Official Estimate of Unemployment Misspending Rises to $191 billion—and That Is Still the “Low End”

Yesterday, the House Ways and Means Committee held a hearing provocatively titled “The Greatest Theft of Taxpayer Dollars: Unchecked Unemployment Fraud.” In his testimony at the hearing, the Inspector General of the US Department of Labor, Larry Turner, stated that the new “low end” estimate for unemployment benefit misspending is $191 billion:

Estimating the overall improper payment rate for the pandemic UI programs is critical for the efficient operation of the program….In December 2021, consistent with our recommendation, ETA reported an improper payment rate of 18.71 percent for 2021, which ETA applied to two of the three key pandemic UI programs, PEUC and FPUC. Additionally, in December 2022, ETA reported an improper payment rate of 21.52 percent, which it also applied to PEUC and FPUC. 

We previously reported that, applying the 18.71 percent to an estimated $872.5 billion in federal pandemic UI funding, at least $163 billion in pandemic UI benefits could have been paid improperly, with a significant portion attributable to fraud. We are now able to report updated information, with two primary changes: (1) ETA released its annual improper payment rate estimate for fiscal year (FY) 2022 and (2) ETA has recently provided a total for pandemic UI spending. While that expenditure information is likely to be updated, we are now able to report on actual expenditures rather than on estimated funding.

With those updates, more than $888 billion in total federal and state UI benefits were paid for benefit weeks during the pandemic period. Applying the estimated 21.52 percent improper payment rate to the approximate $888 billion in pandemic UI expenditures, at least $191 billion in pandemic UI payments could have been improper payments, with a significant portion attributable to fraud.

Those are some big numbers, which cover fiscal years 2020, 2021, and 2022. How big are they, exactly?

Below is a summary of the annual federal spending on other major welfare and related programs under the jurisdiction of the Ways and Means Work and Welfare Subcommittee:

Those figures suggest that just the “low end” of misspending on unemployment benefits during the pandemic is almost double the total amount spent annually on other major programs under the committee’s jurisdiction designed to assist low-income children and families. The new $191 billion estimate for misspending is only expected to continue to rise, especially as more is known about misspending under Pandemic Unemployment Assistance (PUA) program, which is widely regarded as the most abused unemployment program.

This latest estimate adds to the serious challenge before lawmakers—both to assist in the recovery of as much as possible that was lost during this episode, and to take needed steps to ensure such massive abuse never recurs.