Fraud, back­logs dis­rupt job­less ben­e­fit pay­ments

The Trentonian (Trenton, NJ) - - BUSINESS - By Christo­pher Rugaber and Maryclaire Dale

WASH­ING­TON » Many Amer­i­can work­ers ap­ply­ing for un­em­ploy­ment ben­e­fits af­ter be­ing thrown out of a job by the coro­n­avirus face a new com­pli­ca­tion: States’ ef­forts to pre­vent fraud have de­layed or dis­rupted their pay­ments.

Cal­i­for­nia has said it will stop pro­cess­ing new ap­pli­ca­tions for two weeks as it seeks to re­duce back­logs and stop phony claims. Penn­syl­va­nia has found that up to 10,000 in­mates are im­prop­erly col­lect­ing aid.

The big­gest threat is posed by so­phis­ti­cated in­ter­na­tional fraud rings that of­ten use stolen iden­ti­ties to ap­ply for ben­e­fits, fill­ing out the forms with a wealth of ac­cu­rate in­for­ma­tion that en­ables their ap­pli­ca­tions to “sail through the sys­tem,” said Michele Ever­more, an ex­pert on job­less aid at the Na­tional Em­ploy­ment Law Project.

The bo­gus ap­pli­ca­tions have com­bined with large back­logs and mis­counts to make un­em­ploy­ment ben­e­fit data, a key eco­nomic in­di­ca­tor, a less-re­li­able mea­sure of the na­tion’s job mar­ket.

On Thurs­day, the La­bor Depart­ment said the num­ber of peo­ple ap­ply­ing for un­em­ploy­ment rose slightly last week to 870,000, a his­tor­i­cally high fig­ure that shows the out­break is still forc­ing many com­pa­nies to cut jobs, six months into the cri­sis that has killed more than 200,000 peo­ple in the U.S.

The over­all num­ber of peo­ple col­lect­ing job­less aid in the U.S. fell slightly to 12.6 mil­lion. The steady de­cline in re­cent weeks in­di­cates some of the un­em­ployed are get­ting re-hired. Yet it also means oth­ers have ex­hausted their ben­e­fits, which last six months in most states.

About 105,000 peo­ple who have used up their reg­u­lar aid were added to an ex­tended job­less ben­e­fit pro­gram, cre­ated in the eco­nomic re­lief pack­age ap­proved by Congress this spring. That pro­gram is now pay­ing ben­e­fits to 1.6 mil­lion peo­ple.

Ap­pli­ca­tions for job­less aid soared in March af­ter the out­break sud­denly shut down busi­nesses across the U.S., throw­ing tens of mil­lions out of work and trig­ger­ing a deep re­ces­sion. Since then, as states have slowly re­opened their economies, about half the jobs that were ini­tially lost have been re­cov­ered.

Yet job growth has been slow­ing, and un­em­ploy­ment re­mains el­e­vated at 8.4%. Many em­ploy­ers ap­pear re­luc­tant to hire in the face of deep un­cer­tainty about the course of the virus.

Most econ­o­mists say it will be hard for the job mar­ket or the econ­omy to sus­tain a re­cov­ery un­less Congress en­acts another res­cue pack­age. The econ­omy may not fully re­cover un­til a vac­cine be­comes avail­able.

The con­cerns about fraud have fo­cused mainly on a new pro­gram, Pan­demic Un­em­ploy­ment As­sis­tance, which made self-em­ployed peo­ple, gig work­ers and con­trac­tors el­i­gi­ble for job­less aid for the first time.

The pro­gram has been tar­geted for fraud in many states and has also dou­ble-counted ben­e­fi­cia­ries. Last week, Cal­i­for­nia

cut nearly in half the num­ber of peo­ple re­ceiv­ing ben­e­fits un­der PUA, ap­par­ently af­ter purg­ing dou­ble-counts. It now says 3.4 mil­lion peo­ple are col­lect­ing the aid.

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. 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 ben­e­fits are tied up by bu­reau­cratic snags and the sus­pen­sion.

Mal­don­ado ap­plied 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-yearold, and I’mnot re­ally sure how I pay for any­thing in the com­ing weeks.”

Christo­pher Thorn­berg, a founder of Bea­con Eco­nomics, an eco­nomic con­sult­ing firm, said all the new pro­grams have taxed most states’ un­em­ploy­ment agen­cies and made the eco­nomic data less re­li­able.

“It’s kind of the Wild West,” Thorn­berg said. “I have just largely dis­missed this data.”

STEVEN SENNE — THE AS­SO­CI­ATED PRESS

As busi­nesses like this store in Ded­ham, Mass., con­tinue to strug­gle, the num­ber of peo­ple seek­ing U.S. un­em­ploy­ment aid re­mains at his­tor­i­cally high lev­els.

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