National unemployment payment scandal tops $100 billion. With a “b”
Earlier this month, the U.S. Government Accountability Office (GAO, f/k/a General Accounting Office) issued a report on the fraud around Covid-related unemployment insurance (UI) payments. It seems like the headline should have been bigger news,
Estimated amount of fraud during pandemic likely between $100 billion and $135 billion
The GAO adds on page 1 of its 73-page report,
This is about 11 percent and 15 percent, respectively, of the total amount of UI benefits paid during the pandemic.
For its part, the U.S. Dept. of Labor (DOL) believes that the actual level of fraud is somewhat lower. But adding together the fraud with bureaucratic error and waste produces an even bigger number. Politico reports,
Still DOL’s inspector general in February estimated that as much as $191 billion had been improperly distributed, through fraud and improper payments.
No matter. The amount of overpayments that the GAO has been able to verify is staggering. The GAO includes in its estimate the regular UI program and the emergency Covid-related program over the period from April 2020 to May 2023.
During that period, GAO has verified overpayments (both fraud and nonfraud) totaling $56 billion, with recoveries by the states and territories of almost $7 billion. GAO reports (p. 33) that states have written off as unrecoverable almost $1 billion ($849 million, to be exact) in nonfraudulent, improper payments and waived recovery of an additional $5.5 billion.
The GAO provides numbers broken down by state and territory for four categories: the regular UI program (both fraud and nonfraud) and the emergency Covid program (both fraud and nonfraud). These tables begin at page 55 of the report.
For the fraud, regular UI category, North Dakota had $1.7 million lost to fraud, $1.1 million recovered, and $6,500 written off. Minnesota had a verified $35 million lost, $13 million recovered, and $7 million written off.
For the fraud, pandemic UI category, North Dakota had $2.6 million lost to fraud with $588,000 recovered. Minnesota had a verified $26 million lost, $3 million recovered and $136,000 written off.
Unexpectedly, the “winner” of this category appears to be the state of Ohio. The buckeye state lost a staggering $1.1 billion to fraud, with only $18 million recovered so far.
In the nonfraud categories, overpayments were higher for all states, with accompanying larger recoveries.
Again, Ohio came out on top. They experienced $5.4 billion in overpayments in the pandemic UI program, with recoveries of only $142 million.
Allegedly, a few of the Ohio fraudsters had inside help. The Statehouse News Bureau reported earlier this month,
A former employee at the Ohio Department of Job and Family Services and an accomplice have been indicted in a scheme to steal nearly $6 million in unemployment pandemic benefits.
Amazingly, Reuters reports that occasional waves of fraudulent UI claims have been large enough (in places such as Ohio and Massachusetts) to skew the national monthly unemployment data.
Your tax dollars at work!