By Paul Kiernan And Sarah Chaney Cambon 

WASHINGTON -- The nation's system for providing unemployment benefits to jobless workers has consistently produced inaccurate data and lower-than-appropriate payouts to some workers amid the Covid-19 pandemic, a government watchdog said Monday.

The Labor Department's weekly reports on jobless claims have published "flawed estimates of the number of individuals receiving benefits each week throughout the pandemic," the Government Accountability Office said in a periodic report, warning that the inaccuracies could hinder policy makers' ability to effectively respond to the economic fallout.

In addition, a program created by Congress to provide jobless benefits to workers who are normally not eligible for them has underpaid recipients in most states. As a result, the average weekly payout under what is called the Pandemic Unemployment Assistance program, which is available to gig-economy workers and the self-employed, is below the poverty line in 70% of states that reported data.

"The majority of states have been paying PUA claimants the minimum allowable benefit instead of the amount they are eligible for based on prior earnings," the GAO said. While states are obligated to pay out the full amount that is owed "with the greatest promptness that is administratively feasible," Labor Department officials told the GAO they didn't know how many states had begun working to do so.

The Labor Department didn't respond to requests for comment.

The GAO report said much of the inaccurate data in the department's weekly jobless-claims reports -- which have included both overestimates and underestimates at various times -- stemmed from inconsistent reporting from states, many of which have been overwhelmed by processing backlogs of claims.

Thomas Costa, acting director of the GAO's education, workforce and income-security team, said the office didn't have exact estimates of the magnitude of the inaccuracies in Labor Department data or for the total number of PUA claimants who have been underpaid. He said the latter figure is likely in the millions.

Nathan Courtney, a 30-year-old Army veteran in Mobile, Ala., who lost his construction job amid lockdowns in the spring, said his unemployment checks were recently cut to $113 a week, the state's minimum payout, from $275, the maximum. The change occurred after he was transferred to PUA.

"It ain't a good situation," said Mr. Courtney, who said he had gone from the cusp of a home purchase to living in a camper on a rented plot with his wife and toddler. "My account is overdrawn $519, rent is over a month late, the pantry is quickly dwindling down to next to nothing, [and] my credit I worked so hard to repair is now in a worse state than it's ever been."

A spokeswoman for Alabama's Department of Labor declined to comment on Mr. Courtney's case but offered to reach out to him. She said that because PUA is a new program, beneficiaries must resubmit documentation of their wages in order to receive more than the minimum payout. The agency's IT department is working on a system to eliminate that step, she said.

The GAO report comes as two key coronavirus-relief programs -- the PUA and an extended availability of regular unemployment-insurance to 39 weeks from the usual 26 -- are set to expire at the end of December. Negotiations between Democrats, Republicans and the White House over another round of coronavirus relief have been stalled for months.

Ever since lockdowns to contain Covid-19 caused economic activity to collapse in March, the Labor Department's weekly jobless-claims numbers have been one of the most important economic data points tracked by policy makers and investors. Figures are reported with a one-week delay, providing a nearly real-time picture of changes in the labor market.

But the Labor Department report for the entire U.S. relies on incoming data from state unemployment offices, which were swamped with applications for benefits in the early months of the pandemic. As a result, claims were initially underreported as state offices struggled with a huge backlog of applications.

Because the department uses the total count of weeks claimed as a proxy for the number of people claiming benefits, a laid-off worker who had to wait a month to file her claim could have been counted as four people once the application went through. In such cases, jobless claims have also been overestimated at times.

In California, for instance, the state unemployment office reported a backlog of nearly 600,000 individuals who had applied for benefits as of Sept. 16 whose claims hadn't been processed for more than 21 days.

Nevertheless, Mr. Costa said it's possible that the cumulative number of jobless claims reported by the Labor Department during the pandemic continue to understate the legions of unemployed.

Not all states provided PUA data at the onset of the crisis, and many states have reported it inconsistently. For example, Arizona reported no PUA data in the week ending July 4, 2020, after reporting 2.3 million claims in the previous week. As a result, the Labor Department reported -- likely inaccurately -- that the number of claims in all programs during the week ending July 4 fell by about 200,000, the GAO said.

Initial unemployment claims have come down sharply from a pandemic high of near 7 million in March. But they still remain above levels seen in any previous recession on record.

About 9.1 million people were collecting benefits through the pandemic unemployment assistance program, on an unadjusted basis, in the week ended Nov. 7. That exceeded the number of individuals collecting unemployment benefits through regular state programs, which cover most workers. In the week ended Nov. 14, about 6.1 million were claiming benefits through regular state programs, on a seasonally adjusted basis.

Unemployment fraud, which appears to be particularly prevalent in the PUA system, has also skewed claims counts, the GAO said. In some instances, fraud has inflated claims counts and in other cases, it has had the opposite effect. For example, Maine's Labor Department canceled nearly 24,000 initial jobless claims and 41,000 continuing claims it deemed fraudulent between the end of May and the end of June.

Some economists and policy experts have previously noted that state reporting and accounting errors caused the Labor Department to overstate the number of people filing for PUA. In September, a Labor Department spokesman said the agency was monitoring PUA claims to identify potential anomalies and was working with states where claims appeared to be overstated.

But the department rebuffed the GAO's recommendation to look for ways to report the actual number of individuals claiming unemployment benefits since January 2020, citing potential challenges that could pose for state unemployment offices. The GAO countered that hundreds of billions of dollars have been set aside for unemployment programs and encouraged the Labor Department to correct the data, even if it takes time.

"Without an accurate accounting of the number of individuals who are relying on [unemployment insurance] and PUA benefits in as close to real-time as possible, policy makers may be challenged to respond to the crisis at hand," the GAO said.

States collect information to "pay unique individuals claiming UI benefits," GAO said, meaning they could provide the Labor Department with an accurate weekly count.

Write to Paul Kiernan at and Sarah Chaney Cambon at


(END) Dow Jones Newswires

November 30, 2020 16:11 ET (21:11 GMT)

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