GAO-22-104251: Unemployment Insurance: Pandemic Programs Posed Challenges, and DOL Could Better Address Customer Service and Emergency Planning
Summary
GAO report GAO-22-104251, "Unemployment Insurance: Pandemic Programs Posed Challenges, and DOL Could Better Address Customer Service and Emergency Planning," a report to congressional requesters dated June 2022. It states that the CARES Act created three new, federally funded temporary UI programs and that DOL has reported about $658 billion in compensation paid as of April 30, 2022. Officials in six selected states described shortages of experienced staff and IT challenges, and claimants and advocates reported persistent customer service problems such as long call wait times. GAO finds that DOL could have better assisted states with customer service challenges and lacked a strategic approach to the pandemic, and makes two recommendations to DOL, including that it identify and provide UI customer service best practices.
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“GAO-22-104251: Unemployment Insurance: Pandemic Programs Posed Challenges, and DOL Could Better Address Customer Service and Emergency Planning.”
Original at www.gao.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/gao-22-104251-unemployment-insurance-pandemic-programs-posed-challenge-1262365fe0/
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United States Government Accountability Office
Report to Congressional Requesters
UNEMPLOYMENT
June 2022
INSURANCE
Pandemic Programs
Posed Challenges,
and DOL Could Better
Address Customer
Service and
Emergency Planning
GAO-22-104251
June 2022
UNEMPLOYMENT INSURANCE
Pandemic Programs Posed Challenges, and DOL
Could Better Address Customer Service and
Highlights of GAO-22-104251, a report to
Emergency Planning
congressional requesters
Why GAO Did This Study What GAO Found
In the wake of the COVID-19 pandemic State officials GAO interviewed in six selected states that varied across
and subsequent shutdowns, the nation characteristics, such as IT modernization, described facing shortages of
experienced historic levels of job loss experienced staff and IT challenges in processing the surge in claims while
and an expansion of the UI system. implementing the CARES Act Unemployment Insurance (UI) programs.
The CARES Act created three new, Challenges in implementing federal guidance and maintaining program integrity
federally funded temporary UI were also cited. Officials in all of the six states reported that they increased
programs that expanded eligibility, staffing. States also added functionality to their IT systems. Despite these efforts
enhanced benefits, and extended to respond to the challenges, claimants in GAO’s discussion groups and
benefit duration. DOL has reported
advocates in the six states reported persistent customer service problems, such
about $658 billion in compensation
as long call wait times.
paid as of April 30, 2022.
The CARES Act includes a provision Unemployment insurance application
for GAO to monitor federal efforts in
response to the COVID-19 pandemic.
This report examines (1) selected
states’ challenges with implementing
the temporary UI programs and efforts
to address those challenges; (2) DOL’s
support and monitoring of the
programs, including efforts to address
improper payments; and (3) the
economic effects of expanding UI
benefits in adverse times.
GAO interviewed DOL officials and met
with officials in six states that were
selected to include a variety of
characteristics, such as their IT
modernization, payment timeliness,
and estimated improper payment rates. The Department of Labor (DOL) took steps to support and monitor states’
GAO held discussion groups with UI implementation of the CARES Act UI programs. However, it could have better
recipients in the selected six states; assisted states with customer service challenges and lacked a strategic approach
analyzed data DOL collects from when responding to the pandemic. DOL is responsible for ensuring customer
states; reviewed relevant federal laws satisfaction in the UI system, and has taken steps to incorporate customer service
and program guidance; and reviewed into its UI modernization efforts, including providing states with technical assistance
economic literature. and funding opportunities. However, it has not identified and provided states with
comprehensive customer service best practices. Without sharing best practices, DOL
What GAO Recommends may miss opportunities to assist states in improving service delivery during periods of
high demand. In addition, while as of March 2022, DOL had not assessed its
GAO is making two recommendations response to the pandemic, as generally recommended by the National Response
to DOL to identify and provide UI Framework, in May 2022, DOL officials said DOL had begun to do so. Until such a
customer service best practices and review is completed, DOL and states may not be well positioned to address future
assess lessons learned from the emergencies.
pandemic. DOL partially agreed with
the first recommendation, and agreed The 30 empirical studies reviewed by GAO showed the effect of the expansion of UI
with the second, and noted plans to programs during adverse times, such as the 2007-2009 recession and the COVID-19
address them. pandemic. The expansions specifically helped to stabilize the economy, prevented
View GAO-22-104251. For more information, detrimental outcomes from worsening, and had a limited effect on workers’ incentives
contact Thomas Costa, 202-512-4769, to return to work. Some of the studies also showed that UI expansion had other
costat@gao.gov
positive benefits such as an improved labor market.
United States Government Accountability Office
Contents
Letter 1
Background 3
Selected States Reported Numerous Challenges in Implementing
CARES Act UI Programs 11
DOL Provided Various Supports to Help States Implement the
CARES Act UI Programs and Prevent Improper Payments, but
Could Have Better Responded to Customer Service Challenges 32
Empirical Studies Show UI Expansion in Adverse Times Created
Economic Stability, While Resulting in Limited Negative Effects
on Workers’ Return to Employment 47
Conclusions 52
Recommendations for Executive Action 53
Agency Comments 53
Appendix I Objectives, Scope, and Methodology 58
Appendix II Characteristics of Discussion Group Participants 63
Appendix III Timeline of Selected Events Related to CARES
Act Unemployment Insurance (UI) Programs,
January 2020-December 2021 66
Appendix IV Detailed Information about Empirical Studies Reviewed 68
Appendix V Studies Included in Literature Review 80
Appendix VI Comments from the Department of Labor 84
Appendix VII GAO Contact and Staff Acknowledgments 89
Page i GAO-22-104251 Unemployment Insurance
Tables
Table 1: Unemployment Insurance (UI) Initial Claims Volume
between March-May 2019 as Compared to March-May
2020 13
Table 2: Department of Labor (DOL) Guidance for the CARES Act
Unemployment Insurance (UI) Programs Issued between
April 2020 and September 2021 33
Table 3: Summary of Interviews and Discussion Groups
Conducted in Site Visit States 58
Table 4: Discussion Group Participant Characteristics: Race and
Ethnicity 63
Table 5: Discussion Group Participant Characteristics: Number of
dependents 63
Table 6: Discussion Group Participant Characteristics: Industry
Sector Before Becoming Unemployed 64
Table 7: Discussion Group Participant Characteristics: Income
before Becoming Unemployed 64
Table 8: Discussion Group Participant Characteristics: Number of
Weeks of CARES Act Unemployment Insurance Program
Benefits Received 65
Figures
Figure 1: Dates of Initial Payments under the CARES Act
Programs in Selected States 19
Figure 2: Percentage of Regular Unemployment Insurance First
Payments to Claimants that Met the 21 Day Timeframe
Compared to DOL’s 87 Percent Standard, Selected
States, January 2020 through August 2021 23
Figure 3: Selected Events Related to CARES Act UI Programs,
January–December 2020 66
Figure 4: Selected Events Related to CARES Act UI Programs,
January–December 2021 67
Page ii GAO-22-104251 Unemployment Insurance
Abbreviations
BAM Benefit Accuracy Measurement System
DOL Department of Labor
DUA Disaster Unemployment Assistance
ETA Employment and Training Administration
FPUC Federal Pandemic Unemployment Compensation
IDH Integrity Data Hub
IP Internet Protocol
NASWA National Association of State Workforce Agencies
OIG Office of Inspector General
OMB Office of Management and Budget
PEUC Pandemic Emergency Unemployment Compensation
PUA Pandemic Unemployment Assistance
UI Unemployment Insurance
UIPL Unemployment Insurance Program Letter
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Page iii GAO-22-104251 Unemployment Insurance
Letter
441 G St. N.W.
Washington, DC 20548
June 7, 2022
Congressional Requesters
Following the emergence of the COVID-19 pandemic in the United States
in early 2020, and related public health measures taken to contain and
mitigate its transmission, the nation experienced historic levels of job loss
and an expansion of the unemployment insurance (UI) system. The
CARES Act, enacted on March 27, 2020, created three new federally
funded temporary UI programs that expanded UI benefit eligibility,
enhanced benefits, and extended benefit duration. 1 The temporary
programs supplemented the existing UI program, known as “regular” UI,
which is a federal-state partnership that provides temporary financial
assistance to eligible workers who become unemployed through no fault
of their own. 2 The federal government funded the administration of and
benefits for the new programs and relied on states to determine
claimants’ eligibility, process claims, and issue benefits to individuals. The
Department of Labor (DOL) has reported about $658 billion in
compensation paid under the CARES Act UI programs as of April 30,
2022. 3
The CARES Act included a provision for GAO to conduct monitoring and
oversight of the use of funds made available to prepare for, respond to,
and recover from the COVID-19 pandemic. 4 This report examines: (1)
challenges selected states reported in implementing the CARES Act UI
programs, and actions they took to address those challenges; (2) how
1Pub. L. No. 116-136, §§ 2102, 2104, 2107, 134 Stat. 281, 313-28.
2In this report, we refer to the UI program—excluding the temporary UI programs created
by the CARES Act and other legislation—as the regular UI program and the benefits paid
under the program as regular UI benefits.
3DOL, Employment and Training Administration, “Families First Coronavirus Response Act
and Coronavirus Aid, Relief, and Economic Security (CARES) Act Funding to States,”
accessed May 3, 2022:
https://oui.doleta.gov/unemploy/docs/cares_act_funding_state.html.
4Pub. L. No. 116-136, § 19010(b), 134 Stat. 579-81. We have regularly issued
government-wide reports on the federal response to COVID-19. For the latest report, see
GAO, COVID-19: Current and Future Federal Preparedness Requires Fixes to Improve
Health Data and Address Improper Payments, GAO-22-105397 (Washington, D.C.: Apr.
27, 2022). Our government-wide reports are available on GAO’s website at
https://www.gao.gov/coronavirus. In addition, several congressional committees and
members requested that we review unemployment insurance programs, which we list in
this report.
Page 1 GAO-22-104251 Unemployment Insurance
DOL supported and monitored states’ implementation of the CARES Act
UI programs, including detection and prevention of improper payments;
and (3) what is known about the economic effects of the expansion of UI
benefits for individuals and the economy during adverse times.
For our first two objectives, we reviewed relevant federal laws,
regulations, and guidance, and interviewed officials from DOL and its
Office of Inspector General (OIG). We also interviewed officials from the
National Association of State Workforce Agencies (NASWA), which
represents state UI agencies. We selected six states (Arizona, Florida,
Massachusetts, Michigan, Minnesota, and Wyoming) to reflect diverse
conditions based on a range of characteristics, including average
unemployment rate; COVID-19 cases per capita; varying stages of UI
agency IT modernization; the reported estimated improper payment rate;
and timeliness of benefit payments in the regular UI program. For all six
states, we interviewed state UI agency officials, and in five of those
states, we interviewed advocates for UI claimants and state attorney
general officials. 5 For Arizona and Florida, we interviewed advocates for
Spanish-speaking UI claimants about those claimants’ experiences in
applying for and receiving benefits. Additionally, we conducted 12 virtual
discussion groups (two in each of the six states) in May and June 2021
with individuals who had received UI benefits in the six selected states to
understand participants’ experiences with applying for and receiving
benefits, and with contacting state UI agencies for customer service
regarding their claims. Discussion group results are not generalizable to
UI recipient experiences in the six states or nationwide; however, the
results provide insights about the experiences of some UI recipients.
Appendix II provides a description of the characteristics of the participants
in our 12 discussion groups. Additionally, we analyzed data on payment
timeliness and claims for selected states. We conducted a reliability
assessment for all of the data elements used in our study and determined
that data were sufficiently reliable for the purposes of this report.
To address our third objective, we conducted a literature review to identify
key government, industry, and academic studies examining the effects of
expanded UI benefits for individuals and the economy during adverse
5We were unable to identify an advocate for UI claimants in Wyoming, and we did not
interview officials of the Minnesota Office of Attorney General. According to officials of
Minnesota’s unemployment insurance agency, the state attorney general plays no role in
prosecuting UI fraud, the Bureau of Criminal Apprehension, within the Department of
Public Safety, can issue arrest warrants when the state unemployment insurance agency
identifies fraud, and prosecutions are conducted by district attorneys at the county level.
Page 2 GAO-22-104251 Unemployment Insurance
times. We searched relevant databases, such as ProQuest, ECONlit,
Scopus, and Dialog to identify scholarly and peer-reviewed research,
working papers, government reports, trade and industry articles, as well
as association and non-profit publications published in the last 20 years.
From our initial search that yielded over 500 articles, we identified 65 for
further in-depth review based on our criteria, such as academic
publication, data analysis, and focus on the United States as the country
of analysis. After the in-depth review, we determined that 30 studies
fulfilled our criteria for inclusion in our literature review. These in-depth
reviews entailed an assessment of each study’s research methodology,
including its data quality, research design, and analytic techniques, as
well as a summary of each study’s major findings and conclusions. We
also assessed the extent to which each study’s data and methods
supported its findings and conclusions. We based our data collection and
assessment on generally accepted social science standards.
Appendix I provides a more detailed discussion of the objectives, scope,
and methodology of our review. Appendix IV provides detailed information
about the studies we reviewed, and appendix V provides the bibliography.
We conducted this performance audit from March 2020 to June 2022 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Background
Federally Funded UI The CARES Act created three new federally funded temporary UI
Programs in Response to programs that expanded UI benefit eligibility and enhanced benefits. 6
COVID-19 These programs were subsequently extended and amended by the
Consolidated Appropriations Act, 2021, as well as the American Rescue
Plan Act of 2021, and expired in September 2021. 7 However, 24 states
6Pub. L. No. 116-136, §§ 2102, 2104, 2107, 134 Stat. 281, 313-28. The CARES Act also
addressed other elements of the unemployment insurance system. For example, the act
also authorized certain flexibilities for states to hire additional staff and to participate in
Short-Time Compensation programs, which allow workers to work reduced hours while
receiving partial pay and partial UI benefits.
7Pub. L. No. 116-260, div. N, tit. II, §§ 201, 203, 206, 134 Stat. 1182, 1950-56; Pub. L. No.
117-2, §§ 9011, 9013, 9016, 135 Stat. 4, 118-20.
Page 3 GAO-22-104251 Unemployment Insurance
ended their participation in at least one of these programs before the
programs expired in September 2021. These temporary UI programs
were:
1. Pandemic Unemployment Assistance (PUA), which was generally
available through September 6, 2021, and authorized UI benefits to
individuals not otherwise eligible for UI benefits, such as the self-
employed and certain gig economy workers, who were unable to work
as a result of specified COVID-19 reasons; 8
2. Federal Pandemic Unemployment Compensation (FPUC), which
generally authorized an additional $600 weekly benefit through July
2020, and generally authorized a $300 weekly benefit for weeks
beginning after December 26, 2020 and ending on or before
September 6, 2021, for individuals eligible for weekly UI benefits
available under the regular UI program and CARES Act UI programs; 9
and
3. Pandemic Emergency Unemployment Compensation (PEUC), which
was generally available through September 6, 2021, and generally
authorized additional weeks of UI benefits for those who had
exhausted their regular UI benefits. 10
In addition, the Consolidated Appropriations Act, 2021 created the Mixed
Earner Unemployment Compensation (MEUC) program, which was
8Pub. L. No. 116-136, § 2102, 134 Stat. at 313, as amended. In order for applicants to
potentially qualify for PUA benefits, states first had to determine that applicants were
ineligible for regular UI benefits. In cases where an individual’s eligibility for regular UI was
questionable, states had to require the individual to file a regular UI claim before applying
for PUA. Historically, self-employed and similarly situated workers have not been eligible
for unemployment insurance, except through a program that provides coverage for such
workers following major disasters. The Disaster Unemployment Assistance program, the
regulations for which generally applied to Pandemic Unemployment Assistance, provides
unemployment benefits and reemployment assistance to individuals who have become
unemployed as a result of a major disaster and who are not eligible for any other
unemployment insurance. 42 U.S.C. § 5177.
9Pub. L. No. 116-136, § 2104, 134 Stat. at 318, as amended.
10Pub. L. No. 116-136, § 2107, 134 Stat. at 323, as amended. In addition to the CARES
Act UI programs, on August 8, 2020, the President signed a memorandum directing the
Department of Homeland Security’s Federal Emergency Management Agency to provide
up to $44 billion in lost wages assistance. Pursuant to the presidential memorandum,
upon receiving a grant, states and territories could provide eligible claimants $300 or $400
per week—which included a $300 federal contribution—in addition to their UI benefits. The
White House, Memorandum on Authorizing the Other Needs Assistance Program for
Major Disaster Declarations Related to Coronavirus Disease 2019 (Washington, D.C.:
Aug. 8, 2020).
Page 4 GAO-22-104251 Unemployment Insurance
extended by the American Rescue Plan Act of 2021 and expired in
September 2021. 11 According to DOL, the MEUC program was intended
to cover regular UI recipients whose benefits did not account for
significant self-employment income and who thus may have received a
lower regular UI benefit than they would have received had they been
eligible for PUA. 12 Appendix III provides a timeline of selected events from
January 2020 to December 2021, including enactment, extension, and
expiration of key programs; issuance of selected DOL guidance
documents; and selected dates related to program integrity activities.
