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
"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 firstname.lastname@example.org and Sarah Chaney
Cambon at email@example.com
(END) Dow Jones Newswires
November 30, 2020 16:11 ET (21:11 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.