The nonpartisan Government Accountability Office (GAO) yesterday released a report titled “COVID-19: Urgent Actions Needed to Better Ensure an Effective Federal Response.” The report includes numerous policy and administrative recommendations, including several specific to the nation’s unemployment insurance (UI) system. As The Wall Street Journal noted, the GAO report finds the US Department of Labor (DOL) has issued “flawed estimates” of the number of individuals receiving unemployment benefits “throughout the pandemic.”  

GAO identified key flaws in how DOL
reports each week on the number of individuals claiming unemployment benefits,
which is an often-cited measure of the labor market’s status:

“Each week, the agency publishes the number of weeks of unemployment benefits claimed by individuals in each state during the period, and reports the total count as the number of people claiming benefits nationwide. … However, because backlogs in processing a historic volume of claims have led to individuals claiming multiple weeks of benefits at a time for previous weeks of unemployment, as well as other data issues, these traditional estimates have not been appropriate in the context of the pandemic.”

GAO’s findings confirm concerns I highlighted earlier this year, especially involving the temporary federal Pandemic Unemployment Assistance (PUA) program. At one time, that program appeared to have millions more “current recipients” than the number of individuals who had ever applied to get onto the program. The report’s review of 20 states similarly showed “the number of continued claims submitted in the PUA program through June 27, 2020, exceeded by almost 20 million the cumulative number of individuals who had submitted an initial claim since the program began.”

According to the GAO report, another issue that has compromised the accuracy of unemployment claims data is fraud: “We also remain concerned about potential fraud throughout the system. States have identified schemes that reportedly could account for tens of thousands of fraudulent claims and potentially millions of dollars in improper payments.”

For an example, one needs to look no further than DOL’s initial claims report issued two weeks ago. As I found then, the apparent national increase in initial claims for state Unemployment Insurance as well as federal PUA benefits was driven entirely by sharply elevated claims in a single state — Louisiana. Without Louisiana’s elevated claims, initial claims for UI and PUA nationwide actually fell in the week ending November 14.

Unsurprisingly, we have since learned that fraud was indeed behind the recent surge in initial claims in Louisiana. In a November 25 press release headlined “fraud causes…spike in unemployment claims,” the Louisiana Workforce Commission (LWC) found that in recent weeks the state

“…witnessed a drastic increase in Unemployment Insurance (UI) claims. Records show more than 32,000 claims were filed, many that are being rigorously reviewed for validity. To date, the LWC has stopped over 160,000 claims (and rising daily) that are potentially fraudulent/identity theft. As per guidance from USDOL, the LWC has amended the claims data until further analysis can be completed on these suspicious claims. Increased fraudulent activity is occurring nationwide, and Louisiana is not an exception.”

Fraud and data reporting issues continue to confound efforts to accurately count the number of people filing applications for and ultimately collecting key unemployment benefits. That has real-world implications that extend well beyond getting an accurate count of benefit recipients. As GAO concluded, “Without an accurate accounting of the number of individuals who are relying on UI and PUA benefits in as close to real-time as possible, policy makers may be challenged to respond to the crisis at hand.”

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