New FGA Paper Shows Skyrocketing Unemployment Fraud Was a Side Effect of the Weekly Unemployment Bonus

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Naples, FL — This week, the Foundation for Government Accountability (FGA) published a research paper to show how unemployment fraud investigations and claims skyrocketed during the pandemic. 

In March 2020, Congress increased unemployment benefits and extended collection duration in an attempt to assist those laid off due to the COVID-19 pandemic. The U.S. Department of Labor’s Inspector General estimates that $89 billion of federal pandemic-related unemployment benefits were improperly distributed. Private-sector experts project unemployment fraud could total more than $300 billion. Findings also showed that unemployment overpayments states were able to identify grew eightfold from 2020 to 2021.

States such as Arkansas, Idaho, Iowa, Kansas, New Mexico, and Pennsylvania saw massive fraud investigation increases—ranging from 354 percent on the low end to 3,129 percent on the high end. 

“States saw a record number of unemployment fraud investigations after Congress loosened proof of unemployment benefit eligibility requirements,” said Jonathan Bain, Research Fellow at FGA. “By tripling benefits and extending the unemployment benefit collection duration to 86 weeks, Congress all but invited individuals to scam the unemployment system, costing taxpayers billions in improper payments. The American taxpayer deserves better, and states should look to restore the integrity of their unemployment programs.”

Auditors estimate that nearly one in four of all unemployment payments in 2020 were fraudulent. FGA encourages all states to adopt measures that will protect taxpayers, support a functional unemployment system, and ensure benefits are distributed to those who are eligible and truly needy. 

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The Foundation for Government Accountability (FGA) is a non-profit, multi-state think tank that specializes in health care, welfare, work, and election reform. To learn more, visit TheFGA.org.