In March of 2020, as the COVID-19 pandemic was garnering the full attention of policymakers across the country and forcing economic shutdowns in the various states, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES) and the Families First Coronavirus Relief Act (FFCRA). These bills included large new expenditures on social welfare programs—including a $600 weekly unemployment boost—added on top of typical state benefits.
This boost—which was a staggering 25 times larger than a similar boost provided during the Great Recession in 2009— provided a strong incentive for unemployment fraud. In fact, as early as June 2020, the Department of Labor Inspector General was warning lawmakers that at least $26 billion of CARES Act-related spending would be wasted, much of it due to fraud. For perspective, this is more than all legitimate unemployment spending in 2019.
Unfortunately, these predictions are coming to fruition: fraudsters reportedly stole $36 billion in unemployment benefits in 2020. The federal unemployment trust fund is billions in the red when accounting for outstanding debt borne by states and authorized loans. States are borrowing (or have been authorized to receive) more than $50 billion from the Treasury to keep their trust funds afloat. Without putting better program integrity measures into place, it will be difficult to close the gap.