Unemployment fraud reaches $20 billion
California has given away at least $20 billion to criminals in the form of fraudulent unemployment benefits, state officials said Monday, confirming a number smaller than originally feared but one that still accounts for more than 11% of all benefits paid since the start of the pandemic.
State officials blamed nearly all of that fraud on a hastily approved expansion of unemployment benefits by Congress that let people who were self-employed get weekly checks from the government with few safeguards to stop people from getting benefits who were not eligible to receive them.
“I don’t think people have captured in their mind the enormity of the amount of money that has been issued errantly to undeserving people,” said Assemblyman Tom Lackey, a Republican from Palmdale, who brought along an illustration of 29 dump trucks filled to the brim with $100 bills representing just over half of that money lost to fraud.
The pandemic ushered in widespread fraud at unemployment agencies across the country, with at least $87 billion in fraudulent payments approved by states, according to a June report from the inspector general’s office at the U.S. Department of Labor. In Arizona alone, state officials said scammers pocketed nearly 30% of all its unemployment benefit payments.
In California, the fraud was so widespread that state officials OK’d at least $810 million in benefits in the names of people who were in prison, including dozens of infamous killers on death row. State officials even sent $21,000 in benefits to an address in Roseville under the name and Social Security number of U.S. Sen. Dianne Feinstein, some of the $2 million in total fraudulent payments that were sent to that same address.
Gov. Gavin Newsom’s administration has hired former U.S. Attorney McGregor Scott to help prosecute scammers, with the department saying Monday investigations are ongoing.
Jobless claims decline in state, U.S.
California workers filed fewer initial unemployment claims last week, but filings remain far above typical claims before pandemic-related shutdowns began more than 18 months ago.
Workers statewide filed 65,042 claims for unemployment benefits for the week ending Oct. 23, a decrease of 7,843 from the 72,885 claims filed the previous week, the U.S. Labor Department reported Thursday.
The number of jobless claims posted last week with California’s Employment Development Department was 45% higher than filings in February 2020.
Nationwide, jobless claims dropped by 10,000 to 281,000, the lowest since midMarch 2020. Since topping 900,000 in early January, weekly applications have steadily dropped, moving ever closer to pre-pandemic levels just above 200,000.
The four-week average of claims, which smooths out week-to-week gyrations, fell by nearly 21,000 to 299,250, also a pandemic low.
In all, 2.2 million people were collecting unemployment checks the week of Oct. 16, down from 7.7 million a year earlier.
Recovery slows in late summer
Hampered by rising COVID-19 cases and persistent supply shortages, the U.S. economy slowed sharply to a 2% annual growth rate in the July-September period, the weakest quarterly expansion since the recovery from the pandemic recession began last year.
Thursday’s report from the Commerce Department estimated that the nation’s gross domestic product — its total output of goods and services — declined from robust growth rates of 6.7% in the second quarter and 6.3% in the first quarter, gains that had been fueled by vast infusions of federal rescue aid.
The 2% annual growth last quarter fell below expectations and would have been even weaker if not for an increase in restocking by businesses, which added whatever supplies they could obtain. Such inventory rebuilding added 2.1 percentage points to the quarter’s modest expansion.
By contrast, consumer spending, which fuels about 70% of overall economic activity, slowed to an annual growth rate of just 1.6% after having surged at a 12% rate in the previous quarter.