The COVID-19 pandemic was not the first time that temporary, federally
funded UI programs were used to supplement the regular UI program in
response to an emergency. Specifically, during the Great Recession of
2007-2009, temporary, federally funded UI programs included a
supplemental weekly benefit amount as well as a program that extended
benefit duration. The CARES Act UI programs have exceeded the cost of
the temporary programs enacted during the Great Recession, reflecting
the scale of the underlying job loss and economic contraction. 13 In
addition, the PUA program was the first nationwide unemployment
program that included contingent and similarly-situated workers. 14
According to DOL officials, the CARES Act UI programs also represent
11The MEUC program, which was voluntary for states, authorized an additional $100
weekly benefit for certain UI claimants who received at least $5,000 of self-employment
income in the most recent tax year prior to their application for UI benefits. Pub. L. No.
117-2, § 9013(a), 135 Stat. 4, 119; Pub. L. No. 116-260, div. N, tit. II, § 261(a)(1), 134
Stat. 1182, 1961.
12According to DOL, 51 states and territories elected to participate in the MEUC program,
with Idaho and South Dakota opting not to participate, but 23 states terminated their
participation in June or July 2021. The remaining 28 states and territories continued
participating in the MEUC program until it expired in September 2021, including Maryland,
which intended to terminate participation but did not because of litigation at the state level,
according to DOL. As of February 7, 2022, not all participating states and territories had
begun paying MEUC benefits, according to DOL.
13The Congressional Budget Office estimated that the total cost of temporary
unemployment insurance programs enacted during the Great Recession was $520 billion.
Congressional Budget Office, Unemployment Insurance in the Wake of the Recent
Recession (Washington, D.C.: Nov. 2012).
14For more information about implementation of the PUA program, see GAO, Pandemic
Unemployment Assistance: Federal Program Supported Contingent Workers amid Historic
Demand, but DOL Should Examine Racial Disparities in Benefit Receipt, GAO-22-104438
(Washington, D.C.: June 7, 2022).
Page 5 GAO-22-104251 Unemployment Insurance
the first time that the regular UI program has been supplemented to
respond to a pandemic.
UI as a Federal-State The nation’s UI system is a federal-state partnership and regular UI
Partnership benefits are funded primarily through state taxes levied on employers. 15
Under this arrangement, states administer their own programs, according
to certain federal requirements and under the oversight of DOL’s
Employment and Training Administration (ETA) Office of Unemployment
Insurance and ETA’s six regional offices. The UI system provides
temporary, partial compensation for lost earnings to individuals who have
become unemployed through no fault of their own and helps stabilize the
economy during economic downturns.
Federal law and states determine how the UI system is administered.
Federal law sets forth broad provisions that determine the categories of
workers who must be covered by the program, some benefits provisions,
the federal tax base and rate, and certain aspects of program
administration. States have considerable flexibility to set benefit amounts
and their duration, and to establish eligibility requirements and other
program details. States also provide customer service and address
program integrity and improper payments in their UI programs. Regarding
eligibility, generally, each state’s law sets both monetary and
nonmonetary requirements, according to DOL. Monetary eligibility
typically refers to an earnings threshold and employment history that
applicants must meet in order to qualify for benefits. Generally, when
filing a claim, applicants are asked to provide certain information, such as
the dates and addresses of their former employment, and state agencies
corroborate this information through employer contacts. 16 Nonmonetary
eligibility refers to states’ criteria to determine if an individual’s job loss is
through no fault of their own (i.e., for reasons including a lack of suitable
15According to DOL, administration of the regular UI program is financed by a federal tax
on employers.
16According to the U.S. Chamber of Commerce and selected state agencies’ employer
manuals, after an applicant files a claim, employers can be expected to provide
information to the state unemployment insurance agency, such as whether the individual
was working full-time, part-time, or not at all; the nature of the individual’s separation from
work; and whether the individual was receiving any form of compensation, such as a
pension or severance pay. In addition, according to DOL, state law generally requires that
employers report workers’ earnings quarterly to state unemployment insurance agencies,
which uses the information to determine applicants’ monetary eligibility.
Page 6 GAO-22-104251 Unemployment Insurance
work), and that the individual is able to work, available for work, and
actively seeking work.
During the pandemic, states continued to operate the regular UI program
while administering the CARES Act UI programs. Generally, states were
permitted to ease certain nonmonetary requirements to respond to the
spread of COVID-19. 17 For example, states must generally have laws that
require regular UI recipients to be “actively seeking work” as a condition
of eligibility for unemployment compensation for any week. 18 However,
states were permitted to waive work search requirements during the
pandemic. While states were permitted temporary flexibility regarding
work search, DOL determined that states could not waive the requirement
to be able to and available for work. DOL also noted that states had
flexibility to determine what it meant for an individual to be able to work
and be available for work during the pandemic.
DOL Funding for State DOL’s UI State Administration Program funds grants to states to help
Administration of UI them administer UI programs. 19 Generally, DOL has used national
projections of UI agencies’ workload related to the volume of claims, as
well as other factors, to develop the President’s Budget request for the UI
State Administration Program. After funds are appropriated, DOL uses a
formula, and considers state workloads estimates and other information
that states provide to DOL, to allocate funding to states. Since funding is
calculated in part on the basis of claims-related workloads, the federal
funding made available to states is generally sensitive to changes in total
claims, with more funding becoming available when the number of claims
increases and less when they decrease. Due, in part, to reduced
workloads as a result of low unemployment levels, this funding declined
steadily during the decade before the pandemic. From fiscal years 2010
to 2019, funding available for state administration declined from
17Pub. L. No. 116-127, § 4102(b), 134 Stat. 178, 194 (2020).
18States can specify a minimum number of weekly contacts a claimant must have with
potential employers. See GAO, Unemployment Insurance: Actions Needed to Ensure
Consistent Reporting of Overpayments and Claimants’ Compliance with Work Search
Requirements, GAO-18-486 (Washington, D.C.: Aug. 22, 2018). Among other things, in
that report we recommended that DOL provide states with information about its
determination about the permissibility of states’ policies regarding warning claimants of
noncompliance with work search requirements, monitor states’ efforts to discontinue these
policies, and that it clarify information on work search verification requirements. As of May
2022, DOL had not implemented these recommendations.
1942 U.S.C. § 502(a).
Page 7 GAO-22-104251 Unemployment Insurance
approximately $3.2 billion to approximately $2.5 billion, a decline of about
21 percent. 20 In addition to the amount that states receive through the UI
State Administration Program, states may receive additional federal
administrative funding if their claims-related workloads exceed certain
levels. 21
Additionally, depending on the availability of funding, DOL may award
supplemental grants to support various aspects of states’ UI programs,
including IT modernization, as it did in 2017. 22 States may also use
additional state funding to administer their UI programs; however,
according to DOL, not all states do so. The CARES Act and other
legislation included provisions for funding states’ administration of the
temporary UI programs. In addition, according to DOL, the CARES Act
waived federal merit-based hiring requirements, which allowed states to
hire contract staff during the pandemic.
Program Integrity In the UI program, program integrity is a shared responsibility between
the federal and state governments, with DOL providing general support
and technical assistance, and states assuming responsibility for
20After adjusting for inflation, this represents a decline of about 32 percent, using the gross
domestic product price index.
21In September 2021, DOL issued guidance providing information to the states about the
preliminary fiscal year 2022 state UI administration grants that reflected an increase of
$447.7 million over the amount issued in fiscal year 2021. The guidance noted that the
fiscal year 2020 data that was the basis for much of the allocation was volatile, and that to
distribute the funds equitably, DOL ensured that all states received the same percentage
increase over their fiscal year 2021 allocations. The guidance also noted DOL’s
assumption that Congress appropriates the amounts included in the agency’s fiscal year
2022 budget request, and that it would revise the amounts if Congress appropriates a
different amount. See DOL, “Fiscal Year (FY) 2022 Unemployment Insurance (UI) State
Workforce Agency Unemployment Insurance (UI) Resource Planning Targets and
Guidelines,” Unemployment Insurance Program Letter (UIPL) 25-21, Sept. 2, 2021.
22See DOL, “Unemployment Insurance Supplemental Funding Opportunity for State
Consortia to Modernize Tax and Benefit Systems,” UIPL 22-17 (Sept. 8, 2017). According
to DOL, this was the most recent supplemental funding opportunity. In addition, according
to DOL, generally, funding has been available for IT modernization efforts during limited
periods of time, and in such instances, DOL provided the funding to a few consortia of
states. Additionally, the American Recovery and Reinvestment Act of 2009 created
incentives for states to expand benefits, and address systems and policies, and, according
to the National Employment Law Project, from 2009 to 2011, 39 states used $4.5 billion in
this incentive funding for IT improvements. See Pub. L. No. 111-5, §§ 2002, 2003, 123
Stat. 115, 437-43. According to DOL officials, states could use these funds for IT
modernization, for any other state UI administration efforts, or to improve their state UI
trust fund balances.
Page 8 GAO-22-104251 Unemployment Insurance
determining eligibility, ensuring accurate benefit payments, and
preventing improper payments. 23 Federal executive agencies have been
required since 2002 to identify and report estimated improper payments in
their federal programs. 24
An improper payment is defined as any payment that should not have
been made or that was made in an incorrect amount (including
overpayments and underpayments) under statutory, contractual,
administrative, or other legally applicable requirements. It includes, but is
not limited to, any payment to an ineligible recipient. 25 While improper
payments may be the result of errors, some may also be the result of
fraudulent activities. Before the pandemic, according to DOL, reported
improper payments in the regular UI program most commonly occurred
because some recipients failed to comply with the requirement that they
search for work while claiming UI; made claims while working or after
returning to work, and failed to report or misreported their earnings; or
made claims when they were ineligible to receive benefits because of a
23For the regular unemployment insurance program, DOL uses its Benefit Accuracy
Measurement (BAM) system to determine the accuracy of benefit payments and estimate
the amount and rate of improper payments. According to DOL, although temporary UI
programs, like the CARES Act UI programs, have generally not been subject to the BAM
system or improper payment estimation, DOL has extrapolated and applied the improper
payment rates generated by BAM to PEUC and FPUC and included them in the UI
improper payment estimate for fiscal year 2021, and is exploring methods to do so for
PUA.
24See the Improper Payments Information Act of 2002, Pub. L. No. 107-300, 116 Stat.
2350, as amended by the Improper Payments Elimination and Recovery Act of 2010, Pub.
L. No. 111-204, 124 Stat. 2224, and the Improper Payments Elimination and Recovery
Improvement Act of 2012, Pub. L. No. 112-248, 126 Stat. 2390, codified as amended at
31 U.S.C. § 3321 note. The Payment Integrity Information Act of 2019 repealed the prior
improper payment statutes but instead enacted substantially similar provisions in a new
subchapter of the U.S. Code. However, the core structure of executive branch agency
assessment, estimation, analysis, and reporting of improper payments remains consistent
with the prior statutory framework. Pub. L. No. 116-117, 134 Stat. 113. See 31 U.S.C. §§
3351-3352.
25See 31 U.S.C. § 3351(4). When an executive agency’s review is unable to discern
whether a payment was proper as a result of insufficient or lack of documentation, this
payment must also be included in the improper payment estimate. 31 U.S.C. § 3352(c)(2).
Page 9 GAO-22-104251 Unemployment Insurance
disqualifying job separation, such as quitting a job without good cause or
being discharged due to misconduct. 26
According to DOL, many UI improper payments cannot be prevented
because federal law requires states to pay claims in a timely manner and
provide claimants with due process when the state finds an eligibility
issue. 27 Specifically, federal law requires UI payments to be made “when
due.” 28 In addition, according to DOL, federal law prohibits states from
suspending payments for claimants who have previously been found
eligible for benefits until an official determination has been made that
payments are no longer due. 29 Because states are legally required to
make payments when due, states may later deem some payments as
improper after they obtain new, previously unavailable information about
the associated claims. Additionally, according to DOL, federal law
requires that when states detect an eligibility issue on a claim, the
claimant has a right to receive notice of the issue and provide the state
information before being denied benefits. 30
States must follow certain program integrity requirements and are
encouraged to take other steps to ensure UI program integrity. For
26DOL has identified fraud as one of four leading causes of improper payments, along with
recipients’ failure to demonstrate compliance with work search requirements, recipients’
continued receipt of benefits after returning to work, and employers’ failure to report
separations in a timely way (see DOL, Agency Financial Report, Fiscal Year 2021,
Washington, D.C.). While overpayments may be caused by unintentional error, fraud
involves obtaining something of value through willful misrepresentation. Whether an act is
fraudulent is determined through the judicial or other adjudicative systems.
27GAO-18-486.
28Federal law requires states to have methods of administration in their UI programs that
are found by DOL to be reasonably calculated to ensure full payment of UI benefits “when
due.” 42 U.S.C. § 503(a)(1). DOL points to a Supreme Court decision stating that this
language was intended to mean “at the earliest stage of unemployment that such
payments [are] administratively feasible after giving both the worker and the employer an
opportunity to be heard.” Cal. Dep’t of Hum. Res. Dev. v. Java, 91 S. Ct. 1347, 1354
(1971).
29According to DOL, the requirement to pay benefits when due, as well as due process
requirements requiring notice and an opportunity for the claimant to be heard, present
significant challenges to addressing improper payment rates. See DOL, Agency Financial
Report, Fiscal Year 2017 (Washington, D.C.: Nov. 15, 2017).
30In addition, if an eligibility issue is detected but not resolved, the state is still required to
pay for a claimed week no later than the week after an eligibility issue is detected,
according to DOL. The time it takes to work through the necessary due process steps can
prevent states from stopping the payment before it must be paid.
Page 10 GAO-22-104251 Unemployment Insurance
example, states must conduct cross-matches with federal agencies’ data,
including the Department of Health and Human Services’ National
Directory of New Hires and the Department of Homeland Security’s
Systematic Alien Verification for Entitlement for verification of immigration
status. 31 DOL strongly encourages states to use other resources,
including those of the Integrity Data Hub (IDH) operated by NASWA. 32
The IDH is a voluntary database where states can submit claims data to
be matched against a state-populated database of fraudulent and
suspicious claims data and identify multi-state claims. 33 The level of
participation in NASWA’s services varies by state. 34
Officials from the six selected states faced numerous and varied
Selected States challenges as UI claims rapidly surged to unprecedented levels during the
Reported Numerous pandemic. Concurrent with the surge in claims, these states faced
challenges implementing CARES Act UI programs that expanded benefits
Challenges in and provided assistance to unemployed workers. And, as states ramped
Implementing CARES up the new UI programs, state and NASWA officials said potentially
fraudulent activity targeting UI benefits increased. According to NASWA
Act UI Programs officials, this increase challenged states to deliver benefits quickly for
legitimate claimants while detecting and addressing potentially fraudulent
claims. 35 The selected states generally acted to address these multiple
challenges simultaneously by significantly increasing staff, increasing IT
capacity, expanding customer service, and strengthening program
integrity. Despite these efforts, NASWA officials noted that recipients
31The DOL Office of Inspector General reported in May 2021 that 20 states did not
perform such required cross-matches. See DOL Office of Inspector General, COVID-19:
States Struggled to Implement CARES Act Unemployment Insurance Programs, 19-21-
004-03-315 (Washington, D.C.: May 28, 2021).
32See DOL, “Program Integrity for the Unemployment Insurance (UI) Program and the UI
Programs Authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act
of 2020—Federal Pandemic Unemployment Compensation (FPUC), Pandemic
Unemployment Assistance (PUA), and Pandemic Emergency Unemployment
Compensation (PEUC) Programs,” UIPL 23-20, May 11, 2020.
33NASWA also provides other UI-related program integrity services, including fraud alerts,
identity verification tools, and biweekly phone calls on a variety of fraud identification
topics. In addition, NASWA identifies suspicious email domains and foreign internet
provider addresses, and offers expertise for consultation with states.
34As of March 2022, DOL officials said that 42 states were sending UI claims for cross-
matching, and 34 states were using the identity verification services.
35DOL officials characterized sophisticated criminal identify fraud as increasing
significantly.
Page 11 GAO-22-104251 Unemployment Insurance
often could not access needed benefits in a timely manner, which
recipients said led to hardships.
Selected States Tried to When the pandemic first emerged in the United States, the selected
Meet Soaring Demand by states were not well positioned to handle the unprecedented surge in
claims volume. Specifically, selected state officials said that their state UI
Addressing Staffing, IT,
offices experienced numerous staffing issues, including staffing shortages
and Customer Service and the need to train new staff, problems using and adding functionality
Challenges for their IT systems, challenges meeting customer demand for help with
claims processes, and issuing payments in a timely manner. 36 NASWA
officials explained that during the years prior to the pandemic, states had
reduced their UI staff, given that the economy was strong and
unemployment rates were historically low. DOL and NASWA officials told
us that states could not have anticipated—and could not have planned
for—such a rapid and large increase in claims volume. At the outset of
the pandemic, the volume of regular UI initial claims—claims filed by an
unemployed individual after separation from an employer—reached an
unprecedented level, which placed an immense strain on state staff
resources. In our six selected states, regular UI initial claims submitted
from March 2020 through May 2020 ranged from 10 times to almost 25
times higher than claims submitted during the same 3-month period in
2019 (see table 1). The strain on staff resources created by the
unprecedented volume of regular UI claims was exacerbated by the
accompanying surge in initial PUA claims. If PUA claims were also
included, the initial claims volumes facing staff in our six selected states
during this initial 3-month period of the pandemic ranged from about 11
times to about 33 times higher than what they faced during the same
period in 2019. 37 However, the corresponding period in 2019 does not
include PUA claims because the program was not in effect at that time.
