More than $45 billion in jobless benefits were misappropriated in the United States during the pandemic, when those benefits were expanded in the face of mass layoffs, according to a new, rising estimate from the Department of Labor’s watchdog services. Between March 2020 and April 2022, $45.6 billion in unemployment benefits were fraudulently collected, according to a report released Thursday by the Inspector General of the US Department of Labor.
That’s $30 billion more than the previous estimate, released in June. And more than 1,000 people have so far been charged for their involvement in these frauds. These figures “underscore the extent of this problem,” Inspector General Larry Turner said in a statement, citing “historic levels of fraud and other abusive payments.”
20 million jobs destroyed in two months
The Covid-19 pandemic had hit the American economy in March 2020, and, in two months, more than 20 million jobs had been destroyed. The federal government then opened the floodgates of unemployment benefits, increasing the amounts and duration of payment, and broadening the spectrum of beneficiaries.
“In five months, more than 57 million people have registered as unemployed,” said the office of the inspector general. This influx of claims, however, created a loophole for fraudsters, as states responsible for paying unemployment benefits struggled to cope with “the substantial increase in the volume of unemployment insurance claims and to determine that benefits were paid to the right person and in the right amount”, it is specified.
Fraudsters have notably misappropriated these funds by applying for benefits in several states, or by usurping the identities of deceased persons or prisoners. Ministry departments have “not taken sufficient steps to implement” the recommendations made in various warnings, according to the report. Officials at the time acknowledged that some programs could be risky, but stressed the need to disburse aid quickly.
The unemployment services had been, because of the Covid, completely overwhelmed by the unprecedented number of registrations, highlighting a long-standing underinvestment. The images of men and women waiting for hours in their car to be able to register had marked the spirits. As well as the testimonies of those who waited weeks for an answer or a payment, and were unable to pay their rent or meet their daily expenses.