Government Misstates Unemployment Data, Watchdog Says

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The Department of Labor’s weekly report on unemployment insurance has misreported the actual number of people filing jobless claims during the COVID-19 pandemic, a government watchdog agency said this week, blaming backlogs in processing historic numbers of claims in many states. 

The errors stem from assuming the number of claims is roughly equivalent to the number of people filing claims, the Government Accountability Office (GAO) said in a report released Monday. While the Department of Labor (DOL) has traditionally correlated the two numbers, because of processing backlogs and other inconsistencies in how the states report their data to the department, it hasn’t proven to be an accurate system in the pandemic economy, according to the GAO. The errors are potentially overstating the numbers in some instances and understating them in others, the agency said.

The GAO, which said the DOL has agreed to start including a caveat in its news releases, said the inaccurate accounting makes it harder for policymakers to respond to the challenges posed by the COVID-19 crisis. The watchdog also found that most states are underpaying the benefits afforded by the Pandemic Unemployment Assistance (PUA) program, which extends insurance to self-employed and gig workers who would otherwise be ineligible. Specifically, states have been paying claimants the minimum allowable benefit instead of the amount they are eligible for based on their prior earnings, the GAO said. 

“These shortcomings have real-world implications: less money in the pockets of struggling people and less reliable information for policymakers seeking to make informed decisions about how best to help them,” Democratic Sen. Mark Warner of Virginia said in a statement. “The Department of Labor needs to step up to the plate and better support states."

In one example of inconsistencies in the timing of reporting, the DOL press release for the week ending July 4 reported the number of continued claims in all programs decreased by about 200,000 from the previous week. But according to the GAO, it likely would have reported a significant increase had Arizona reported its PUA claims that week. Arizona didn’t in fact report them because of suspected fraud in the program, the GAO said, citing DOL officials.

Regarding underpayment of PUA, the GAO found that, rather than calculate benefit amounts based on prior earnings, most states have been paying the minimum benefit to make it easier and perhaps faster to distribute the money. Specifically, 27 of 41 states reporting PUA data for September were paying recipients within 25% of the minimum amount they were entitled to. 

States should retroactively pay the difference owed, but Labor Department officials said they didn’t know how many have started recalculating benefit amounts according to individual earnings, GAO said.

Besides recommending that the DOL clarify the potential pitfalls in its accounting, the GAO said DOL officials had “partially agreed” with its recommendation to pursue other ways to accurately report the number of distinct individuals claiming benefits.