Unmasking the Unemployment Crisis: The new pandemic plaguing America

The unemployment system was designed to provide temporary, limited help to unemployed Americans who lost their jobs through no fault of their own as they searched for new work. But over the past year, another kind of beneficiary has taken center stage: fraudsters seeking to bilk taxpayers out of millions of dollars.

The unemployment system has had severe program integrity issues for years, but the COVID-19 pandemic has brought these issues into the limelight. Indeed, taxpayers could be on the hook for as much as $300 billion in improper unemployment payments. Two big reasons why: Congress made fraud more lucrative than ever and then made it easy to cheat.

By creating an unemployment bonus and extensions that let fraudsters collect tens of thousands of dollars in benefits, Congress made fraud pay better than ever before. By forcing states to accept applicants’ word that they are eligible for pandemic-related benefits— no verification required—they made it easy to scam the system. Quite simply, it was more lucrative for individuals to skim and scam the unemployment system than it was for them to return to work.