36System functionality refers to the set of functions or capabilities associated with
hardware and software.
37For more information on states’ implementation of the PUA program and the extent to
which it helped contingent workers, see GAO, Pandemic Unemployment Assistance:
Federal Program Supported Contingent Workers amid Historic Demand, but DOL Should
Examine Racial Disparities in Benefit Receipt, GAO-22-104438 (Washington, D.C.: May
2022).
Page 12 GAO-22-104251 Unemployment Insurance
Table 1: Unemployment Insurance (UI) Initial Claims Volume between March-May 2019 as Compared to March-May 2020
Total number of initial claims, March through May of selected year
Comparison of
regular UI claims
2019 to total
Comparison of Total regular regular UI and PUA
Regular UI Regular UI regular UI claims in PUA claims, UI and PUA claims combined in
State claims, 2019 claims, 2020 2019 and 2020 2020 claims, 2020 2020
Arizona 56,999 634,442 10.1 times higher 204,652 839,094 13.7 times higher
Florida 73,344 1,877,611 24.6 times higher 136,174 2,013,785 26.5 times higher
Massachusetts 60,438 924,561 14.3 times higher 583,303 1,507,864 23.9 times higher
Michigan 73,151 1,555,842 20.3 times higher 937,391 2,493,233 33.1 times higher
Minnesota 39,072 680,516 16.4 times higher 100,880 781,396 19 times higher
Wyoming 3,721 40,699 9.9 times higher 3,600 44,299 10.9 times higher
Source: GAO analysis of Department of Labor’s monthly data for regular UI and the Pandemic Unemployment Assistance (PUA) program. | GAO 22-104251
Notes: The Pandemic Unemployment Assistance (PUA) program was created with the enactment of
the CARES Act in March 2020 and thus there are no 2019 PUA claims. Data are from DOL’s ETA
902P and ETA 5159 data files, which we obtained on January 28, 2022. States may submit adjusted
data to DOL over time. We reviewed data between March 2020 and May of 2020 to reflect claims
submitted during the first three months of the pandemic, and reviewed data for the same time period
in 2019 to compare state staff claims workloads. We observed some additional spikes in the initial
claims counts after May 2020, but those spikes are not reflected in this data. Not all initial claims are
approved and result in benefit payments, but the volume indicates the demand for UI benefits and the
workload states faced at the beginning of the pandemic, as compared to the same timeframe in the
previous year.
Staffing challenges. Selected states reported experiencing challenges
related to staffing shortages, training new staff, adopting social distancing
practices and implementing remote workplaces; however, state officials
said they found ways to mitigate these challenges. Officials in all of our
selected states said that to address staffing shortages—one of their most
urgent needs when claims volume increased—they supplemented their
existing staff using one or more of the following strategies: hiring new
staff, using staff from other agencies, and contracting for staff. They told
us that they lacked sufficient staff overall and particularly staff with
sufficient experience with claims processing, adjudication, and customer
service when UI claims surged. Almost all of our selected states
increased claims processing staff. Some UI agencies expanded their staff
by using staff from other units from within the UI agency or from other
state agencies. 38 For example, the UI agencies in Florida, Massachusetts,
and Michigan used staff internally or from other state agencies to meet
their staffing needs. In Florida, officials said they used staff from the state
38The Massachusetts agency also used staff from the City of Boston.
Page 13 GAO-22-104251 Unemployment Insurance
Department of Revenue to help with claims processing and making
claims determinations, and contracted with vendors for additional staff to
support call center operations. Officials in Minnesota also told us that they
assigned experienced staff to claims and determinations work while
assigning other tasks to new staff and staff from other offices and
agencies. 39
Despite states’ efforts to increase their claims processing staff, in some
cases, state officials said it was still difficult to address the unprecedented
claims volume. For example, while Florida officials told us they increased
their staff by 93 percent, they also said this was not sufficient to handle
the spike in claims they received. According to data Florida reported to
DOL, the state received more than 2 million initial regular UI and PUA
claims from March 2020 to May 2020, compared to the 73,000 initial
regular UI claims they received during the same period in 2019. When
asked how they estimated the number of additional staff they would need,
in four of the six states, officials noted that they considered workload at
some point, and officials in three states noted related challenges. For
example, officials in one state noted that there was not time to forecast
staffing needs at the onset of the pandemic. Additionally, Minnesota
officials said that based on the model DOL uses to allocate funding to
support states’ staffing on an annual basis and given the increased
volume of claims the state was experiencing, the Minnesota UI agency
would have needed about 4,000 total staff—a staff level they
characterized as impractical. 40 Minnesota officials also pointed out that
their need was for experienced staff who could address the complexity of
the CARES Act UI claims. Additionally, Minnesota officials noted that it is
problematic to scale up UI quickly, a program they described as
inherently complex. As a result, states had to take additional steps to try
to manage the workloads facing staff.
As the states increased their staffs in response to the surging claims
volume, state officials said they shortened the length of training,
streamlined training, and adopted other approaches to expedite preparing
new staff to assume their duties. For example, Arizona officials told us
that prior to the pandemic, training claims adjudicators took 6 to 8 weeks,
39States employed similar strategies, such as using staff from other agencies, in response
to the increased claims during the Great Recession. See Coffey Consulting,
Unemployment Insurance (UI) Call Center Study Final Report, January 27, 2017.
40See ET Handbook 410, 6th edition, Resource Justification Model, Department of Labor,
n.d.
Page 14 GAO-22-104251 Unemployment Insurance
including 4 weeks of on-the-job training. During the pandemic, they
developed shorter training modules that could be completed in 5 weeks
and established an internal help line for new state claims adjudicators to
use when they needed help answering a claimant’s question. Also,
Florida officials told us they shifted from face-to-face to virtual training, so
new employees could complete training at their office workstations.
Florida officials also shortened existing training modules and trained a
core group of contractors to provide the same training to their peers,
among other techniques.
The selected states also used other strategies to address staffing needs
to process the high volume of claims, including assigning less
experienced staff to tasks other than claims processing and adjudication,
authorizing overtime, and shifting to a remote work environment, which
also addressed the emerging need for workplace social distancing. For
example, to better allocate tasks based on skills and experience,
Minnesota officials told us they assigned newly-hired staff to answering
calls and responding to simple questions from claimants, freeing
experienced staff to do more complex work. Michigan officials also
reported that they used staff from other agencies to assist with account
lockout issues, which did not require experience with UI, while staff from
other offices, who were former UI staff, helped with claims processing.
Arizona and Florida accommodated the increased workload by also
authorizing overtime, while Wyoming both authorized overtime and
expanded its phone line hours.
The shift to a remote work environment emerged as a necessity to help
states meet new workplace safety requirements, such as social
distancing. State officials noted that the shift to telework presented
multiple challenges, including acquiring the necessary equipment,
providing technology training to staff, and, in some cases, adjusting staff
for supervisory purposes. For example, Massachusetts officials said one
of their biggest challenges was adjusting to the new remote work
environment. Prior to the pandemic, the state agency was piloting remote
work with some groups of employees, but in response to COVID, moved
all staff to telework. However, they told us that some staff needed
additional training to assist with adjusting to the new remote work
environment.
IT challenges. State UI agencies rely extensively on IT systems to carry
out their program functions, including benefit eligibility determinations,
recording claimant filing information, and calculating benefit amounts.
However, at the time of the pandemic, many states relied on antiquated,
Page 15 GAO-22-104251 Unemployment Insurance
or legacy, IT systems that were developed in the 1970s. 41 Those legacy
systems typically ran on outdated software. As a result, states with legacy
IT systems may have faced challenges that were exacerbated by the
pandemic’s high claims volume, which necessitated state actions to
address them. 42
Status of IT Modernization and System Capacity Among the six states, all
but one (Arizona) had modernized their UI systems before the pandemic,
according to NASWA. Of the five modernized systems, three
(Massachusetts, Minnesota, and Wyoming) had cloud-based systems. 43
Massachusetts officials told us that migrating their system to the cloud in
2017 enabled them to handle regular UI claims volumes increases
without system crashes. Arizona officials used their existing mainframe
system, and had the ability to add server capacity automatically to avoid
system interruptions as a result of their experience with high claims
volumes during the Great Recession. Most of the state officials we spoke
with said they regularly monitored system capacity to address emerging
issues. NASWA officials told us that modernization is an ongoing effort as
technology evolves. According to the DOL OIG, states with modernized
UI IT systems implemented CARES Act UI programs faster than states
with systems that were not modernized, launching PEUC on average 15
41GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C: June 25, 2020).
42GAO has previously reported on UI system modernization. Please see for example,
Information Technology: Department of Labor Could Further Facilitate Modernization of
States’ Unemployment Insurance Systems, GAO-12-957 (Washington, D.C.: September
26, 2012). In that report, we provided information about the status of nine states’ IT
modernization efforts at that time and related DOL efforts, such as a $500 million special
distribution made under the American Recovery and Reinvestment Act of 2009 that states
could use for certain administrative purposes. See Pub. L. No. 111-5, § 2003, 123 Stat.
115, 439-43. In 2010, the DOL OIG reported that 25 of 39 states planned to use this
funding for UI IT improvements. See Department of Labor Office of Inspector General,
Recovery Act: More Than $1.3 Billion in Unemployment Insurance Modernization
Incentive Payments Are Unlikely to Be Claimed by States, 18-10-012-03-315, September
30, 2010. In June 2012, DOL subsequently reported that, as of May 2012, 47 percent of
that funding had been expended, and that nine states had not expended any funds. See
Department of Labor, “500 Million Special Distribution Provided under the American
Recovery and Reinvestment Act of 2009 (Recovery Act),” June 1, 2012.
43Cloud computing is a means for enabling on-demand access to shared pools of
configurable computing resources (e.g., networks, servers, storage applications, and
services) that can be rapidly provisioned and released.
Page 16 GAO-22-104251 Unemployment Insurance
days earlier than states with non-modernized systems, and PUA 8 days
earlier. 44
Overall, while some states benefitted from modernizing their systems
prior to the pandemic, other states that had modernization efforts
underway, such as Wyoming, which was fine-tuning its newly modernized
system, postponed those efforts due to the pandemic. 45
State officials described challenges with their systems’ capacity to handle
the high volume of claims. State officials reported that the surge in claims
volume challenged system capacity, and five of the selected six states
reported increasing server capacity. When determining the system
capacity needed, states had to factor in both the expected volume of
initial claims being filed for the first time and the volume of continuing
claims for individuals who remained unemployed.
Functionality: State officials reported that implementing the new CARES
Act UI programs required states to add new functionality to their IT
systems, which was a challenge given the tight timeframes for meeting
claimant needs. Officials in some selected states cited particular
challenges in implementing PUA, with Arizona and Massachusetts
determining that their existing systems could not support it and setting up
a standalone system instead. 46 NASWA officials told us that this was
necessary in some states due to the program’s complexity. 47 Other states
that incorporated PUA requirements into their existing systems also
reported challenges. For example, Florida officials said the speed with
which they had to add functionality for PUA into their system was
challenging, and some states reported that adding functionality to their
systems for PUA was difficult because it was so dissimilar to regular UI
programs. However, four of the selected states noted that they were able
44Department of Labor Office of Inspector General, COVID-19, 19-21-004-03-315.
45According to NASWA, 23 states had modernized their tax or benefit systems or both as
of September 2019, and by May 2022, 31 states had done so.
46For additional information on states’ IT challenges with PUA, see GAO-22-104438.
47Programming for PUA was more complex, according to state and NASWA officials,
because it was the first time contingent and self-employed workers were covered by
unemployment insurance nationwide and the eligibility requirements are substantially
different from those for regular UI. Moreover, the states and the workers themselves
typically lack the same types of documentation that the states use to process regular UI
claims.
Page 17 GAO-22-104251 Unemployment Insurance
to use some existing system functionality, in particular for the
implementation of FPUC and PEUC. 48
Despite facing challenges getting their systems ready for program
implementation, overall, the six states had systems in place to make initial
payments under all three of the CARES Act UI programs by June 15,
2020. 49 Fig. 1 shows the dates that each of our selected six states signed
the agreement to administer the CARES Act UI programs, and the dates
of the first benefit payments under each program. 50
48Specifically, states were able to reuse and modify program code they had previously
used for temporary programs during the 2007-2009 Great Recession. One such program
provided a supplemental weekly benefit, like FPUC, and the other provided additional
weeks of benefits, like PEUC. By contrast, DOL officials noted, since there was no
comparable predecessor program for PUA, states had to develop significant new
functionality to implement PUA within their existing IT systems or create a separate
standalone system for PUA.
49In its analysis of implementation for all states, the DOL OIG found that, from the
enactment of the CARES Act to the first payment of a claim, it took on average 25 days for
states to make first payment on Federal Pandemic Unemployment Compensation claims,
38 days for Pandemic Unemployment Assistance claims, and 50 days for Pandemic
Emergency Unemployment Compensation claims. It described delays of longer than 30
days as unacceptable because they exceeded a typical billing cycle for household
expenses. In its response, DOL noted that, for comparison purposes, a “swift rollout” of a
new government benefit program would be at least 30 months. DOL Office of Inspector
General, 19-21-004-03-315 (Washington, D.C.: May 28, 2021).
50The CARES Act authorized benefit payments for FPUC and PEUC for weeks of
unemployment beginning after the date of states’ agreements with DOL, and authorized
benefit payments for PUA for certain weeks of unemployment before the date of
enactment. Pub. L. No. 116-136, §§ 2102(c)(3), 2104(e), and 2107(g).
Page 18 GAO-22-104251 Unemployment Insurance
Figure 1: Dates of Initial Payments under the CARES Act Programs in Selected States
After the states developed the initial system functionality needed to
implement the CARES Act programs, modifications became necessary to
accommodate changes in law and related guidance. According to DOL,
certain of these changes were in response to state questions that arose
during implementation or to anticipate the CARES Act programs’
expiration, and some state officials identified particular changes as
challenging to implement. For example, Florida officials noted that a
change to DOL guidance added new instructions for the PUA program
that the state had not included in their system when they initially
implemented it, such as an instruction that claimants certify their eligibility
weekly for a COVID-related reason. Additionally, citing a subsequent
change to the same guidance, Minnesota officials noted that, while the
change facilitated the eligibility process for PUA claimants, it also
addressed retroactive claims, which they said became very difficult. 51
Michigan officials also identified a subsequent change to that guidance
that required PUA claimants to provide proof of employment, as
51Department of Labor, Coronavirus Aid, Relief, and Economic Security (CARES) Act of
2020, Pandemic Unemployment Assistance (PUA) Program Additional Questions and
Answers, UIPL 16-20, Change 2 (Washington, D.C. July 21, 2020). GAO did not
independently verify states’ interpretation of guidance issued by the DOL.
Page 19 GAO-22-104251 Unemployment Insurance
mandated by a provision in the Consolidated Appropriations Act, 2021,
necessitating that the agency rework the claims. 52
Finally, states also needed to add system functionality to implement the
extension of the UI programs. For example, Florida officials said they had
to add functionality to prepare for two potential dates for PUA expiration.
At the time of our interview, Florida officials said they were waiting for
DOL guidance to implement some CARES Act program extensions.
Additionally, states faced some uncertainty about the expiration of the
CARES Act UI programs, as it was unclear whether Congress would
extend the programs, as it did in December 2020. Given this uncertainty,
according to a Massachusetts official, the state had to anticipate both
prospects—that the programs could end and that they could be extended.
Other actions: In addition to adding server capacity and new functionality,
officials in the selected states also upgraded their systems to develop or
enhance mobile-friendly applications.
States took other actions to address IT challenges to assist in processing
the surging claims workload, including upgrading phone systems,
automating some functions, and increasing self-service options. 53 For
example, Florida officials said they implemented an interactive voice
response system that allowed claimants to access information without UI
staff assistance. Officials from all six states described self-service options
available to claimants, and officials in four described efforts to encourage
claimants to make use of those options. In one of these states,
Minnesota, officials said that the UI program had a high rate of self-
service before the pandemic, which they estimated at 95 percent. During
the pandemic, they said they encouraged everyone other than non-
English speakers to use the website as much as possible.
52Department of Labor, Continued Assistance to Unemployed Workers Act of 2020—
Pandemic Unemployment Assistance (PUA) Program Updated Operating Instructions and
Reporting Changes, UIPL 16-20, Change 2 (Washington, D.C. January 8, 2021).
