Ken's Project Blog

September 16, 2011

Nineteen Billion in Improper Unemployment Benefits?

Filed under: In The News — Ken @ 7:18 am

Over at the Wall Street Journal they have a sensationalist piece describing almost $19 Billion in improper Unemployment Insurance Benefits payments made during the last three years ending in June – but once you get past the great interactive graphic from the Department of Labor and read the piece you find out that the issue may not be that bad.

It turns out that the definition of “improper” benefits being paid is a bit broader than you might think – the three main criteria defining an “improper” benefit are:

  1. Recipients continue to claim benefits after returning to work
  2. Employers or their third-party administrators do not submit timely or accurate separation information
  3. Claimants fail to register with the state’s Employment Service (ES) as dictated by state law

The first two criteria are obvious (working while collecting benefits), but the third one is where it gets a bit trickier – for example, if a state requires a benefits recipient to document three job applications each week, but a recipient only applies for two jobs, that meets the definition of an “improper” payment but many states still send out the benefit check.

The federal government (remember Unemployment Benefits are a unique responsibility of both the state and federal governments) will be helping the states to rein in their improper benefit payments. With some states having as much as 43% of all benefit payments classified as “improper” I suspect the “fix” will be to redefine what is considered an “improper” benefit payment, most likely by encouraging the states to remove the some of their more specific requirements to receive unemployment benefits.

Sources:

wsj.com: Billions in Unemployment Benefits Paid in Error

dol.gov: Unemployment Insurance (UI) Improper Payments By State

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