About one in five unemployment insurance dollars paid out during the Covid-19 pandemic went to people who didn’t qualify for the benefits, according to a report issued this week by the U.S. Government Accountability Office (GAO).
At the same time it spotlighted the fiscal disaster, the congressional watchdog added the country’s unemployment insurance (UI) system to its list of federal programs at “high risk” for waste, fraud, abuse and mismanagement.
To underscore the severity of the situation, the high-risk label was added outside the agency’s regular biennial schedule for making such designations. “The widespread problems plaguing the unemployment insurance system are extremely troubling,” said GAO head Gene L. Dodaro.
Things were terrible enough in the UI system before the pandemic, with an estimated 9% to 13% of benefit payments considered “improper” between 2016 and 2020—meaning they went to people who didn’t qualify for any benefits, or were overpayments to those who qualify for some benefits.
During the pandemic, however, the improper payment rate more than doubled to 18.9%; the Department of Labor estimates that rate will continue through the 2022 fiscal year.
Far worse—with Congress shoveling money into UI programs to compensate for government-forced business shutdowns, the actual dollar total of the overpayments soared almost ten-fold—from $8.0 billion in fiscal year 2020 to $78.1 billion in 2021.
And those numbers understate just how bad things are—perhaps by a wide margin.