The U.S. government paid out billions in unemployment benefits to people who were actually working, a new report finds, sparking concerns that a big share of the money meant for the jobless isn't going to the workers who are struggling the most.
Unemployment insurance fraud cost the federal government $3.3 billion in 2011, according to a recent report from the St. Louis Federal Reserve. The largest share of fraudulent unemployment benefits went to people who were still working: $2.2 billion or two-thirds of the fraudulent payments, according to the report.
Nearly a half-billion dollars went to workers earning at least $900 a week or $46,800 a year, the report found. That's only slightly less than the U.S. household median income of $49,909 in 2011, according to a study from two Census Bureau researchers from that year. Those earning less than $300 per week received $210 million of the fraudulent benefits, or less than 10 percent.
Though only a small fraction of the $108 billion the federal government paid out in unemployment benefits in 2011 went to people who weren’t eligible, the study’s findings raise concerns that some of the money intended for struggling jobless Americans is going to people who don’t qualify to receive it.
A person must be unemployed through no fault of their own in order to be eligible to collect unemployment benefits. Of those who fit that criteria, not everyone collects the money they’re entitled to. In fact, unclaimed benefits amount to more money on average than fraudulent benefits payments, according to a St. Louis Fed paper from last year.
Still, unemployment benefit fraud has drawn attention in recent years. Nearly 3,200 households making more than $1 million per year received unemployment benefits during the economic downturn, according to Bloomberg, amounting to $80 million paid out by the government. Other ineligible groups notoriously receiving jobless benefits include prisoners and dead people.
(Hat tip: The Wall Street Journal)