As I reviewed in recent congressional testimony, the pandemic and government’s response to it unleashed unprecedented demand for unemployment benefits. Major federal benefit expansions included $600-per-week (and later $300-per-week) supplements to regular unemployment benefits and the provision of weekly checks to groups never before eligible for unemployment benefits. Those and other expansions contributed to record benefit payouts, as depicted in the chart below:
As the chart shows, weeks of benefits claimed across all programs — traditional state-funded unemployment insurance (UI), the permanent law federal/state Extended Benefits (EB) program, and federally funded Pandemic Unemployment Assistance and other temporary federal benefit expansions — soared to a record 33 million in June 2020. That’s over two and a half times the pre-pandemic record of 12 million claims set in early 2010 in the wake of the Great Recession.
That record level of claims significantly exceeded the number of unemployed individuals reported by the Department of Labor, which peaked at 23 million in April 2020 and by June 2020 had fallen to 17.6 million. As University of Chicago economist Casey Mulligan has noted, the large gap is attributable to backdated checks, fraud, and payments to individuals who “would not be working even without a pandemic.”
Overall, in the 18 months between when the pandemic struck in March 2020 and temporary federal unemployment programs expired on Labor Day 2021, a total of nearly 1.6 billion weeks of all unemployment benefit checks were paid out. That’s the equivalent of three full months of benefits for every one of the 121 million households in the US.
State and federal unemployment benefits paid during the pandemic totaled around $900 billion, with over $700 billion in federal costs simply added to the deficit. Prior to the pandemic, the US in 2019 spent $27 billion on unemployment benefits, almost exclusively on state UI checks, which are supported by employer payroll taxes.
The Department of Labor Inspector General testified last week that improper payments of unemployment benefits during the pandemic totaled at least $163 billion. Other experts have pegged misspending at as high as $400 billion.
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