53A report conducted for DOL on states’ customer service practices in 2017 found that
many states had self-service options for claimants, and noted that 75 to 80 percent of
initial claims were filed online then. It noted that a common reason why claimants contact
the state UI agency is to check on claim status. By offering claimants various ways to
access information about their claims, state agencies may save staff resources and time.
Coffey Consulting, Unemployment Insurance.
Page 20 GAO-22-104251 Unemployment Insurance
Despite these actions by states, some recipients who participated in our
discussion groups and some advocates told us that claimants faced a
variety of challenges with the public-facing components of state IT
systems, such as websites, interactive voice response system menus,
online chat functions and other features. For example, in our discussion
groups in Arizona, Massachusetts, Michigan, Minnesota, and Wyoming,
some recipients described problems with getting locked out of their online
application account, website crashes, and website navigation. 54
Customer service. State officials said they hired staff and contractors to
help address the significant challenges to providing customer service to
the high number of CARES Act UI claimants, including those applicants
who were seeking UI benefits for the first time, and took other actions
such as expanding their offices’ operating hours. Advocates and
discussion group participants reported negative experiences applying for
assistance, such as long wait times to obtain assistance with questions
about their claims and some said they found limited services for non-
English-speaking claimants.
Officials in the selected states reported long call wait times for individual
claimants. For example, four states (Arizona, Massachusetts, Michigan,
and Minnesota) reported call wait times of up to 1 to 3 hours during the
pandemic, and two other states (Florida and Wyoming) reported
individual wait times up to 8 hours or more. In many cases, some
recipients in our discussion groups said that they had to make multiple
calls over days or weeks to resolve their concerns.
Recipient perspectives on call wait times and multiple call attempts:
Arizona recipient: “And it took forever to get someone on the phone. I finally got
someone, and they were actually able to help me. But it takes hours to be on the phone
with them. And I have two kids, so it’s really hard to be on the phone all day.”
Florida recipient: “I was on the phone for hours. Hours, like 3 hours.”
Massachusetts recipient: “I called every single week for I think, 3 months straight. And
the first time I called I got disconnected because the phones were too busy.”
Michigan recipient: “You would be on the phone staying there 2 hours waiting to talk to
someone, after you’ve done everything that you were supposed to do on the…account.”
Wyoming recipient: “I did try to contact them, like I said in the beginning, but I wasn’t
able to, so I just let it go.”
54We have ongoing work looking at state UI IT system modernization efforts, including
successes and challenges, as well as DOL’s management and oversight of its efforts to
assist agencies with their modernization efforts.
Page 21 GAO-22-104251 Unemployment Insurance
Source: GAO analysis of information from discussion groups with unemployment insurance recipients in Arizona, Florida,
Massachusetts, Michigan, and Wyoming. | GAO-22-104251
Additionally, some discussion group participants and advocates we spoke
with said it was difficult to reach a UI employee who could answer
questions about a specific claim. For example, one discussion group
participant said that a UI employee with whom they spoke seemed to be
reading from a script and could only respond to general questions.
Advocates told us language services for non-English speakers were
limited. For example, according to an advocate in one state, translation
services were available for only 1 day a week. State officials described
specific steps they took to address the needs of non-English speakers.
For example, Michigan and Arizona set up phone lines for those needing
translation services.
Payment timeliness: When asked about challenges with issuing
payments in a timely way, officials in two states noted challenges related
to the increased claims volume and officials in one state noted the need
to mitigate the increased risk of fraud. 55 Figure 2 provides data on first-
payment timeliness for the six selected states from January 2020 through
August 2021. According to DOL officials, states’ payment timeliness data
reflect the challenge of addressing claims backlogs, which continued into
2021.
55See also CARES Act reports, at https://www.gao.gov/coronavirus. DOL’s standard for
first-payment timeliness applies to the regular UI program, not temporary programs like
the CARES Act UI programs. However, the states we spoke to said that it generally
reflected the timeliness of Federal Pandemic Unemployment Compensation payments,
because those benefits were paid simultaneously with the regular benefit.
Page 22 GAO-22-104251 Unemployment Insurance
Figure 2: Percentage of Regular Unemployment Insurance First Payments to Claimants that Met the 21 Day Timeframe by
Selected States Compared to DOL’s 87 Percent Standard, Selected States, January 2020 through August 2021
Note: According to the Department of Labor (DOL), states must pay at least 87 percent of regular UI
claims within 14 or 21 days to reach an acceptable level of performance. We analyzed UI first-
payment timeliness data that states had reported to DOL as of February 10, 2022. One of DOL’s core
performance measures is the percentage of all regular UI first payments made within either 14 or 21
days of the first week of benefits for which claimants are eligible, depending on whether the state
requires that individuals who are otherwise eligible for benefits serve a waiting period—generally one
week—before receiving benefits. We focused on payments made within 21 days because in guidance
released at the start of the pandemic, DOL recommended that states consider temporarily waiving
their waiting week requirements.
Page 23 GAO-22-104251 Unemployment Insurance
Furthermore, some of our discussion group participants said they had
received their first benefit payment within 3 weeks of their application, but
other participants reported payment delays, in some cases as long as 2
or 3 months. 56
Recipient perspective on payment delay and state efforts to address fraud:
Massachusetts recipient: “My challenge is, because of the whole fraud thing, I had to
verify every time. Even now when I log in, I have to do an extra step just to verify it’s me
by phone text— every time I log in, I have to verify who I am. And I wasn’t aware that the
first time when I was laid off and I had applied, that when they terminated me, everything
was going to kick start again and I would have to start the application process all over
again as well when I was sick and I wasn’t able to look for work or anything because of
surgery. They made me restart everything and I had to send proof. And I spent from
November to February without collecting and not to mention the first time that I applied
that my unemployment didn’t kick in until like June, July. So that was pretty hard, like the
process—having to send all the verifications in.”
Source: GAO analysis of information from discussion groups with unemployment insurance recipients in Massachusetts. |
GAO-22-104251
In our discussion groups, participants who experienced delays in payment
described the impact of those delays and the strategies they used to
cope. They told us that impacts covered diverse aspects of their lives,
from finances to health. For example, one discussion group participant
said his car was repossessed and for a time, his electricity was turned off.
Other respondents said they experienced stress due to not receiving their
payments on time. Some participants in all of our discussion groups
56Various factors may have contributed to the delays reported by participants in our
discussion groups. According to DOL, states must pay at least 87 percent of regular UI
claims within 14 or 21 days to reach an acceptable level of performance. The large
increase in claims is one factor associated with delays. For example, a NASWA review
conducted in the aftermath of the Great Recession found a relationship between claims
volumes and payment timeliness, as well as other issues, such as payment accuracy. See
Burt S. Barnow and Rich A. Hobbie, Implementation of the American Recovery and
Reinvestment Act Final Report (Center for Employment Security Education and Research,
National Association of State Workforce Agencies, Oct. 2012). Additionally, in a survey
conducted for DOL about states’ customer service practices during the Great Recession,
many states reported that the sudden increase in claims volume at that time, combined
with the onboarding of new and incompletely trained staff, led to mistakes in claims
processing—mistakes that may have contributed to delays as those mistakes were
resolved. Coffey Consulting, Unemployment Insurance. State efforts to address fraud can
also lead to delays for legitimate claimants; officials in three states told us that they
suspend affected accounts during an investigation, and claimants lack access until their
accounts are restored. Other factors that may contribute to delays may include actions by
claimants and employers. For example, claimants may inadvertently cause delays if they
make mistakes during application. Delays may also occur when employers do not report
to their state agencies in a timely manner.
Page 24 GAO-22-104251 Unemployment Insurance
described the strategies they used to make ends meet while waiting for
their payments. Those strategies included using funds from their
retirement accounts and other savings, relying on family and friends for
loans to meet living expenses, and accepting assistance from community-
based food pantries and other organizations to get help with food and
utilities.
The Six Selected States Across our selected states, state officials described a variety of
Noted Challenges with challenges to implementing DOL guidance, as well as the helpfulness of
DOL guidance during the pandemic. State officials cited challenges such
DOL Guidance But Also
as the frequency of changes during implementation and the clarity of the
Found It Helpful guidance, and in some cases noted that the guidance would have been
more helpful if issued earlier. 57 For example, some state officials told us
that DOL often issued many changes amending its original guidance or
issued additional information, in the form of questions and answers, to
clarify the original guidance. According to DOL officials, this additional
information and changes to guidance may have reflected statutory
changes or responses to states’ questions about issues DOL had not
previously considered. Nevertheless, according to officials in two states,
some of the changes to guidance were confusing and one state noted
that it added to their workload. For example, state officials from one state
said DOL corrected their state’s interpretation of proof of employment, but
later issued guidance allowing the state’s original interpretation. Officials
from another state said DOL’s guidance with states’ questions and
answers seemed incomplete and did not reflect adequate knowledge of
program administration in the states.
Four selected states’ officials characterized DOL’s guidance on the PUA
program, in particular, as contributing to challenges with ensuring
program integrity. For example, officials in one of the selected states said
the initial PUA guidance could have been improved with more information
and examples of eligibility determinations and actions states could take in
response to suspicious claims. Without these examples and information,
states found it challenging to make eligibility determinations and ensure
only eligible claimants received benefits. Officials in Florida told us DOL’s
57Similar to the findings from our six states, DOL OIG also heard from states that said
DOL’s guidance was untimely and unclear. For example, according to DOL OIG, some
state officials said that DOL’s additional guidance reinterpreted matters that states thought
had been finalized and that clearer, earlier, and more detailed guidance might have
rendered a more efficient implementation of the CARES Act UI programs and prevented
overpayments. See Department of Labor Office of Inspector General, COVID-19: States
Struggled to Implement CARES Act Unemployment Insurance Programs, 19-21-004-03-
315 (Washington, D.C.: May 28, 2021).
Page 25 GAO-22-104251 Unemployment Insurance
changes to PUA guidance after states had begun implementation made it
difficult to ensure program compliance. For example, they told us DOL
issued changes to the guidance providing instructions on PUA financial
and reporting requirements after the state had implemented the program
and that having guidance earlier would have been helpful during the
implementation. DOL officials discussed the challenges the agency faced
in getting guidance out to states for the UI programs, noting that there
was an expectation of immediate implementation of the programs after
the CARES Act was enacted for programs that were not easily
implementable.
Despite the areas for improvement voiced by officials in our selected
states, state officials also described the helpful role that DOL guidance
played in state implementation. Officials in all of the selected states said
DOL guidance is the basis for technical program implementation. Across
the states, officials took the opportunity to identify other ways in which the
guidance was helpful during implementation. For example, in one state,
officials said they used it for policy development as well and in in another
state, officials told us that they carefully reviewed the guidance and then
developed checklists that guided their policy and procedures. Additionally,
in two states, officials said they relied on the guidance when adding
functionality to their IT systems to implement the CARES Act programs.
Selected States Officials in our six states said that they collaborated with state and federal
Collaborated with State partners and used various other measures to address challenges in
detecting and preventing improper payments during the pandemic. One of
and Federal Partners and
these challenges involved the need to balance paying legitimate claims
Took Other Actions to quickly with the need to address improper payments. 58 State officials
Address Program Integrity faced difficulties preventing improper payments, in part because the need
Issues to implement CARES Act programs quickly led to some traditional UI
safeguards not being used initially. For example, according to the DOL
OIG, generally, states waived provisions that were in place before the
pandemic that required otherwise eligible individuals to wait—generally,
58An Office of Management and Budget memorandum issued in April 2020 directed
agencies to consider several core principles in order to balance speed and transparency
in the issuance of awards to meet crucial needs. OMB 21, Implementation Guidance for
Supplemental Funding Provided in Response to the Coronavirus Disease 2019,
Memorandum 20-21, Apr. 10, 2020.
Page 26 GAO-22-104251 Unemployment Insurance
for one week—before receiving benefits. 59 Some state officials also
pointed to the challenges of serving the self-employed, such as
documenting eligibility and income. 60 Officials in Wyoming said the
greatest challenge identifying fraudulent claims was the sheer volume of
claims received by the state, a view similarly expressed by officials in
Michigan. However, officials in most of our states also cited the initial lack
of safeguards in the PUA program as a challenge to their program
integrity efforts. 61 Indeed, reported fraud-related overpayments in the
PUA program exceeded those of other UI programs during the first 7
quarters of the pandemic combined. From April 2020 through December
2021, states and territories reported that about $2.9 billion in
overpayments they had identified resulted from fraud across the UI
programs, including about $1.2 billion from PUA, $0.9 billion from FPUC,
$0.6 billion from the regular UI and Extended Benefits programs, and $0.1
billion from PEUC. 62
59The CARES Act provided federal funding for the first week of benefits for states without
a waiting week, providing an incentive for those states with such one-week waiting periods
to remove them. According to the DOL OIG, almost all states had one-week waiting
periods before the pandemic. In its guidance released at the start of the pandemic, DOL
provided guidance to states that reflected the new statutory enactments which
encouraged states to temporarily waive their waiting week requirements. Waiving the
waiting period meant that some states had less time to detect and prevent fraud,
according to NASWA officials.
60For more information, see GAO-22-104438.
61For example, the PUA program’s initial self-certification process did not allow for proper
fraud prevention procedures to take place, according to the DOL OIG. DOL OIG, COVID-
19, 19-21-004-03-315.
62While overpayments may be caused by unintentional error, fraud involves obtaining
something of value through willful misrepresentation. Whether an act is fraudulent is
determined through the judicial or other adjudicative systems. GAO accessed the fraud
overpayments data on March 28, 2022; these data are subject to change as more states
and territories report data and as states and territories revise previously reported data. For
more information, see GAO-22-105397. The total PUA amount shown also includes fraud
overpayments related to identity theft. As of March 28, 2022, 35 states and territories had
reported about $26 million of additional PUA fraud overpayments since December 2021.
The Extended Benefits program comes into effect and pays unemployment benefits when
a state’s unemployment rate is increasing and reaches certain levels. All states must pay
up to 13 weeks of extended benefits if the unemployment rate among those eligible for UI
for a specified 13-week period is at least 5 percent and is 120 percent of the average of
the rates for the same 13-week period in each of the two previous years. States can also
choose to pay an additional 7 weeks of extended benefits if the unemployment rate
among those eligible reaches certain thresholds and is increasing.
Page 27 GAO-22-104251 Unemployment Insurance
Five of our selected states reported working with other state agencies or
federal partners, such as the DOL OIG, to address potentially fraudulent
activity. For example, Michigan officials said they established a working
group that includes its federal partners, the state’s attorney general office,
and state police to investigate and prosecute fraud cases. In Arizona, a
multijurisdictional task force comprised of about 40 federal, state, and
local agencies has facilitated coordination on UI fraud cases among the
agencies, according to state officials. 63 Arizona and Massachusetts
officials said that, among other things, these working groups helped
participants determine which levels of government would be responsible
for pursuing certain kinds of potentially fraudulent claims. For their part,
states’ attorney general officials told us they considered several factors in
pursuing claims, such as geographic scope or a certain dollar threshold,
and in one state, the attorney general was pursuing fraud that targeted
vulnerable groups, including the homeless and persons with limited
English proficiency. State attorney general officials also mentioned
challenges of conducting investigations during the pandemic, such as
interviewing victims and obtaining evidence from external parties, such as
cable and internet providers that could provide information related to
internet addresses used by fraud perpetrators. Additionally, some
selected state officials reported instances of suspected fraud to local law
enforcement, the Secret Service, and the U.S. Postal Inspector.
In our six states, officials reported increased fraudulent activity during the
pandemic, including an increase in cases related to identity fraud,
reflecting organized efforts in some cases. For example, Arizona officials
told us they experienced an initial surge in potential fraud in the PUA
program, followed by a surge in suspected fraud in the regular UI
program in January 2021 after having implemented several fraud
prevention mechanisms in the PUA program. While Wyoming UI and
attorney general officials said they lacked the capacity to investigate fraud
rings, state agency officials told us that they understood federal
investigations were under way based on their conversations with federal
investigative units
63Arizona officials also reported that they worked with a DOL OIG staff person assigned to
them on detail.
Page 28 GAO-22-104251 Unemployment Insurance
Officials in four states told us they used data analytics to flag potential
fraud. 64 These states told us that they used these programs to identify
suspicious patterns in claims. Generally, these programs generate a
numeric score based on the suspicious characteristics of the claims, and
claims with scores over a certain threshold are flagged and payments are
suspended while the state conducts an investigation. Generally, claimants
are given the opportunity to provide additional information, allowing
payments to resume if warranted. Beyond these four states, one state
reported using its own methods to detect unusual patterns, and one state
reported using manual queries for this purpose. These tools were
generally in place prior to the pandemic. For example, Michigan’s data
analytics tool, developed in-house in 2018, was applied during the
pandemic to the CARES Act UI programs, though during the pandemic
not all factors in this tool were running simultaneously, according to state
officials. In Massachusetts, state officials applied a data analytics tool
which they had obtained for the PUA program to the regular UI program,
citing their experience with the results to date. Officials in Florida also
reported using their data analytics program to identify potential fraud in
regular UI claims.
