Unclaimed Jobless Benefits Far Exceed Fraudulent Claims, Study Says

Taxpayer-funded jobless benefits that shouldn’t have been paid because of errors or fraudulent claims totaled about $11 billion in 2009, according to a new study published by the Federal Reserve Bank of St. Louis.

But the total amount of unclaimed benefits was nearly 10 times larger, economists estimate: $108 billion. They estimate that during the 2007-2009 recession, only about half of those eligible for them were collecting the benefits.

The Wall Street Journal‘s Real Time Economics blog writes that:

“There are a variety of reasons why people might not claim their benefits, including anxiety over state investigations into how they lost their jobs or changes in the application process that pose hurdles, said Claire McKenna, a policy analyst at the National Employment Law Project. Florida, for example, now requires the unemployed to apply for benefits online and complete a 45-question “individual skills review,” which can intimidate some people, she said.”

The study’s authors note that “overpayments in the U.S. unemployment insurance system have received increasing attention of late. For example, CNN.com cited a recent study by the Department of Labor in reporting that 11 percent of all unemployment benefits were overpaid.” But, they add, “not everyone who is eligible for unemployment benefits actually collects them. Over the longer horizon, these unclaimed benefits are much larger than the overpayments that have received recent attention.”