’t have a choice.”

Mathis was one of hundreds of thousands of California workers ensnared by pandemic unemployment delays at the state Employment Development Department (EDD) and its contractors. At first, she was able to dig herself out of the bureaucratic mess, restart her cleaning business and eke out enough last May for a two-bedroom in the tiny Contra Costa County town of Crockett.

But now, in a state emerging from the pandemic amid intense economic inequality, she — along with many others still dealing with unemployment issues — worry whether efforts to rebuild will be derailed by housing that seems further out of reach than ever.

It’s a cycle that Daniela Urban, executive director of Sacramento’s Center for Workers’ Rights, has seen play out many times. “Housing was the No. 1 thing,” she said, that jobless workers have worried about while contesting COVID-era unemployment claims.

“As the pandemic proceeded, we were dealing with more and more homeless individuals,” Urban said. “The best case scenarios were the folks who moved in with relatives, sometimes out of state or out of country. But it was folks living in cars, living on the street.”

Mathis considered herself lucky to be in the former group.

Fishing for fraud

It wasn’t until about a month after pandemic lockdowns began that federal officials created an emergency program for self-employed workers like Mathis to even apply for unemployment. With her income from housekeeping and other odd jobs vaporized, she said the family had already gotten an eviction notice at their Rodeo home of four years.

She moved into her parents’ Vacaville garage, and her twins split their grandparents’ guest room. The setup was far from ideal, but it became a lifeline during another round of unemployment limbo.

“We were homeless, basically,” Mathis recalled. “But we had a roof over our head.”

In December 2020, Mathis said her payments suddenly stopped for about five months as the state scrambled to crack down on what is now estimated at $20 billion in benefit fraud.

Mathis was one of thousands of people stuck trying to verify her identity with the EDD after an unprecedented 14 million jobless claims flooded the agency in the early months of the pandemic. Panic about fraud left desperate workers to weather account freezes, hours-long customer service waits or negative benefit balances.

While there is no official estimate for how many California unemployment claimants have lost housing as a result payment issues, the casualties included a former San Francisco tech office kitchen staffer who, by late 2020, was sleeping in a friend’s car in West Oakland after his unemployment debit card stopped working and he was forced out of his nearby apartment. Or a Disneyland candymaker left homeless with her son while she fought to recoup more than $12,000 in fraudulent charges on her unemployment debit card.

Enough plaintiffs expressed concern about losing their homes in a class-action lawsuit over unemployment debit card contractor Bank of America’s role in the crisis that a San Francisco federal judge cited the issue in a May 2021 preliminary order.

“The harm being suffered by the class members is irreparable,” U.S. District Judge Vince Chhabria wrote. “Continued denial of these benefits will seriously hinder the ability of many class members to feed their families and keep a roof over their heads.”

At the time of the lawsuit, bank representatives blamed the state’s own unemployment processing for much of the fraud confusion, and said they had hired more staff to help repay claimants who lost funds.

By this time last year, Mathis was hoping to put her unemployment ordeal behind her. She had received a check from the state to cover missed payments and found the quirky old house in Crockett — “the last town before you cross the bridge,” she said, from Contra Costa to Solano County. She went to John Swett High School there, where her 17-year-old twins will next year be seniors.

Many prospective landlords had asked to verify that her monthly income at least three times the rent — often $6,000 or more, far beyond her income — so Mathis was grateful when the owner of a local hardware store offered her a lease with no such requirement.

But everything changed again three weeks ago.

Risky road ahead

Mathis found the typed, one-page notice on the door just before Mother’s Day. Maintaining the property had become “too demanding” while preparing for retirement, landlord Gene Pedrotti explained in the 60-day notice.

In a phone interview, Pedrotti said the pandemic left him with his own challenges as a small business owner working 70- or 80-hour weeks while short staffed. He still owns a nearby mobile home park and emphasized making multiple large contributions to groups working to alleviate the housing crisis, but Pedrotti said he plans to sell the house in Crockett as he and his husband aim to split their time between Washington state and the Bay Area.

“No matter who the tenant would be, I have to face this,” said Pedrotti, who has owned the home for about 25 years. “I can’t do this anymore.”

Though precise numbers are hard to come by, landlord advocates have warned more mom and pop owners are looking to sell in a record-breaking pandemic real estate market and get out of the Bay Area rental business.

The timing couldn’t be worse for workers still trying to recover from job loss, since advocates like Urban fear the state is on the cusp of another wave of financial turmoil linked to unemployment. A March 2021 state audit identified “nearly 1.7 million Californians at risk of needing to repay benefits,” and some workers have already received letters requesting additional documentation or threatening wage garnishment.

The class-action unemployment lawsuit against Bank of America is also ongoing after the bank unsuccessfully attempted to pull out of its EDD debit card contract last year. Since then, the bank has rolled out unemployment cards with more security measures, which EDD Director Rita Saenz said in a statement was one of several reforms to “help many Californians get benefits faster.”

Attorneys for those still navigating the process warn that some workers continue to fall through the cracks.

“There are still people who are being wrongly deprived of benefits, and there are still people whose housing security is being affected by these policies,” said Brian Danitz, a Burlingame-based partner at Cotchett, Pitre McCarthy. “Every week I receive several inquiries.”

As the long tail of California’s unemployment turmoil continues, Mathis is back to spending time between her cleaning shifts scrolling Zillow for new rentals. It seems like there are fewer options in her $2,200-a-month price range.

She’s started a GoFundMe to cover moving costs for the third time in two years — one last chance, Mathis hopes, to contain the fallout from a pandemic that refuses to end.

“My first thought is always my kids,” she said. “I’m always afraid that I’m damaging them for their future.”

Lauren Hepler (she/her) is a San Francisco Chronicle staff writer. Email: Twitter: @LAHepler

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