GAO estimates $60B in unemployment fraud during pandemic
GAO report blames both administration and equipment for the failure, says Department of Labor needs antifraud strategy
The U.S. Government Accountability Office, in a report this month, “found evidence of substantial levels of fraud and potential fraud” in the unemployment insurance system program, amounting to an estimated $60 billion during the pandemic. The program is administered by the U.S. Department of Labor.
The GAO says the $60 billion figure was arrived at by “extrapolating the lower bound” of 2021 levels of fraud.
“However, such an extrapolation has inherent limitations and should be interpreted with caution,” GAO report warns.
Among its limits: At the height of the pandemic, unemployment payouts were not made at 2021 levels. For a time in 2020, there was a $600-per-week federal enhancement to the normal state unemployment check, since people were forced home by order of the government.
So the same frequency of fraud as in 2021 would come at a higher financial cost.
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Related reading: Workers Earning Under $50K A Year Could Do Better On Unemployment
The GAO writes that “the UI system has faced long-standing challenges with program integrity, which increased dramatically during the pandemic.”
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Read it for yourself: GAO Report: Unemployment Insurance: DOL Needs to Address Substantial Pandemic UI Fraud and Reduce Persistent Risks
Last June, the GAO cited the unemployment system’s “need for transformation” and categorized it as high-risk. The report casts blame on both the leadership of the unemployment administration and the computer technology of that office.
“Long-standing challenges with UI administration and outdated IT systems have further affected states’ ability to meet the needs of unemployed workers, especially during economic downturns,” the report reads.
While those factors may have had a role in the alleged fraud, “such challenges have also contributed to impaired service, declining access, and disparities in benefit distribution,” the report reads.
The GAO has offered eight recommendations to the U.S. Department of Labor to address fraud in the unemployment insurance program.
Among them: “Designating an entity to manage fraud-risk assessments, and development and implementing an antifraud strategy.”
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.