How Pervassive is Unemployment Fraud?

 

The Bureau of Labor Statistics reported that the Unemployment Rate in the United States decreased to 7.60 percent in March of 2013 from 7.70 percent in February of 2013.

An article written by David L. Fuller, B. Ravikumar and Yuzhe Zhang entitled: Who is Concealing Earnings and Still Collecting Unemployment Benefits? highlights the extent to which fraud is plaguing the unemployment insurance program in the United States.

Unemployment benefits are offered to workers who lose their job through no fault of their own.  Total unemployment benefits paid in 2011 were $108 billion.  Unfortunately, nearly $3.3 billion was spent on overpayments due to fraud (Source: Fraud data are taken from the Benefit Accuracy Measurement (BAM) program run by the U.S. Department of Labor.).

So what exactly is unemployment insurance fraud?  The most common occurrence is when an ineligible individual collects benefits after intentionally misreporting their eligibility.  An extreme example would be an individual who is incarcerated and continues to receive unemployment benefits while in prison.

Concealed Earnings Fraud continues to be the most prevalent form of unemployment insurance fraud. This fraud occurs when individuals collect unemployment benefits while they are employed and are earning wages. The overpayments due to concealed earnings
accounted for almost $2.2 billion in 2011, two-thirds of the total overpayments due to
all categories of fraud.

The following are some highlights from the 2011 Unemployment Insurance Data:

  • There were 3.7 million unemployed individuals who were collecting benefits
  • Those collecting benefits comprised only twenty-seven percent (27%) of all persons who were unemployed
  • Among those collecting unemployment benefits, 88,000 committed concealed earnings fraud; their (past) median earnings were $479
  • Among those committing concealed earnings fraud, 18,000 (roughly 20 percent)
    earned less than $300 per week, and 12,000 (14 percent) earned more than $900 per week
  • nearly half a billion dollars of the overpayment went to those earning more
    than $900 per week and only $210 million of the overpayment was accounted for by
    the individuals whose weekly earnings were less than $300.

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