State officials also reported extensive use of tools for identity verification
to address fraud. Five of the six states reported increases in potential
fraud related to identity fraud, and in some cases characterized the
increase as substantial. For example, officials in Arizona said that the
vast majority of cases referred to them for fraud investigation involved
identity theft. Five of the six states reported extensive use of identity
verification processes to combat identity theft during our interviews. In
some cases they reported using commercially available products, data
analytics, NASWA’s identity verification services, or a combination of
these processes. States described using these tools to authenticate a
claimant’s identity at application, as well as to unlock accounts after
determining that a claim was legitimate, among other purposes.
Additionally, four states also reported that they used their websites to
allow claimants and the public at large to report potential fraud, such as
fraud related to failure to report earnings or fraud related to identity theft.
64While predictive data analytics can identify potential fraud before payments are made,
data analytics can also include data mining and data matching techniques that enable
programs to identify potential fraud or improper payments that have already been
awarded, thus assisting programs in recovering these dollars. See GAO, A Framework for
Managing Fraud Risks in Federal Programs, GAO-15-593SP (Washington, D.C.: July
2015).
Page 29 GAO-22-104251 Unemployment Insurance
Massachusetts officials said that those who have had their identity used
to file a UI claim can submit the information online and receive
information on steps they can take to address the fraudulent activity. In
these cases, they said that the state is able to automatically stop the
claim.
As of late 2021, all six states reported using at least some form of identity
verification. Four states mentioned using NASWA’s identity verification
services available through the Integrity Data Hub (IDH). Three states
reported that they were actively using a commercial service for identity
verification, and one state was planning to use that service. States also
noted some internal processes they utilized to verify identities, such as
requiring claimants to use multi-factor authentication or submit “selfie”
photographs. 65
Officials in four states said their use of identity verification methods had
prevented improper or fraudulent payments among other results. For
example, Florida officials estimated they had prevented about $23 billion
in potentially fraudulent CARES Act UI and regular UI payments from
March 2020 through August 2021. 66 Similarly, Arizona officials estimated
potential savings of $40 billion from preventing potentially fraudulent PUA
payments. 67 Some states also cited other results from using these
methods. For example, Florida officials cited a substantial reduction in the
number of fraudulent claimants filing initial claims, and Massachusetts
officials reported a substantial reduction in the backlog of identity
verification issues. In addition, Massachusetts officials noted that before
the adoption of these new methods, identity-based disqualifications were
happening during the fourth or fifth week of the claim—after the claim had
65Across the six states, officials said they used these methods in tandem with other
program integrity tools, such as the National Directory of New Hires and the Interstate
Connection Network, and matches with state databases, such as state driver’s license and
tax data.
66Florida officials said they based their estimate on the number of accounts that had been
suspended due to suspected fraud, the number of benefit weeks available in those
accounts after they were suspended and the maximum amount of benefits that could have
potentially been processed. Florida officials said the estimates are for the period March
2020 through August 2021, the estimate is not annualized, and it does not include
administrative costs that would have been associated with processing the payments if
they had been made.
67Arizona officials said they calculated their estimates using, in part, the decrease of
incoming initial and continuing claims that resulted from the state’s implementation of real-
time identity verification.
Page 30 GAO-22-104251 Unemployment Insurance
already been paid—whereas, with the new methods, the state agency
can immediately prevent payment on the claim.
Four of the five selected states’ officials we interviewed about using
federal funds for program integrity said they had used federal funding for
that purpose. For example, officials from Massachusetts said federal
funding supported hiring and costs for fraud prevention tools, and officials
from Michigan noted that they used the funding to hire additional fraud
investigators, both using a DOL allotment to support states’ program
integrity efforts. Despite these efforts, state officials said it was
challenging to respond to the evolving and aggressive tactics of the
perpetrators of fraud. For example, Michigan officials noted that the
volume of fraud has ebbed and flowed, as fraudsters appeared to target
different states in succession, and Arizona officials also noted that
targeting of different UI programs appeared to shift in tandem with the
state’s adoption of program integrity measures. Massachusetts officials
said they had experienced fraud perpetrators boldly appealing initial
claims denials by submitting falsified documents that state officials
described as really good fake documents that appeared legitimate.
Page 31 GAO-22-104251 Unemployment Insurance
DOL Provided
Various Supports
to Help States
Implement the
CARES Act UI
Programs and
Prevent Improper
Payments, but Could
Have Better
Responded to
Customer Service
Challenges
DOL Supported States’ DOL supported states’ implementation of the CARES Act UI programs by
Implementation of the issuing guidance, conducting ongoing monitoring, and providing technical
assistance and funding. However, states faced numerous customer
CARES Act UI Programs,
service challenges due to high UI claims volumes, and DOL could have
but It Could Have Better better assisted states with these challenges by sharing customer service
Assisted States with best practices.
Customer Service
Challenges Issuing guidance. Between April 2020 and September 2021, DOL
issued 33 guidance documents to assist states in implementing the three
CARES Act UI programs (see table 2). For example, DOL issued the
initial version of Unemployment Insurance Program Letter (UIPL) 16-20
for the PUA program on April 5, 2020, and subsequently issued six
changes to this UIPL, clarifying aspects of program implementation and
providing new guidance as statutory changes were enacted. To assist
states’ implementation of the new UI programs, DOL officials said that
DOL also held webinars and created a COVID-specific electronic mailbox
to field questions from states about the new programs and to offer
guidance. DOL officials noted that implementing and administering the
CARES Act UI programs was dynamic and challenging and that they tried
to meet state needs for guidance as quickly as possible, but that this also
resulted in some documents needing to be clarified later. In addition, as
new legislation was enacted, DOL updated program guidance. For
Page 32 GAO-22-104251 Unemployment Insurance
example, the Consolidated Appropriations Act, 2021 added several new
program integrity features to the CARES Act UI programs. 68
Table 2: Department of Labor (DOL) Guidance for the CARES Act Unemployment Insurance (UI) Programs Issued between
April 2020 and September 2021
Total number of
Date of most recent guidance documents,
DOL guidance Original publishing date change including changes
Related to all CARES Act UI programs (FPUC, PUA, and PEUC)
Unemployment Insurance April 2, 2020 August 12, 2020 2
Program Letter (UIPL) 14-20
UIPL 23-20 May 11, 2020 ─ 1
UIPL 25-20 June 15, 2020 ─ 1
UIPL 9-21 December 30, 2020 ─ 1
UIPL 14-21 March 15, 2021 July 12, 2021 2
UIPL 19-21 May 4, 2021 ─ 1
UIPL 20-21 May 5, 2021 ─ 1
Related to multiple CARES Act UI programs (PUA and PEUC)
UIPL 28-20 August 31, 2020 September 17, 2021 4
Related to FPUC
UIPL 15-20 April 4, 2020 March 26, 2021 5
Related to PUA
UIPL 16-20 April 5, 2020 September 3, 2021 7
Related to PEUC
UIPL 17-20 April 10, 2020 March 26, 2021 4
UIPL 24-20 May 14, 2020 April 7, 2021 3
UIPL 17-21 April 27, 2021 ─ 1
Total 33
Source: GAO analysis of DOL guidance. | GAO-22-104251
Note: This table includes the guidance for the three UI programs established by the CARES Act –
Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment
Compensation (PEUC), and Pandemic Unemployment Assistance (PUA). We also identified UIPL 10-
68For example, the Consolidated Appropriations Act, 2021 generally required PUA
claimants to provide documentation substantiating their prior employment or self-
employment and to recertify with their state each week that they continue to meet the
eligibility requirement of not being able to work as a result of COVID-19. Pub. L. No. 116-
260, div. N, tit. II, §§ 241(a), 263(a), 134 Stat. 1182, 1959-1960, 1963. In addition, it
required states to have procedures for identity verification and for timely payment of PUA
benefits, to the extent reasonable and practicable. Pub. L. No. 116-260, div. N, tit. II, §
242(a), 134 Stat. 1182, 1960.
Page 33 GAO-22-104251 Unemployment Insurance
20 Change 1 as relevant to these three programs. However, we did not find the other two guidance
documents in that series, UIPL 10-20 and UIPL 10-20 Change 2, as relevant to these three UI
programs, and thus, we excluded this UIPL from the table. UIPL 15-20 Change 3 and Change 4,
included in this table, also provided guidance for the MEUC program, in addition to FPUC. We
reviewed guidance until September 2021 when FPUC, PEUC, and PUA expired. DOL may continue
to issue guidance to assist states in collecting overpayments or addressing other issues related to
these programs beyond September 2021.
Ongoing monitoring. DOL conducted ongoing monitoring of states’
implementation of the CARES Act UI programs through its six regional
offices. 69 As of September 2021, DOL officials said that the regional
offices had conducted ongoing monitoring activities in a majority of states
and that monitoring activities will continue in 2022. DOL worked with its
regional offices to develop monitoring tools, which provide guidance and
procedures for the regional offices to review states’ implementation of the
CARES Act UI programs and to assess overall risk in the UI programs. As
part of its ongoing monitoring, DOL’s regional offices were instructed to
review specific aspects of UI, such as policies and procedures for
determining weekly benefit amounts, claims taking and adjudications,
appeals, information on backlogs, and a review of program integrity
efforts.
According to DOL officials, DOL regional office staff use the monitoring
tools to review states’ UI applications and systems and interview state
agency staff on UI processes and procedures, including for the CARES
Act UI programs. DOL officials said that at times, regional staff focus their
review on certain areas of the UI program that appear to involve higher
levels of risk, based on previous risk assessments. DOL regional office
staff may also identify findings that lead them to deepen or lengthen their
review of certain other areas of the UI program. DOL regional offices
were also instructed to review a sample of claims, including ones that
received benefits under the CARES Act UI programs, to determine
whether payments were proper and whether the state had properly
administered the program. For example, when reviewing PUA claims,
regional offices may examine the processes a state used to determine
eligibility for PUA, including whether the state had a process to check if
claimants were eligible for benefits under other UI programs, such as
regular UI, and thus ineligible for PUA. When the review of states’ UI
claims and systems is complete, regional office staff hold a closeout
meeting in which they share findings with the state agency. Regional
69According to DOL, staff in these six regional offices monitor programs, services, and
benefits provided under UI, among other programs. As appropriate, staff in these regional
offices also provide technical assistance to state and local governments and organizations
that deliver UI services and benefits.
Page 34 GAO-22-104251 Unemployment Insurance
offices may provide state agencies with recommendations for corrective
actions or arrangements for technical assistance, as appropriate.
During their monitoring, DOL’s regional offices found that states
experienced confusion and faced challenges in implementing the PUA
program, according to DOL officials. For example, DOL’s regional office
staff identified issues with some states’ calculations of PUA benefit
amounts. 70 In addition, DOL officials told us that regional office staff
identified instances where states did not follow DOL guidance, such as
not requiring self-certification, paraphrasing the COVID-related reasons
for unemployment as identified in the CARES Act, or including COVID-
related reasons that did not align with the PUA guidance. 71 According to
DOL officials, DOL required states to implement corrective actions for any
issues identified, and at times, required states to implement those actions
retroactively.
DOL also monitors states’ UI programs by reviewing states’ estimated
improper payment rates. 72 For fiscal year 2021, DOL reported an
estimated improper payment amount of $78.1 billion with an estimated
improper payment rate of about 18.9 percent, according to data published
by the Office of Management and Budget (OMB). 73 DOL officials said this
estimated amount includes the regular UI, Extended Benefits, PEUC, and
70See GAO, COVID-19: Continued Attention Needed to Enhance Federal Preparedness,
Response, Service Delivery, and Program Integrity, GAO-21-551 (Washington, D.C.: July
19, 2021).
71To claim PUA, individuals submitted an initial application (also referred to as an initial
claim) to their state to receive a determination of basic eligibility for the program.
Applicants self-certify that their unemployment or inability to work was due to one of the
COVID-19 related reasons identified in the CARES Act, such as their place of work being
closed due to COVID-19. After the initial application, claimants completed weekly
certifications of their continued eligibility for PUA and to claim benefits for the prior week of
unemployment (also referred to as continued claims). See Department of Labor,
Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 – Pandemic
Unemployment Assistance (PUA) Program Operating, Financial, and Reporting
Instructions, UIPL 16-20 (Washington, D.C.: Apr. 5, 2020).
72The estimated improper payment rate is developed by states through independent
assessments of representative samples of paid and denied claims of UI programs, using
the Benefit Accuracy Measurement (BAM) Program.
73The estimated improper payment amount and rate include unknown payments. For the
purpose of producing an improper payment estimate, when the executive agency cannot
determine, due to lacking or insufficient documentation, whether a payment is proper or
not, the payment shall be treated as an improper payment. 31 U.S.C. § 3352(c)(2). In this
report we refer to such payments as “unknown payments.”
Page 35 GAO-22-104251 Unemployment Insurance
FPUC programs, and excludes PUA. 74 Because PUA has unique and
distinct eligibility requirements, DOL officials said that applying the
improper payment methodology used for the regular UI program and
reported on paymentaccuracy.gov is not appropriate, and instead they
are exploring methods to estimate improper payments for PUA that will
not be overly burdensome for states. In late February 2022, DOL
reiterated its plans to submit the improper payment estimation
methodology to OMB by June 2022 and to include the estimates in DOL’s
fiscal year 2022 reporting. 75
Technical assistance and funding to states. According to DOL
officials, throughout the pandemic, DOL provided states and territories
with extensive technical assistance through webinars and trainings to
implement the CARES Act UI programs. For example, according to DOL
officials, in May 2020, DOL reviewed all states’ initial and continued
claims forms and provided technical assistance to states identified as
having issues that required corrections. In addition, DOL officials said that
DOL provided the territories with technical assistance related to the PUA
program. 76 Early in the pandemic, we reported that DOL collaborated with
NASWA to develop a training to help state agency staff process PUA
claims. 77 When the Consolidated Appropriations Act, 2021 was enacted,
DOL also conducted several webinars for states and territories, according
to DOL officials. DOL officials said that they responded to hundreds of
questions from states through a COVID-19-dedicated email box.
DOL also provided states with funding and resources for UI program
integrity efforts. DOL made three allotments of $100 million available—
one in September 2020, one in January 2021, and another in August
2021—to states to address potential fraud and identity theft in the PUA
and PEUC programs. DOL officials said that three of GAO’s selected
states—Arizona, Florida and Michigan—used the September 2020 and
January 2021 funding to, among other things, hire program integrity staff,
some of whom have focused on identity theft cases or detecting and
recovering overpayments. According to DOL, states have reported using
74GAO-22-105397.
75GAO-22-105397.
76According to DOL, the PUA program was available in all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, the Commonwealth of the Northern Mariana Islands, the Federated States of
Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.
77GAO-20-625.
Page 36 GAO-22-104251 Unemployment Insurance
the January 2021 funding to, among other things, engage third-party
vendors to conduct fraud risk and cybersecurity assessments of states’ UI
systems and subscribe to identity verification services. DOL has
encouraged states to use all functionalities of NASWA’s IDH, including its
identity verification service, multi-state cross-match, suspicious actor
repository, foreign internet protocol (IP) address detection, and fraud
alerts.
With funding provided by the American Rescue Plan Act of 2021, DOL
also presented states with funding opportunities to promote equitable
access to UI, ensure timely payment of benefits, and support states with
fraud detection and prevention. 78 According to DOL, these funding
opportunities aim to address some of the critical challenges that states
faced during the pandemic. In September 2021, DOL announced nearly
$118 million in American Rescue Plan Act of 2021 funding to 45 states
and territories to strengthen identity verification, enhance fraud detection,
increase cybersecurity, and expand overpayment recovery efforts across
all UI programs. DOL officials told us in March 2022 that DOL had
provided about $134 million to 50 states and territories through American
Rescue Plan Act of 2021 grants for fraud prevention and recovery. 79
In addition, as we reported in January 2022, DOL solicited grant
applications from states for efforts to address equity issues, such as by
improving access to the regular UI program for individuals with disabilities
or individuals who have limited or no internet access, and improving parity
78See Department of Labor, Grant Opportunity for Promoting Equitable Access to
Unemployment Compensation (UC) Programs, UIPL 23-21 (Washington, D.C.: Aug. 17,
2021), Grant Opportunity to Support States with Fraud Detection and Prevention,
Including Identity Verification and Overpayment Recovery Activities, in All Unemployment
Compensation (UC) Programs, UIPL 22-21 (Washington, D.C.: Aug. 11, 2021), and Grant
Opportunity to Support States Following a Consultative Assessment for Fraud Detection
and Prevention, Promoting Equitable Access, and Ensuring the Timely Payment of
Benefits, including Backlog Reduction, for all Unemployment Compensation (UC)
Programs, UIPL 2-22 (Washington, D.C.: Nov. 2, 2021).
79According to DOL officials, in total, DOL has provided states with up to $440 million in
grants to assist with fraud prevention and identity verification. This total includes the
funding made available through American Rescue Plan Act of 2021 grants, as well as the
funding made available to address potential fraud and identity theft in the PUA and PEUC
programs.
