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Unemployment is still very high in the U.S., but maybe not as high as government data suggests. Here a government official delivers an eviction notice for non payment of rent.
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The number of people out of work and collecting jobless benefits is likely exaggerated, a government watchdog agency said Monday, and millions of unemployed were paid less than they were entitled to receive.
The findings by the Government Accountability Office appear to confirm long-held suspicions by many Wall Street DJIA, -0.90% economists that federal data on unemployment insurance is flawed.
While the weekly jobless claims report showed 20 million-plus Americans were collecting benefits at the end of October, the Labor Department’s more comprehensive monthly employment report indicated that just over 11 million were still unemployed.
The big gap between the two numbers has puzzled economists for months.
Read: The coronavirus is erasing jobs again
The GAO said initial and continuing claims have been plagued by historically high backlogs, double counting, inconsistent state reporting and potential fraud.
California, for example, temporarily stopped accepting new claims in September to try to reduce its huge backlog and implement fraud-prevention measures. The Wall Street Journal, a sister publication of MarketWatch, reported last week that California may have paid out $140 million in benefits to 35,000 fake claims.
The GAO also cited the suspension of 340,000 claims in Michigan in June and the cancelation of 65,000 claims in Maine that were found to be fraudulent.
Dozens of investigations into unemployment fraud have already been conducted or are underway, the GAO said.
An even larger problem is double counting. In some cases people filed multiple claims due to system errors or they applied for back benefits after they found a job and were no longer in the program.
“The number of continued claims is not equivalent to the number of individuals claiming benefits,” the report said.
The GAO did not give an estimate on how many unique individuals are actually receiving benefits, but it suggested the total of continuing claims could be sharply inflated. The agency recommended steps for the Labor Department to take to improve its data collection.
Another big problem, the GAO found, is underpayment to the unemployed who are covered under a temporary federal benefit program known as Pandemic Unemployment Assistance.
The PUA was created last spring to provide help for independent contractors such as writers or Uber UBER, -2.12% drivers who previously had never been eligible for benefits.
In many cases, states paid PUA applicants much smaller benefits than they were entitled to receive as part of an effort to speed up payments. By law the states are supposed to provide the full allotted benefit, so many recipients could get back benefits in the near future.
The GAO said the Labor Department has agreed to make some changes to try to improve the claims data, including an accurate count of how many people are actually receiving benefits. The department also plans to affix a note to its weekly report stating its data is not entirely accurate.
Without more accurate information, the GAO report concluded, it would be hard for lawmakers in Washington to know how many people need help and to craft the appropriate laws.
Extra emergency benefits provided by the federal government, for example, are set to expire in the last week of December unless Congress extends them.
