The growing concerns about fraudulent applications have focused mainly on a new program, Pandemic Unemployment Assistance. This program made self-employed people, gig workers and contractors eligible for jobless aid for the first time.
But the program has been targeted for fraud in many states and has also double-counted many beneficiaries. Last week, California cut in half the number of people receiving benefits under PUA, likely after purging double-counts. It now says 3.4 million people are receiving the aid, down from 6.4 million the previous week.
And first-time applications for benefits, which generally reflect the pace of layoffs each week, often include leftover claims from previous weeks.
Christopher Thornberg, a founder of Beacon Economics, an economic consulting firm, says all the new programs to provide aid have taxed most states’ unemployment agencies and made the data less reliable.
“It’s kind of the Wild West,” Thornberg said. “I have just largely dismissed this data.”
Sharon Hilliard, director of California’s Employment Development Department, said her agency has stopped accepting applications for aid for two weeks while it adopts reforms recommended by a state task force. The department will try to clear a backlog of nearly 600,000 first-time applications and review about 1 million people who have received benefits but whose cases have come under scrutiny. .
Kimberly Maldonado, a 31-year-old out-of-work music instructor, is among the thousands of Californians whose unemployment aid is tied up by bureaucratic snags and the state’s decision to suspend the processing of new applications.
Maldonado applied for benefits four weeks ago. She said she calls daily to check on the status yet reaches only a recording that says the department is overwhelmed. For her, the wait is growing critical.
“It’s literally the difference between food on my table or not,” says Maldonado, who lives in Placentia. “I’ve got a 2-year-old, and I’m not really sure how I pay for anything in the coming weeks.”
Other state unemployment agencies have been bedeviled by fraud since the pandemic intensified in March. As tens of millions were laid off, applications for aid overwhelmed the agencies, which just weeks earlier had been operating with the lowest unemployment rates in 50 years. A now-expired $600-a-week federal unemployment benefit, on top of regular state benefits, provided an added incentive to apply for aid.
Washington was the first state to be hit as an international fraud ring based in Nigeria managed to steal up to $650 million in benefit payments, although at least half that money has been recovered. Texas, Florida and Oklahoma have also been affected.
In Pennsylvania, investigators are also tackling fraud. On Wednesday, state officials announced that 18 state prison inmates and two girlfriends of inmates on the outside had been charged in what officials described as a scheme to fraudulently obtain jobless benefits for ineligible prisoners.
After cross-checking unemployment applications with state prison rolls, they found 10,000 people on both lists — more than onefifth of the state’s prison population. The 20 people who were charged Wednesday had sought a combined $300,000 in money from the Pandemic Unemployment Assistance program, state Attorney General Josh Shapiro said.