Page 37 GAO-22-104251 Unemployment Insurance
across all demographic groups and underserved populations. 80 After
receiving grant applications from 49 of 53 states and territories, DOL
began awarding equity grants and as of May 2, 2022, DOL had awarded
grants totaling about $56.5 million to the District of Columbia and 11
states: Alabama, Idaho, Indiana, Kentucky, Missouri, New Mexico,
Oregon, Pennsylvania, Utah, Virginia, and Washington. DOL officials
noted that DOL will continue to award these grants on a rolling basis. In
January 2022, DOL also announced the availability of up to $15 million for
selected states to participate in the American Rescue Plan Act UI
Navigator Program. According to DOL, the purpose of the program is to
help workers learn about, apply for, and if eligible, receive UI benefits and
related services, as well as to support state agencies in delivering timely
benefits to workers, especially those who have faced obstacles to
accessing UI benefits in the past. 81
Customer service assistance. DOL’s guidance, monitoring, and funding
were critical as states implemented the CARES Act UI programs, but as
discussed, some states still faced challenges in addressing customer
service issues during the pandemic. Prior to the pandemic, we
documented long-standing customer service problems states experienced
providing services to UI claimants. 82 The high demand for assistance from
UI claimants during the pandemic exacerbated the problems we
previously reported on, such as long call wait times, website crashes, and
challenges in obtaining information and application assistance from
knowledgeable claims processing staff, as reported by DOL, states,
NASWA officials and our discussion group participants.
Under the UI program’s federal-state partnership, helping claimants with
questions about their claims is generally a state role, and DOL has had a
limited role in monitoring states’ practices for customer service. For
80GAO-22-105291. In addition to these efforts, in August 2021, DOL announced the
creation of the Office of Unemployment Insurance Modernization, a temporary unit, to
provide oversight and management of funding authorized by the American Rescue Plan
Act of 2021 and to carry out the act’s purposes. According to DOL officials, the Office is
working on a variety of initiatives with state agencies, one of which also created its own
office of modernization.
81For more information about these grants, see Department of Labor, Grant Opportunity
for States to Participate in the American Rescue Plan Act (ARPA) Unemployment
Insurance (UI) Navigator Program, UIPL 11-22 (Washington, D.C.: Jan. 31, 2022).
82See GAO, Unemployment Insurance: States’ Customer Service Challenges and DOL’s
Related Assistance, GAO-16-430 (Washington, D.C.: May 12, 2016).
Page 38 GAO-22-104251 Unemployment Insurance
example, when asked about customer service, DOL officials noted that
DOL has established standards, such as standards for payment
timeliness, that reflect the services claimants receive. However, DOL has
a role in providing technical assistance to states, and according to DOL’s
website, it is responsible for “managing strategically in order to ensure
high performance, greater public accountability, service quality, and
customer satisfaction.” 83 In addition, according to Standards for Internal
Control in the Federal Government management should externally
communicate the necessary quality information to achieve the entity’s
objectives. 84
Despite this limited role in customer service, DOL has started to
incorporate aspects of customer service into its efforts to modernize and
improve UI, but these efforts are not generally focused on developing
comprehensive best practices to help states to improve service delivery.
For example, we previously reported that DOL is working with the U.S.
Digital Service to develop modular technology solutions, the first of which
is focused on the claimant experience and may address customer service
issues with accessing state IT systems. 85 According to DOL officials, DOL
began pilot testing the claimant experience module with Arkansas in late
March and New Jersey in April 2022. As part of these efforts, DOL plans
to define the key benchmarks associated with delivering effective
customer experience for UI programs and use them to test, refine, and
deploy solutions that help states improve access to UI services and to do
so equitably, according to DOL officials.
In addition, DOL officials told us that DOL’s multidisciplinary teams of
experts are reviewing claimants’ access to UI benefits by examining
where claimant bottlenecks occur, as well as other issues related to fraud,
83Department of Labor, Office of Unemployment Insurance,
https://oui.doleta.gov/unemploy/aboutoui.asp (accessed Feb. 17, 2022).
84GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington D.C.: Sept. 2014).
85GAO-22-105291.
Page 39 GAO-22-104251 Unemployment Insurance
timeliness, technology, and equity. 86 According to officials, the expert
teams have made recommendations to states, including simplifying
communication with claimants, standardizing translation services,
streamlining adjudication processes, implementing fraud risk scoring
capabilities, and ensuring that states are following guidance from DOL.
DOL officials said they are in the process of using the teams’ findings to
identify best practices and solutions for common challenges, which they
plan to make available as a resource for all states. Although these best
practices are expected to cover a wide range of issues, it is unclear
whether they will provide comprehensive information to assist states in
addressing customer service challenges. Without comprehensive
information, DOL may miss opportunities to assist states in improving
service delivery during periods of high demand like the pandemic.
DOL OIG and Others The DOL OIG, along with other federal agencies, have flagged both
Have Identified Billions in regular and CARES Act UI programs as high risk and identified billions of
dollars in potentially fraudulent payments throughout the pandemic. To
Potentially Fraudulent
assist states in preventing and detecting improper payments, including
Claims, and DOL Has those due to fraud, DOL provided resources to NASWA’s IDH and took
Provided Resources to many other actions. However, we previously reported that DOL has not
Assist States with UI taken actions to comprehensively assess fraud risks in alignment with
leading practices identified in GAO’s Fraud Risk Framework. 87
Program Integrity Efforts
DOL OIG efforts. Through its investigative work, DOL OIG identified a
total of about $17 billion in potential fraudulent payments from March
86According to DOL, these teams review selected states’ processes and develop
recommendations based on their reviews. DOL officials said that, as of March 2022, 12
states—Alabama, Colorado, Connecticut, Iowa, Kansas, Kentucky, Nebraska, Nevada,
Pennsylvania, Virginia, Washington, and Wisconsin—had received assistance from these
multi-disciplinary teams of experts in fraud, timeliness, technology and equity. DOL
officials said these teams began working with six more states between January and March
2022: Arizona, Delaware, Illinois, Michigan, New Hampshire, and Oregon. See
GAO-22-105397. DOL is also providing funding opportunities to states involved in these
reviews to implement the recommendations identified. See Department of Labor, Grant
Opportunity to Support States Following a Consultative Assessment for Fraud Detection
and Prevention, Promoting Equitable Access, and Ensuring the Timely Payment of
Benefits, including Backlog Reduction, for all Unemployment Compensation (UC)
Programs, UIPL 2-22 (Washington, D.C.: Nov. 2, 2021).
87GAO-22-105051.
Page 40 GAO-22-104251 Unemployment Insurance
2020 through October 2020. 88 DOL OIG continues to investigate potential
fraud and is reviewing the UI programs through its ongoing audits, which
focus on, among other things, detection and recovery of overpayments;
the adequacy of state IT resources; and state staffing sufficiency.
DOL OIG has raised concerns with potential fraud in the UI programs
through its numerous reviews since the beginning of the pandemic. From
April 2020 through August 2021, DOL OIG issued nine reports,
highlighting concerns related to UI during the pandemic and making
numerous recommendations to DOL for corrective action. For example, in
August 2020, DOL OIG’s review of the CARES Act UI programs found,
among other things, that DOL was leveraging existing tools to combat
potential fraud but that more needed to be done to ensure existing tools
are effectively and sufficiently used by states. 89
DOL OIG also identified specific issues with the PUA program that could
make it more vulnerable to fraud. In May 2020, it reported concerns
regarding the PUA program’s reliance on self-certification to determine
program eligibility, which allowed individuals to receive PUA benefits
immediately after self-certifying that they lost employment income due to
a COVID-19 related reason. Reliance on such self-certifications rendered
PUA highly vulnerable to improper payments and fraud, according to DOL
OIG. 90 In October 2020, DOL OIG issued a subsequent report that found
that states reported challenges when implementing the PUA program and
88This amount differs from what we have previously reported due to clarification we
received from the DOL OIG in May 2022. DOL OIG has investigated potential UI fraud by
collecting and analyzing state UI claims data. The DOL OIG analyzed the state UI claims
data along with other datasets to identify potentially fraudulent claims, which included
payments made to individuals with social security numbers filed in multiple states,
individuals with social security numbers of deceased persons or federal inmates, and
individuals with suspicious email accounts. See Department of Labor Office of Inspector
General, Alert Memorandum: The Employment and Training Administration Needs to
Issue Guidance to Ensure State Workforce Agencies Provide Requested Unemployment
Insurance Data to the Office of Inspector General, 19-21-005-03-315 (Washington, D.C.:
June 16, 2021).
89See Department of Labor Office of Inspector General, COVID-19: More Can Be Done to
Mitigate Risk to Unemployment Compensation Under the CARES Act, 19-20-008-03-315
(Washington, D.C.: Aug. 7, 2020).
90Department of Labor Office of Inspector General, Alert Memorandum: The Pandemic
Unemployment Assistance Program Needs Proactive Measures to Detect and Prevent
Improper Payments and Fraud, 19-20-002-03-315 (Washington, D.C.: May 26, 2020).
Page 41 GAO-22-104251 Unemployment Insurance
detecting and deterring potential fraud. 91 In its response to this report,
DOL said it shared DOL OIG’s concerns regarding potential fraud in the
PUA program, which arose from the self-certification eligibility process as
established under the CARES Act and further noted that the PUA
program’s legal structure made it vulnerable to fraud. 92 For this reason,
DOL took actions to address improper payments and fraud in the UI
system and planned on expanding on these efforts, according to DOL.
Secret Service and Department of Justice efforts. In addition to DOL
OIG, other entities have conducted investigations of potential UI fraud
during the pandemic. As previously reported, in coordination with DOL
OIG and various federal, state, and local partners, from the start of the
pandemic through May 2021, the U.S. Secret Service initiated more than
690 potential UI fraud investigations and inquiries and seized more than
$640 million in potentially fraudulent funds. 93 In addition, we previously
reported that the Department of Justice has publicly announced charges
in numerous fraud-related cases involving the COVID-19 relief programs,
including UI. We previously reported that from March 2020 through
January 2022, 146 individuals and entities pleaded guilty to federal fraud-
related charges related to the UI programs. 94
DOL efforts. DOL has provided funding to the NASWA UI Integrity
Center and IDH, which assists states with combatting potential fraud and
improving program integrity. Throughout the pandemic, states increased
their utilization of the IDH to identify potential fraud in the UI system. For
example, as we previously reported, DOL officials told us that, as of
February 19, 2021, 33 states were sending their UI claimant data to the
IDH for cross-matching with other states’ claims data and 22 states were
using the IDH’s third-party identity verification services. As of March 2022,
DOL officials said that 43 states were sending UI claims for cross-
matching, and 34 states were using the identity verification services.
91Department of Labor Office of Inspector General, COVID-19: States Cite Vulnerabilities
in Detecting Fraud While Complying with the CARES Act UI Program Self-Certification
Requirement, 19-21-001-03-315 (Washington, D.C.: Oct. 21, 2020). Similar to DOL OIG’s
findings on states’ implementation of PUA, GAO is issuing a report on challenges states
faced with PUA. See GAO-22-104438.
92The Consolidated Appropriations Act, 2021 included a new requirement that PUA
claimants provide documentation substantiating their employment to be eligible for
benefits. Pub. L. No. 116-260, div. N, tit. II, § 241(a), 134 Stat. 1182, 1959-60.
93GAO-21-551.
94GAO-22-105397.
Page 42 GAO-22-104251 Unemployment Insurance
According to DOL officials, all 53 states have executed an agreement to
participate in IDH cross-matching and participate in the IDH’s Fraud
Alerting capability. In addition to the resources offered through the IDH,
NASWA’s UI Integrity Center also provides states with program integrity
technical assistance, training, and a library of digital resources.
DOL has taken a variety of other actions to assist states with preventing
and detecting potential fraud. For example:
• In September 2020, the Secretary of Labor sent letters to governors
requesting their leadership to implement key strategies to prevent and
detect fraud in the UI system. During that same month, DOL hosted a
call with state workforce agencies to discuss the importance of
addressing UI fraud.
• In November 2020, DOL officials told us the agency continued to
monitor states’ claims numbers to help states detect cases of potential
fraud. DOL officials also said they increased conversations with
banking institutions, which are identifying potential fraud through data
analytics and working with states to recover UI overpayments.
• In March 2021, DOL launched a website to help the public better
understand UI identity theft. 95 The website provides resources for
those who may have been victims of identity theft, including a list of
contacts for each state and territory to report UI identity theft.
• In April 2021, DOL issued guidance highlighting the importance of
states’ identity verification efforts to stop potentially fraudulent UI
claims. 96 The guidance outlines procedures that states must take
when processing claims and determining UI eligibility in cases where
an individual’s identity is in question.
• In May 2021, DOL issued guidance encouraging states to work with
financial institutions to detect suspicious activity, ensure that accounts
are not unduly suspended, and recover overpayments. 97 This
95Department of Labor, “Report Unemployment Identity Theft,” accessed Apr. 11, 2022,
https://www.dol.gov/agencies/eta/UIIDtheft.
96Department of Labor, Identity Verification for Unemployment Insurance (UI) Claims,
UIPL 16-21 (Washington, D.C.: Apr. 13, 2021).
97Department of Labor, Benefits Held by Banks and Financial Institutions as a Result of
Suspicious and/or Potentially Fraudulent Activity and the Proportional Distribution
Methodology Required to Recovering/Returning Federally Funded Unemployment
Compensation (UC) Program Funds, UIPL 19-21 (Washington, D.C.: May 4, 2021).
Page 43 GAO-22-104251 Unemployment Insurance
guidance also establishes instructions for banks and financial
institutions on how to return recovered overpayments, such as in
instances when the recovered funds span multiple states.
• In September 2021, DOL published instructions for states on how to
access identity verification services provided by three vendors. 98
• In October 2021, DOL released guidance announcing the availability
of a data exchange with the Social Security Administration’s Prisoner
Update Processing System. 99 After taking required steps to access
this data system, states can cross-match UI claims data against the
prisoner data system to help determine UI eligibility, which may help
prevent and detect fraud. 100
Throughout the pandemic, DOL also coordinated with the DOL OIG to
ensure states were actively working with the OIG and other federal law
enforcement entities to address fraud. 101 For example, we previously
reported that DOL officials said they meet regularly with DOL OIG to
discuss emerging UI fraud issues, streamline communication with states,
and coordinate fraud prevention and recovery efforts. 102
GAO findings. We have also reported on fraud risks in the UI programs,
including applicants’ falsifying information on income or employment
eligibility to receive benefits, applicants’ using stolen identities or
personally identifiable information to apply for or receive benefits, and
applicant’s applying for or receiving benefits by using fake identity
98Department of Labor, Accessing Unemployment Insurance (UI) Identity Verification and
Fraud Protection (Identity Proofing) Services using the U.S. Department of Labor’s
(Department) Blanket Purchase Agreements (BPA), Training and Employment Notice 6-21
(Washington, D.C.: Sept. 15, 2021).
99Department of Labor, Announcing the Availability of an Incarceration Data Exchange
and Instructions to Access the Data Exchange between the Unemployment Insurance (UI)
Interstate Connection Network (ICON) and the Social Security Administration (SSA)
Prisoner Update Processing System (PUPS), UIPL 1-22 (Washington, D.C.: Oct. 29,
2021).
100In February 2021, DOL OIG issued an alert memorandum that identified that the social
security numbers of about 13,000 potentially ineligible federal prisoners were used to file
claims equaling more than $98 million in UI benefits. See DOL OIG, Alert Memorandum:
The Employment and Training Administration (ETA) Needs to Ensure State Workforce
Agencies (SWA) Implement Effective Unemployment Insurance Program Fraud Controls
for High Risk Areas, 19-21-002-03-315 (Washington, D.C.: Feb. 22, 2021).
101GAO-22-105051.
102GAO-22-105051.
Page 44 GAO-22-104251 Unemployment Insurance
information. 103 In October 2021, we made several recommendations that
DOL take actions to comprehensively assess UI fraud risks in alignment
with leading practices identified in GAO’s Fraud Risk Framework, which
by law must be incorporated in guidelines established by the OMB for
agencies. 104 In response to one of our recommendations, in its December
2021 Statement of Executive Action, DOL reiterated that its Chief
Financial Officer and the DOL ETA’s Assistant Secretary are responsible
for risk management in the UI program. In April 2022, DOL officials stated
that they are in the process of formally documenting this designation and
these officials’ antifraud responsibilities, consistent with GAO’s Fraud
Risk Framework. In February 2022, DOL reiterated that it will incorporate
the recommended practices and approaches from the Fraud Risk
Framework in its risk assessment activities as it moves forward. As of late
April 2022, these recommendations remain open. We continue to monitor
DOL’s fraud risk assessment activities and have ongoing work in this
area.
DOL Lacked a Strategic As we discussed, states faced numerous challenges while quickly
Approach to Implement an implementing the new CARES Act UI programs, including low staffing
levels, IT limitations, frequently changing federal guidance, and program
Emergency Response to
integrity issues. DOL and states could not have anticipated many of these
the Pandemic for the UI challenges due to the changing nature and length of the pandemic. DOL
Programs often acted reactively to the changing pandemic environment, causing
states to do so as well, which at times led to inefficiencies in program
implementation and oversight. The rush to implement new programs and
then continuously adjust state systems to program changes as quickly as
possible may have led to improper payments.
