Stephanie Ferguson Melhorn
Senior Director, Workforce & International Labor Policy, U.S. Chamber of Commerce
Published
October 28, 2020
The past month has been arduous for Coronavirus related negotiations. Numerous proposals have gone back and forth between Congress and the White House, but the goal of getting a bill done has yet to succeed.
One piece of the negotiations has been federal aid to state and local governments to meet various needs, such as COVID tracing and testing, support for schools and childcare, and, the focus of this blog, assistance for states to tackle unemployment insurance (UI) fraud.
In years past, UI fraud, while serious, was relatively low. Specifically, an estimated 3 percent of UI claims in 2019 were fraudulent, according to the Department of Labor. That statistic has spiked significantly this year, as UI fraud has become particularly intriguing for two reasons. First, PUA—UI for individuals who regularly do not qualify for regular benefits—has fewer thresholds to prove income and identity verification. Second, the weekly $600 top-up that was available from March to July 31 meant hefty deposits for claimants. This was especially true for claims that included weeks of retroactive payments, often totaling deposits north of $15,000. Since the spike in unemployment in March, Colorado has identified 48,000 fraudulent claims, Maryland, 47,000, and 86,000 in Washington. New York was able to stop 42,000 claims from being processed. In July, Ohio flagged 270,000 potentially fraudulent claims along with Arizona which had flagged a wopping 1 million potentially fraudulent PUA claims by August. These numbers alone account for roughly $2 billion in fraudulent claims. It is important to note that some states have been able to stop fraudulent payments and recover some funds. As made clear by months of failed negotiations, every dollar counts.
Congress must act in three ways to attack UI fraud: stricter income and identity verification parameters for PUA claims, grants for states to hire fraud detection vendors, and funding for states to invest in IT infrastructure that is less susceptible to professional hackers and identity thieves. When negotiations finally succeed, everything you need to know will be posted here.
About the authors
Stephanie Ferguson Melhorn
Stephanie Ferguson Melhorn is the Senior Director of Workforce & International Labor Policy. Her work on the labor shortage has been cited in the Wall Street Journal, Washington Post, and Associated Press.
