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US government miscounting & underpaying unemployment recipients, watchdog warns as Covid-19 benefits expire

US government miscounting & underpaying unemployment recipients, watchdog warns as Covid-19 benefits expire
The US Department of Labor is underpaying unemployment recipients and both over- and undercounting benefit recipients as they prepare to phase out Covid-19 aid programs, the General Accountability Office has claimed.

Americans receiving expanded unemployment benefits under March’s CARES Act Covid-19 bailout are being systematically underpaid, the GAO alleged in its report published on Monday. While benefits are supposed to be calculated based on how much an individual made at their most recent job, many claimants – especially those who wouldn’t qualify for unemployment benefits under pre-pandemic circumstances – have received only the bare minimum in their weekly checks.

The report highlighted the urgency of passing a second stimulus bill, noting that the expanded unemployment payments are set to expire at the end of December, leaving millions of Americans dangling from a financial cliff. Many US states have no intention of returning to pre-coronavirus “normal” any time soon, meaning those who were laid off or furloughed due to the economic shutdowns are still unable to resume work.

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The Department of Labor also stands accused of both undercounting and overcounting the unemployed. The GAO pointed out that backlogs in evaluating individual cases have led to artificially low unemployment numbers being reported, while repeat claims by the same person are incorrectly recorded as multiple newly unemployed individuals. While acknowledging that the bureau’s data collection methods haven’t changed, the report points to “the atypical unemployment environment during the pandemic” throwing standard methods out of whack.

A recommendation to include a disclaimer in the Department of Labor’s weekly reports acknowledging that “in the current unemployment environment, the numbers it reports for weeks of unemployment claimed do not accurately estimate the number of unique individuals claiming benefits” was reportedly agreed to by the department. It also “partially agreed” to use state-level data in its calculations to increase accuracy.

While the unemployment extension that doled out $600 in benefits per week to qualified individuals expired in July, Trump cushioned the cutoff with an executive order allotting $300 per week while Congress negotiated a new aid package. However, talks over a second stimulus remain deadlocked, with both parties refusing to budge as their constituents go hungry.  

A study released earlier this month found 12 million people will lose their unemployment benefits at the end of December if the unemployment provisions in the CARES Act go unrenewed. A national moratorium on evictions imposed by the Centers for Disease Control is also due to run out at the end of the year, potentially spelling catastrophe for the millions of Americans who haven’t been able to keep up with rent and other expenses as sweeping economic shutdowns keep entire industries on ice. 

The official US unemployment rate was 6.9 percent as of October – 11.1 million Americans – a figure that does not include the underemployed (anyone working more than an hour a week), those who have given up looking for work, or those who have never held a job. A more accurate measure known as the real unemployment rate stood at 12.1 percent that same month. The labor force participation rate sits at 61.7 percent, excluding individuals who haven’t looked for a job in the last month. By June, some 43 million Americans had filed for unemployment since the start of the pandemic, a number not seen since the Great Depression.

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