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Despite Staggering Improper Payments, New Labor Department Report Calls for Reviving Pandemic Unemployment Assistance


September 1, 2023

As America prepares to celebrate Labor Day, it’s timely to wonder what the US Department of Labor (DOL) has been up to. One noteworthy recent action was DOL’s August 21 release of a report on improper payments made by the troubled Pandemic Unemployment Assistance (PUA) program. PUA was a temporary federal program in 2020 and 2021, which California officials recently blamed for “the vast majority of the fraud that occurred during the pandemic.” The new DOL report—mostly ignored by the media—finds PUA had a staggering 35.9 percent improper payment rate, yet offers few details about program misspending. One likely reason for the curious lack of details is that DOL concludes the report by calling for the permanent revival of the PUA program, despite its history of abuse.

Policymakers knew PUA was prone to abuse from almost the moment it was created in March 2020. An April 2020 DOL Inspector General (IG) report found that, under the program on which PUA was modeled, 71 percent of sampled recipients in one state received improper payments. The IG added “the risk of fraud and improper payments is even higher under PUA because claimants can self-certify” their eligibility, a risibly weak standard.

Those warnings were quickly realized as criminal gangs started fraudulently claiming PUA and other unemployment benefit checks in massive numbers. In May 2020, the Secret Service issued an alert about “large-scale fraud” targeting multiple states. Washington officials reported “a Nigerian fraud ring” made off with hundreds of millions of dollars. Maine joined Washington in freezing new applications for benefits to investigate runaway fraud. California suspended new benefit applications in September 2020 after PUA claims there surged by nearly four million in just two weeks, forcing the state to admit fraud was “a big part of the unusual recent rise in PUA claims.” Recent government estimates of PUA and other unemployment benefit improper payments conservatively total almost $200 billion, while outside experts suggest losses could reach $400 billion.

Despite DOL claims that the new report is the result of an “exhaustive study,” it offers just three new findings about PUA improper payments. It finds that PUA’s overpayment rate was 17.0 percent, that 1.5 percent of benefits were underpaid, and finally that 17.4 percent of benefits “could not be determined as valid, overpaid, or underpaid.” The report’s headline finding of an overall improper payment rate of 35.9 percent simply sums those data points.

Given the dearth of new information, it’s unsurprising that most of the report devotes itself to topics other than PUA improper payments. The largest section reviews the administration’s “actions taken” during the pandemic, which only spotlights what is missing. For example, the “actions” include the creation of six separate grant programs providing nearly $900 million in new federal funding, yet the report fails to identify the far larger dollar losses from PUA improper payments. Applying the 35.9 percent improper payment rate against total PUA spending of nearly $132 billion yields over $45 billion in improper payments—without counting additional billions in improper payments from $600-per-week (and later $300-per-week) federal supplements added to PUA checks.     

The report’s glaring omissions don’t end there.

We learn nothing about how many Americans had their identities stolen by criminals improperly claiming PUA benefits. Given the high improper payment rate, it’s clear many millions of claims were either overpaid or didn’t have their eligibility properly determined. 

The report also avoids discussion of how many PUA claimants were improperly paid because they self-certified their eligibility. As the IG noted, allowing claimants to self-certify their eligibility was widely understood as one of PUA’s fundamental flaws.

And the report offers no details on the average duration and amount of improper PUA claims. A September 2020 report reviewing unemployment insurance (UI) and PUA payments in California found that “claimants of regular UI have been almost five times more likely to exit UI in any given week than those receiving PUA benefits.” An individual receiving just the average guaranteed minimum PUA payment could have collected over $34,000 in total benefits during the program’s operation.

Instead of providing important details, the DOL report gushes that PUA “provided critical support to workers and communities during a historic pandemic.” And it closes with a pitch for the administration’s FY 2024 budget proposal, which promotes “future efforts to reform the UI system.” Those reforms include “improving benefit levels and access” and “expanding eligibility to reflect the modern labor force.” Those are code words for permanently reviving the PUA program, which explains why this “improper payment” report sheds so little light on that critical topic.