Many American workers applying for unemployment benefits after being thrown out of a job by the coronavirus face a new complication — states’ efforts to prevent fraud have delayed or disrupted their payments.
California has said it will stop processing new applications for two weeks as it seeks to reduce backlogs and stop phony claims.
Pennsylvania has found that up to 10,000 inmates improperly applied for aid.
The biggest threat is posed by sophisticated international fraud rings that often use stolen identities to apply for benefits, filling out the forms with a wealth of accurate information that enables their applications to “sail through the system,” said Michele Evermore, an expert on jobless aid at the National Employment Law Project.
The bogus applications have combined with large backlogs and miscounts to make unemployment benefit data, a key economic indicator, a less-reliable measure of the nation’s job market.
On Thursday, the U.S. Labor Department said the number of people applying for unemployment rose slightly last week to 870,000, an historically high figure that shows the outbreak still is forcing many companies to cut jobs.
The overall number of people collecting jobless aid in the United States fell slightly to 12.6 million.
The steady decline in recent weeks indicates some of the unemployed are getting rehired.
Yet it also means others have exhausted their benefits, which last six months in most states.
About 105,000 people who have used up their regular aid were added to an extended jobless benefit program, created in the economic relief package approved by Congress this spring.
That program now is paying benefits to 1.6 million people.
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Applications for jobless aid soared in March after the outbreak suddenly shut down businesses across the United States, throwing tens of millions out of work and triggering a deep recession.
Since then, as states have reopened their economies, about half the jobs that initially were lost have been recovered.
Yet job growth has been slowing, and unemployment remains elevated at 8.4 percent.
Many employers appear reluctant to hire in the face of deep uncertainty about the course of the virus.
The concerns about fraud have focused mainly on a new program,
Pandemic Unemployment Assistance, which made self-employed people, gig workers and contractors eligible for jobless aid for the first time.
The program has been targeted for fraud in many states and also has double-counted beneficiaries.
California, for example, last week cut nearly in half the number of people receiving benefits under PUA, apparently after purging double-counts. It now says 3.4 million people are collecting the aid.