As discussed, DOL has taken steps to address some of the challenges
states faced during the pandemic through technical assistance and
funding made available by the American Rescue Plan Act of 2021.
Nevertheless, DOL has not completed an assessment of its response to
the pandemic or started planning for future emergencies. The Department
of Homeland Security’s National Response Framework provides a
scalable, flexible guide for how all levels of government respond to
disasters and emergencies, including pandemics. 105 The framework
103GAO-22-105051.
104For a full list of our recommendations related to fraud risk management, see
GAO-22-105051.
105Department of Homeland Security, National Response Framework: Fourth Edition (Oct.
28, 2019).
Page 45 GAO-22-104251 Unemployment Insurance
states that, at a minimum, federal agencies should have department- or
agency-level operational plans that address the execution of their roles
and responsibilities in support of disaster response, and agencies should
develop lessons learned to assist their future efforts. In addition, the
framework states that the national response to disasters depends on the
ability of all levels of government, among others, to act decisively and
proactively for incidents that may expand rapidly in size, scope, or
complexity and occur without warning.
DOL supports the National Response Framework and disaster response
efforts through its Disaster Unemployment Assistance (DUA) and UI
programs. 106 According to DOL officials, DOL has continuity of operations
plans that it operated under throughout the pandemic. And DOL has also
conducted efforts to assist states in preparing for future emergencies. For
example, DOL officials said that shortly before the pandemic, DOL
provided states with a planning resource to assist them in preparing for
surges in claims volumes to prepare for the next recession. Agency
officials said that DOL acknowledged the nation was experiencing a
period of growth and they wanted to assist states with preparations for the
next economic swing. The recession planning resource encourages
states to consider various topics, including staffing, technology,
communication, and service delivery, when planning and preparing for
recessions. However, according to DOL officials, because this resource
was shared shortly before the pandemic, states did not have time to fully
utilize it. And as evidenced by the pandemic, DOL and states were
unprepared for the surge in claims while simultaneously working to
implement the new CARES Act UI programs. DOL officials also
acknowledged that DOL does not have a long-term permanent
emergency benefits program, lacks authority to create such a program,
and has had to rely on Congress to develop ad hoc programs to address
national emergencies. Agency officials said that operating in this manner
makes it difficult to plan and think about how to respond to the next
emergency.
In March 2022, DOL officials said they had not started to assess lessons
learned from the pandemic, which could help prepare the UI system for
106DOL is a supporting agency for mass care services, a key emergency support function,
within the National Response Framework. Agencies that support mass care services
coordinate and provide life-sustaining resources, essential services, and statutory
programs. DUA provides financial assistance to individuals whose employment or self-
employment has been lost or interrupted as a direct result of a major declared disaster
and who are ineligible for regular UI. The UI program provides a vital safety net during
economic downturns.
Page 46 GAO-22-104251 Unemployment Insurance
future emergencies, because DOL was still responding to the pandemic.
By May 2022, according to DOL, the Department had begun to assess
and share lessons learned from the pandemic. Until a review of lessons
learned from the pandemic is completed, DOL and states may not be well
positioned to address future emergencies that may expand rapidly or
without warning and may face challenges similar to those experienced
during implementation of the CARES Act UI programs with the next
emergency.
Overall, the 30 empirical studies included in our literature review showed
Empirical Studies that an expansion of UI programs during adverse times, such as the
Show UI Expansion in Great Recession of 2007-2009 and the COVID-19 pandemic, created
overall economic stability, prevented detrimental outcomes from
Adverse Times worsening, and had a limited effect on workers’ incentives to return to
Created Economic work. Appendix IV provides a more detailed discussion of findings from
the studies we reviewed and appendix V provides a list of the studies
Stability, While reviewed.
Resulting in Limited
Negative Effects on
Workers’ Return to
Employment
UI Expansion Created Among the 30 empirical studies included in our literature review, six
Overall Economic Stability measured the benefits of UI expansion and found that an expansion of UI
programs during adverse times, such as the Great Recession of 2007-
and Improved Outcomes
2009 and the COVID-19 pandemic, helped maintain economic stability
for Individuals, According and prevented detrimental outcomes from getting worse.
to Empirical Studies
Stabilized economy overall. UI expansion during economic crises
helped create overall economic stability by helping to maintain consumer
spending and may even have increased aggregate spending during the
pandemic. 107 The studies in our review explained that by maintaining
aggregate demand in the economy, expanded benefits acted as an
automatic stabilizer by limiting reductions in expected revenue of firms
and further reductions in jobs offered. In addition, according to the
authors, the extra income from expanded UI benefits was particularly
107Aggregate spending refers to total spending on all goods and services in the economy.
Aggregate demand shows the quantity demanded for all goods and services at the
existing price levels.
Page 47 GAO-22-104251 Unemployment Insurance
important for families who did not have alternative income sources or
personal savings during periods of high unemployment or sufficient
access to other income transfer programs. 108
• Studies included in our literature review analyzed real-time data
during the pandemic and found that the UI expansion helped sustain
consumer spending to some extent and that it would have been lower
than what is was had UI not been expanded. For example, one of the
studies found that total spending during this time period was about 2.0
to 2.6 percent higher as a result of the UI benefit expansions. 109
• Another study conducted during the Great Recession found that the
UI expansions acted as an automatic stabilizer for the housing
market. 110
Prevented worsening of detrimental outcomes. A few of these
selected studies demonstrated how expanded UI prevented worsening of
detrimental outcomes in families’ consumption and financial insecurity.
For example, studies conducted during the pandemic noted that specific
occupations, such as service-oriented or low-paying occupations in the
restaurant industry, experienced more layoffs and reductions in hours
than occupations in other industries. The studies added that because
these low-wage occupations disproportionately employ people of color or
women, UI expansion likely also prevented existing inequities among this
group from getting worse. Studies also showed that in the absence of
108The authors of this study claim that “UI may also serve as a substitute for other income
transfer programs (e.g., food stamps, retirement benefits, disability benefits, and cash
welfare) by providing temporary income support during unemployment spells, thereby
alleviating the need to participate in these other programs.” See Jesse Rothstein and
Robert G. Valletta, “Scraping By: Income and Program Participation after the Loss of
Extended Unemployment Benefits,” Journal of Policy Analysis and Management 36, no. 4
(2017).
109See Peter Ganong, Fiona Greig, Max Liebeskind, Pascal Noel, Daniel M. Sullivan, and
Joseph Vavra, Spending and Job Search Impacts of Expanded Unemployment Benefits:
Evidence from Administrative Micro Data (Chicago, IL: University of Chicago, Becker
Friedman Institute for Economics, Feb. 2021).
110This study evaluated the impact of UI expansions on delinquencies, foreclosures, and
home values after controlling for state-level economic conditions and household
characteristics. Their results showed that a $3,600 increase in maximum extended UI
benefits was associated with a twelve percent decline in layoff-related increase in
delinquency and nearly 15 percent of the layoff-related increase in foreclosures. See
Joanne W. Hsu, David A. Matsa, and Brian T. Melzer, “Unemployment Insurance as a
Housing Market Stabilizer,” American Economic Review 108, no. 1 (2018).
Page 48 GAO-22-104251 Unemployment Insurance
expanded UI, poverty levels would have been higher during the Great
Recession and the pandemic.
• One study, for example, analyzed the pandemic’s effects on families
by race and ethnicity and found that the expanded UI and other forms
of cash assistance included in the CARES Act had the biggest
positive impact on Black and Hispanic or Latinx families’ financial
security. 111
• Another study found that the differences in poverty rates between
Black and Hispanic individuals relative to White individuals were
magnified during the pandemic and after the expiration of the FPUC
$600 per-week unemployment supplement. 112 This study also found
that the CARES Act UI programs effectively blunted a rise in poverty
rates during the pandemic.
Empirical Analyses Show Our review of 13 studies that empirically analyzed the relationship
That UI Expansion Had between UI expansion and workers’ incentives to return to work found
that expansion in UI had limited effects on workers willingness to return to
Limited Negative Effects
work, and that other factors may explain the low levels of employment
on Workers’ Incentives to observed during adverse times when UI is also expanded.
Return to Employment
Limited negative effects on workers’ incentives to return to work.
The studies we reviewed found limited disincentive effects in that studies
either found that expanded UI had no disincentive effects or if they found
some effect it was limited to a small group of workers.
• Specifically, eight studies we reviewed found that expanded UI
benefits either during the pandemic or the Great Recession had no
effect on workers’ incentives to return to work. For example, three of
these studies analyzed earnings data for hourly waged restaurant
workers and food industry employees during the current pandemic
and found no evidence of a relationship between high-earnings
111This study used data from the Survey of Consumer Finances, which reports a
household’s mortgage payments, rental payments, property taxes, home insurance, condo
fees, vehicle lease and loan payments, student loan payments, credit card payments,
other/miscellaneous debt payments, and spending on food. See Neil Bhutta, Jacqueline
Blair, Lisa Dettling, and Kevin Moore, “COVID-19, The CARES Act, and Families’
Financial Security,” National Tax Journal 73, no. 3 (Sept. 2020).
112Zachary Parolin, Megan Curran, Jordan Matsudaira, Jane Waldfogel, and Christopher
Wimer, Monthly Poverty Rates in the United States during the COVID-19 Pandemic (New
York, NY: Center on Poverty & Social Policy, School of Social Work, Columbia University,
Oct. 2020).
Page 49 GAO-22-104251 Unemployment Insurance
replacement rates from expanded UI benefits—meaning the amount
of pre-pandemic earnings that UI benefits covered—and declines in
employment. 113
• Four found some disincentive effects but these were limited to a
certain group of workers. For example, one of the studies found that
after separating workers of different skills, occupations, and across
U.S. states the $600 FPUC benefit had moderate disincentive effects
on job-finding rates, but only for a small share of job seekers, such as
janitors or workers in food service occupations. 114
Studies explained that results showing limited disincentive effects are
understandable because workers usually make dynamic and not static
decisions about employment. In other words, workers consider factors
such as the limited duration of benefits, loss of the option to return to their
previous job, time required to find a new job, and the prospect of
permanently lower wages after the career setback of being unemployed
in a recession. 115
Other factors affecting employment. Some studies included in our
review explored factors other than disincentive effects that could be
influencing the relationship between expansion of UI and high
unemployment observed during the pandemic and the Great
113They used data from Homebase, which is a private firm that provides scheduling and
time clock software to small businesses, covering hundreds of thousands of workers
across the U.S. and Canada. Homebase’s clients are primarily small firms that require
time clocks for their day-to-day operations, nearly half of which are in the food and drink
industry. Workers are predominantly hourly, not salaried, employees.
114See N. Petrosky-Nadeau and R. G. Valletta, UI Generosity and Job Acceptance: Effects
of the 2020 CARES Act, Federal Reserve Bank of San Francisco Working Paper 2021-13
(San Francisco, CA: Federal Reserve Bank of San Francisco, 2021).
115See C. Boar and S. Mongey, Dynamic Trade-Offs and Labor Supply Under the CARES
Act, NBER Working Paper Series 27721 (Cambridge, MA: National Bureau of Economic
Research, August 2020). Also see N. Petrosky-Nadeau, Reservation Benefits: Assessing
Job Acceptance Impacts of Increased UI Payments, Federal Reserve Bank Working
Paper Series 2020-28 (San Francisco, CA: Federal Reserve Bank of San Francisco,
August 2020).
Page 50 GAO-22-104251 Unemployment Insurance
Recession. 116 These studies found that factors such as longer labor force
attachment, reduced demand for labor, or fear of risk of illness, as well as
loss of childcare could have been responsible for high levels of
unemployment observed during these adverse times; times during which
UI may also be expanded. The studies included in our review also found
that UI expansion may enable people to wait longer or search more and
potentially find jobs better matched to their skill level. For example, one
study found that increasing the generosity of UI improved the quality of
employee-employer matches because the expanded UI allowed workers
to search longer and eventually find jobs better suited to their skills and
ones where they were no longer over-educated. 117 That is, the UI benefits
did not create a disincentive to work per se but created an opportunity to
find jobs better matched with employee skills. The study also found that
this effect was greater for women, minorities, less educated, and older
workers, all of whom are more likely to be credit constrained. The authors
state that this could potentially increase the general welfare by improving
the functioning of the labor markets.
Some Discussion Group In the twelve discussion groups we held across six states, some
Participants Shared participants shared experiences and observations that are consistent with
the findings of the empirical studies that we reviewed. For example,
Experiences and
according to the studies, the CARES Act UI programs helped maintain
Observations That Are spending and stabilize the economy. This was echoed in the experiences
Consistent with the of participants in all 12 of our discussion groups who said that they used
Findings of Our Empirical the CARES Act UI benefits to pay for expenses such as food, rent,
Studies utilities, and health care expenses, and in seven of the groups, recipients
said they used the benefits for child care expenses. Other participants
noted that the CARES Act UI programs helped them maintain spending
116According to economic theory, high levels of unemployment observed when UI is
expanded could either be due to supply-side factors such as disincentives to return to
work or reduced efforts to search for jobs among those receiving these benefits; or it could
be due to demand side factors such as a reduction in vacancies as firms go out of
business or downsize during a recession. As already described above, empirical studies
show that UI expansion resulted in limited disincentive effects on workers’ return to
employment.
117A.Farooq, D. Kugler, and U. Muratori, Do Unemployment Insurance Benefits Improve
Match Quality? Evidence from Recent U.S. Recession, NBER Working Paper Series
Working Paper 27574 (Cambridge, MA: Federal Reserve Bank, July 2020).
Page 51 GAO-22-104251 Unemployment Insurance
and stabilized their own finances and credit, prevented the loss of
housing and were essentially a “lifesaver.” 118
In addition, a few participants took the opportunity to describe a range of
factors that affected their decisions about returning to work, such as their
age, availability of work, social distancing and other practices at potential
workplaces, and the availability of safe and appropriate child care and
school environments.
From the spring of 2020 to the fall of 2021, DOL and the selected states
Conclusions quickly took action to oversee and implement the UI programs
established by the CARES Act, including actions to implement changes
during the programs’ extensions. States faced an unprecedented surge in
UI claims during the pandemic, which taxed their ability to implement
CARES Act UI programs quickly, address customer service issues, and
respond to other issues to support claims processing and pay benefits in
a timely manner. In particular, customer service challenges were
especially acute during the pandemic, with claimants experiencing
exceptionally long call wait times and challenges in reaching
knowledgeable staff to help them. Nevertheless, the states distributed
over $600 billion in federal assistance to claimants related to the CARES
Act UI programs throughout the pandemic. However, states were
confronted by fraud that was both persistent and dynamic, according to
officials in three states, and faced challenges in ensuring payment
timeliness, as our analysis shows. Indeed, the UI system has rarely faced
the need to get aid to so many so quickly while simultaneously combating
fraud.
DOL issued guidance and provided funding to assist states in
implementing the CARES Act UI programs. However, states still faced
challenges in addressing customer service issues. While DOL plans to
share customer service best practices and solutions with states, it is
unclear whether this information will address customer service in a
comprehensive way to position states to address the customer service
issues they may face during other periods of surging claims.
118While our analysis of the discussion group transcripts focused on the participants’
responses to scripted questions presented by our moderators, on issues such as their
experiences with accessing UI benefits and customer service, it also included some
comments that discussion group participants volunteered. The comments referenced in
this section include comments that were volunteered during the discussion groups but
outside of the scripted questions.
Page 52 GAO-22-104251 Unemployment Insurance
In addition, although the pandemic was unanticipated, past disasters and
the potential for future national crises demonstrate the importance of
assessing lessons learned from the pandemic to prepare for future
disasters or emergencies, in which the UI system may be called on to
play a similar role. In starting a UI modernization effort, DOL has taken a
critical first step to addressing the challenges facing the UI system. As
part of that effort, it is critical that DOL provide states with comprehensive
best practices to assist states in improving customer service and
assessing lessons learned to better plan for future crises. Without these
efforts, DOL and the states may be just as overwhelmed when the next
emergency strikes, leading to more challenges not only for them, but the
people they aim to serve.
We are making the following two recommendations to DOL:
Recommendations for
Executive Action The Secretary of Labor should ensure that the Office of Unemployment
Insurance review the customer service challenges that states faced
during the pandemic, identify comprehensive information on customer
service best practices, and provide states with this information to assist
them in improving service delivery. (Recommendation 1)
The Secretary of Labor should ensure the Office of Unemployment
Insurance assesses lessons learned from the pandemic to inform its
future disaster response efforts and support the Congress on ways to
address future emergencies. (Recommendation 2)
We provided a draft of this product to the Department of Labor (DOL) for
Agency Comments review and comment. DOL provided written comments, which are
reproduced in appendix VI. DOL also provided technical comments,
which we incorporated as appropriate.
DOL noted several challenges in implementing the pandemic UI
programs, including the lack of time to prepare for implementation of the
UI programs after their enactment. DOL noted the extremely challenging
environment for states, with unprecedented claims volumes and efforts to
implement new and complex benefit programs, as well as an expectation
of benefit payments immediately following enactment, among other
challenges.
