Report: Unemployment statistics during pandemic inflated by backlogs, fraud

The nation’s weekly unemployment statistics have been plagued by backlogs, fraud and inconsistent data reporting state by state, making them a seriously flawed measurement that has likely overstated the amount of individuals claiming unemployment during the pandemic, according to a federal report released Monday.

The Government Accountability Office, the nonpartisan auditing agency that works for Congress, was unsparing about the problems with unemployment statistics, as part of a lengthy report that looked at the country’s response to the coronavirus.

In particular, unemployment numbers have likely been inflated due to issues with backlogs that have plagued many state unemployment systems, it found.

The Labor Department doesn’t actually count each person who is claiming jobless benefits every week. Historically, the agency has used the states’ tally of ongoing continued claims as a stand-in for the number of people receiving unemployment benefits at any given time. And each week of unemployment is counted as a separate continued claim, the GAO noted.

Before the pandemic, this was a fine approximation. But due to the massive level of backlogs, as well as the ability for some workers to file claims retroactively, this has resulted in a significant number of inflated claims during the pandemic, the GAO said.

The claims have also relied on inconsistent reporting of data, state by state, from the Pandemic Unemployment Assistance program, the unemployment compensation Congress created for gig and self-employed workers, which has further complicated week-to-week comparisons of the data.

For example, in a sample of 20 states, the number of continued claims submitted in the PUA program through June 27 was nearly 20 million more than the total number of people who had submitted an initial claim, the GAO found.

Other state-by-state quirks have complicated the process.

In California, due to the way the state’s unemployment system works in two week increments, the number of continued claims may be more than twice the number of actual people submitting claims, the GAO said, citing an analysis by the California Policy Lab.

“To understand the supportive role UI and PUA benefits are playing in the economy during the pandemic, reliable data are needed on both the number of new claimants each week and the number of continuing claimants who are relying on program benefits,” the GAO report said. “Without an accurate accounting of the number of individuals who are relying on these benefits in as close to real time as possible, policymakers may be challenged to respond to the crisis at hand.”

The GAO also found problems with the PUA program that went beyond statistics.

A majority of states were paying PUA claimants the minimum allowable benefit instead of the full amount they were eligible for, meaning that many households fell below the poverty line after the supplemental $600 a week in unemployment insurance expired over the summer.

The GAO also noted that fraud, particularly in the PUA program, may be further inflating some states’ counts.

In a response to the GAO included in the report, the Department of Labor said it planned to clarify its future unemployment releases to note that the number of continual claims does not accurately estimate the number of people claiming benefits.