DOL partially agreed with our first recommendation regarding customer
service, stating that the Department already has a number of efforts
underway designed to improve the unemployment insurance (UI) claimant
experience and the timely delivery of UI benefits and services to eligible
Page 53 GAO-22-104251 Unemployment Insurance
workers. For example, DOL stated that it offers grants to states for
activities to promote equitable access to UI programs, and has an effort
underway to support state pilot projects regarding service delivery, among
other efforts. We believe that these efforts are important and could help
DOL to provide states with information to assist them in improving the
customer service experience.
DOL agreed with our second recommendation on assessing lessons
learned from the pandemic to inform future disaster response efforts,
stating that such efforts are underway and will continue. We agree that
DOL’s efforts to learn from states’ challenges during the pandemic could
help inform future disaster response efforts.
We also provided excerpts of this report to officials from Arizona, Florida,
Massachusetts, Michigan, Minnesota, and Wyoming for review and
comment and made technical corrections as needed.
If you or your staff have any questions about this report, please contact
me at 202-512-4769 or costat@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made major contributions to this report are
listed in appendix VII.
Thomas Costa
Director, Education, Workforce, and Income Security
Page 54 GAO-22-104251 Unemployment Insurance
Congressional Requesters
The Honorable Patrick Leahy
Chairman
The Honorable Richard Shelby
Vice Chairman
Committee on Appropriations
United States Senate
The Honorable Ron Wyden
Chairman
The Honorable Mike Crapo
Ranking Member
Committee on Finance
United States Senate
The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate
The Honorable Gary C. Peters
Chairman
The Honorable Rob Portman
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Rosa L. DeLauro
Chair
The Honorable Kay Granger
Ranking Member
Committee on Appropriations
House of Representatives
Page 55 GAO-22-104251 Unemployment Insurance
Congressional Requesters Continued
The Honorable Robert C. “Bobby” Scott
Chairman
The Honorable Virginia Foxx
Republican Leader
Committee on Education and Labor
House of Representatives
The Honorable Frank Pallone, Jr.
Chairman
The Honorable Cathy McMorris Rodgers
Republican Leader
Committee on Energy and Commerce
House of Representatives
The Honorable Bennie G. Thompson
Chairman
The Honorable John Katko
Ranking Member
Committee on Homeland Security
House of Representatives
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
The Honorable Richard Neal
Chairman
The Honorable Kevin Brady
Republican Leader
Committee on Ways and Means
House of Representatives
Page 56 GAO-22-104251 Unemployment Insurance
Congressional Requesters Continued
The Honorable Kathy Castor
House of Representatives
The Honorable Charlie Crist
House of Representatives
The Honorable Val B. Demings
House of Representatives
The Honorable Theodore E. Deutch
House of Representatives
The Honorable Lois Frankel
House of Representatives
The Honorable Al Lawson
House of Representatives
The Honorable Stephanie Murphy
House of Representatives
The Honorable Darren Soto
House of Representatives
The Honorable Debbie Wasserman Schultz
House of Representatives
The Honorable Frederica S. Wilson
House of Representatives
Page 57 GAO-22-104251 Unemployment Insurance
Appendix I: Objectives, Scope, and
Appendix I: Objectives, Scope, and
Methodology
Methodology
This report examines: (1) challenges selected states reported in
implementing the CARES Act Unemployment Insurance (UI) programs,
and actions they took to address those challenges; (2) how the
Department of Labor (DOL) has supported and monitored states’
implementation of the CARES Act UI programs, including detection and
prevention of improper payments; and (3) what is known about the
economic effects of the expansion of UI benefits for individuals and the
economy during adverse times. We employed multiple methodologies to
conduct our work, including site visits, discussion groups, and a literature
review.
Site Visits and Discussion Groups
For our first two review objectives, we reviewed relevant federal laws,
regulations, and guidance, and interviewed officials of DOL and its Office
of Inspector General, and National Association of State Workforce
Agencies (NASWA) officials, which represents state UI agencies. We also
selected six states (Arizona, Florida, Massachusetts, Michigan,
Minnesota, and Wyoming) for site visits, to reflect diverse conditions
based on a range of characteristics, including average unemployment
rate for April to July 2020; COVID-19 cases per capita as of July 31,
2020; varying stages of UI agency IT modernization; reported improper
payment rate (July 2016 to June 2019); and timeliness of benefit
payments in the regular UI program (April through June 2020). For these
states, we conducted interviews with a number of different officials and
held discussion groups during our site visits (See table 3.)
Table 3: Summary of Interviews and Discussion Groups Conducted in Site Visit States
State UI State Attorney Advocacy Discussion groups
State officials General Offices organizations with UI recipients
Arizona √ √ √a √
Florida √ √b √a √
Massachusetts √ √ √ √
Michigan √ √ √ √
Minnesota √ ─c √ √
Wyoming √ √ ─d √
Source: GAO interviews with state unemployment insurance (UI) agency officials, state attorney general offices, advocates for UI claimants, and discussion groups with UI recipients. | GAO-22-104251
a
For Arizona and Florida, we also interviewed advocates for Spanish-speaking UI claimants about
those claimants’ experiences in applying for and receiving benefits.
b
Officials of the Florida Office of Attorney General told us that it only prosecutes cases that cross
county lines, and all other cases are prosecuted at the local level.
Page 58 GAO-22-104251 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology
c
According to officials of Minnesota’s UI agency, the state attorney general plays no role in
prosecuting UI fraud, the Bureau of Criminal Apprehension, within the Department of Public Safety,
can issue arrest warrants when the state UI agency identifies fraud, and prosecutions are conducted
by district attorneys at the county level.
d
We were unable to identify an organization that advocates for unemployment insurance claimants in
Wyoming.
In our interviews with selected state UI program officials, we asked about
the challenges they faced in implementing the CARES Act UI programs
and addressing program integrity issues, including the tools they used to
prevent and detect improper payments, and their observations about the
guidance and assistance they received from DOL. In our interviews with
officials of state attorney general offices, we asked about their efforts to
investigate and prosecute UI fraud and any related challenges, and their
relationship with the state UI agency and tools used to detect fraudulent
claims and prevent improper payments. We also asked about their
coordination with other state and federal agencies, and their observations
about forms of fraud that appear to pose the greatest risk. In our
interviews with advocacy organizations, we asked about their
observations about claimants’ experiences with applying for UI benefits
and receiving assistance with their claims, including issues related to
language access, as well as their observations about any ways in which
their state’s UI program is currently working well. In addition, in two
states—Arizona and Florida—we interviewed advocates for Spanish-
speaking claimants about their experiences.
To learn about recent UI recipients’ experiences related to applying for UI
benefits, receiving timely benefit payments, and obtaining assistance with
their claims, we conducted 12 virtual non-generalizable discussion group
sessions in all six selected states (two in each of the six states), using a
contractor to recruit and screen participants. Specifically, we stipulated
that potential participants must have applied for and received UI benefits
in their respective states between March 2020 and March 2021. In
selecting discussion group participants, we considered demographic
characteristics—such as race, ethnicity, gender, and age—with the goal
of achieving diversity on these characteristics, to the extent possible.
(See app. II for a summary of the characteristics of discussion group
participants.) We conducted these discussion group sessions virtually
from May through June 2021.
These sessions involved structured small-group discussions that were
guided by a moderator who used a standardized list of questions to
encourage participants to share their thoughts and experiences. The
sessions were designed to gain more in-depth information about specific
Page 59 GAO-22-104251 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology
issues that could not easily be obtained from another method, such as a
survey or individual interviews.
Our overall objective in using a discussion group approach was to obtain
views, insights, and feelings of UI recipients who had filed claims within
the last 12 months. Specifically, we wanted to learn about their
experiences in applying for UI, the amount of time it took to receive the
first payment, and their experiences in seeking assistance with their
claims from the state UI agency. In addition, we asked participants about
aspects of their experience in applying for benefits that worked well, their
strategies for coping until they received benefits, how they used their UI
benefits, how their total UI benefit compared to their income before
becoming unemployed, and whether their benefits were sufficient to meet
their financial needs. By including UI recipients who varied according to
age, gender, race, income, and economic sector, we intended to gather a
range of perspectives regarding their experiences with states’ UI
programs. 1
Each of the 12 discussion groups was recorded and transcribed. We
conducted a content analysis of these transcripts to identify similarities
and differences across participants’ responses to each discussion
question, by subtopic. Our method of organization for the content analysis
was to develop codes that reflected objective subtopics of each
discussion group question, using these subtopic codes to organize
participants’ responses for further analysis. We identified key themes
across responses, as well as illustrative examples of these key themes.
Given that participants shared a wide variety of experiences, we also
identified examples that were mentioned less frequently, including
information that was provided in a subset of the discussion groups, but
that illustrated this variation in responses across participants. Additionally,
while our analysis focused on the participants’ responses to scripted
questions, it also included some comments that they volunteered. This
content analysis was conducted by one analyst and verified by a second
analyst. These two analysts discussed any differences of opinion and
reached agreement on the key themes and illustrative examples that best
represented the similarities and differences in the experiences shared by
discussion group participants.
1Participants reported having worked in various sectors before becoming unemployed,
such as hospitality (accommodations and restaurants), retail or wholesale trade,
construction, transportation and warehousing, manufacturing, education, and health care.
Page 60 GAO-22-104251 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology
While discussion groups can provide valuable insights on the views of
participants, the ability to project the information produced by our
discussion groups onto other UI recipients’ experiences is limited for
several reasons. First, the information includes only the responses from a
relatively small number (73 in total) of recent UI recipients from the 12
selected groups from the six selected states. Second, while the
composition of the groups was designed to ensure a range of age,
gender, and ethnicity, the groups were not randomly sampled. Third,
participants were asked questions about their experiences, and other UI
recipients not in the discussion groups may have had other experiences.
Because of these limitations, we did not rely entirely on discussion
groups, but rather used several different methods to corroborate and
support our conclusions.
Assessing the Reliability of DOL and State Data
To examine certain data related to UI, such as trends in weekly initial
claims and payment timeliness, we used data from DOL’s Unemployment
Insurance Database, which includes data reported to DOL by states. To
assess the reliability of the data, we reviewed our previous data reliability
assessments on this data set, including information on data uses, internal
controls, and data entry practices. We determined that these data were
sufficiently reliable for the analytical purposes of this report. Additionally,
for information on state UI agency staffing levels, we obtained the
relevant data from state UI agency officials during our site visits, and
asked those officials about the source of these data and any potential
issues related to our use of those data in this report. Additionally, we
received estimates from two states on the amount of potentially fraudulent
payments they prevented through the use of identity verification methods,
and asked state officials how they developed these estimates. We
determined that these data were also sufficiently reliable for the analytical
purposes of this report.
Literature Review
To address our third objective, we conducted a literature review to identify
key government, industry, and academic studies examining expansions of
UI during adverse times. We searched relevant databases, such as
ProQuest, ECONlit, Scopus, and Dialog to identify scholarly and peer-
reviewed research, working papers, government reports, trade and
industry articles, as well as association and nonprofit publications,
published in the last 20 years. The search terms we used included
variations of “unemployment,” or “jobless” combined with “benefit” or
Page 61 GAO-22-104251 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology
other forms of compensation, and pandemics, natural disasters, and
economic downturns. In addition, we included articles recommended by
GAO economists and analysts with a similar research focus.
From our initial search that yielded over 500 articles, we identified 65 for
further in-depth review based on our criteria, such as academic
publication, data analysis, and focus on the United States as the country
of analysis. After the in-depth review, we determined that 30 studies
fulfilled our criteria for inclusion in our literature review. These in-depth
reviews entailed an assessment of each study’s research methodology,
including its data quality, research design, and analytic techniques, as
well as a summary of each study’s major findings and conclusions. We
also assessed the extent to which each study’s data and methods
supported its findings and conclusions. We based our data collection and
assessment on generally accepted social science standards.
We conducted this performance audit from March 2020 to June 2022 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Page 62 GAO-22-104251 Unemployment Insurance
Appendix II: Characteristics of Discussion
Appendix II: Characteristics of Discussion
Group Participants
Group Participants
This appendix summarizes the self-reported characteristics collected by
our discussion group recruiting firm of the 73 individuals who participated
in our 12 discussion groups.
Demographics. Overall, the 12 discussion groups included both male
and female participants, with nearly double the female than male
participants. One participant identified as non-binary. More than half of
the participants (47 of 73) ranged in age from 18 to 40. Most participants
reported their race as either Black (32) or White (29). The remaining 12
participants identified themselves as Hispanic/Latino, Asian, American
Indian/Alaska Native, or mixed race.
Other selected characteristics of discussion group participants are
detailed in the following tables.
Table 4: Discussion Group Participant Characteristics: Race and Ethnicity
Race and ethnicity of participants Number of participants
American Indian or Alaska Native 2
Asian 2
Black or African American (Not Hispanic or 32
Latino)
Hispanic or Latino 7
Mixed Race 1
White or Caucasian (Not Hispanic or 29
Latino)
Total 73
Source: Data self-reported by discussion group participants to GAO discussion group recruiting firm. | GAO-22-104251
Table 5: Discussion Group Participant Characteristics: Number of dependents
Number of dependents Number of participants
0 26
1 13
2 22
3 9
4 3
Total 73
Source: Data self-reported by discussion group participants to GAO discussion group recruiting firm. | GAO-22-104251
Page 63 GAO-22-104251 Unemployment Insurance
Appendix II: Characteristics of Discussion
Group Participants
Table 6: Discussion Group Participant Characteristics: Industry Sector Before
Becoming Unemployed
Industry Number of participants
Hospitality (accommodations and restaurants) 10
Arts, entertainment, and recreation 8
Construction 8
Retail or wholesale trade 8
Manufacturing 6
Services (other) 7
Other 6
Education 5
Finance, insurance, and real estate 4
Transportation and warehousing 4
Services (professional, scientific, and technical) 3
Health care 2
Information 2
Total 73
Source: Data self-reported by discussion group participants to GAO discussion group recruiting firm. | GAO-22-104251
Table 7: Discussion Group Participant Characteristics: Income before Becoming
Unemployed
Reported income category Number of participants
$100,000 or more 8
$75,000 to just below $100,000 13
$50,000 to just below $75,000 12
$25,000 to just below $50,000 30
Under $25,000 10
Total 73
Source: Data self-reported by discussion group participants to GAO discussion group recruiting firm. | GAO-22-104251
Page 64 GAO-22-104251 Unemployment Insurance
Appendix II: Characteristics of Discussion
Group Participants
Table 8: Discussion Group Participant Characteristics: Number of Weeks of CARES
Act Unemployment Insurance Program Benefits Received
Number of CARES Act UI benefit weeks received Number of participants
1 to 10 24
11 to 20 8
21 to 30 11
31 to 40 9
41 and up 21
Total 73
Source: Data self-reported by discussion group participants to GAO discussion group recruiting firm. | GAO-22-104251
Page 65 GAO-22-104251 Unemployment Insurance
Appendix III: Timeline of Selected Events
Appendix III: Timeline of Selected Events
Related to CARES Act Unemployment
Insurance (UI) Programs, January 2020-
Related to CARES Act Unemployment
December 2021
Insurance (UI) Programs, January 2020-
December 2021
This appendix provides a timeline of selected events from January 2020
to December 2021, including enactment, extension, and expiration of key
programs; issuance of selected Department of Labor (DOL) guidance
documents; and selected dates related to program integrity. During this
time period, as shown in the figure, the CARES Act UI programs were
augmented by other programs of limited scope or duration.
Figure 3: Selected Events Related to CARES Act UI Programs, January–December 2020
Page 66 GAO-22-104251 Unemployment Insurance
Appendix III: Timeline of Selected Events
Related to CARES Act Unemployment
Insurance (UI) Programs, January 2020-
December 2021
a
This guidance provided $100 million to states to support prevention and detection of fraud and
identity theft in PUA and PEUC, and to recover fraud overpayments.
b
The dates shown for states’ first payments under the CARES Act UI programs represent the earliest
payment dates.
c
While funding for the Lost Wages Assistance program was depleted in September 2020, the
program ended in December 2020.
Figure 4: Selected Events Related to CARES Act UI Programs, January–December 2021
a
The Act also included $8 million for federal administration of the UI programs. According to DOL, this
was the first time during the pandemic that additional funding for federal administration of UI was
available.
This date represents the earliest date of state withdrawals from the CARES Act UI programs.
b
Page 67 GAO-22-104251 Unemployment Insurance
Appendix IV: Detailed Information about
Appendix IV: Detailed Information about
Empirical Studies Reviewed
Empirical Studies Reviewed
Overall, the 30 empirical studies included in our literature review showed
Empirical Studies that an expansion of UI programs during adverse times, such as the
Show That UI Great Recession of 2007-2009 and the COVID-19 pandemic, helped
create overall economic stability, prevented existing inequities from
Expansion in Adverse worsening, and had a limited effect on workers’ incentives to return to
Times Created work. Some of the studies also explained other factors that influence the
relationship between UI expansion and the levels of employment during
Economic Stability, adverse times. Additionally, some of the studies included in our review
While Resulting in examined other benefits from UI expansion during adverse times, such as
an improved labor market.
Limited Negative
Effects on Workers’
Return to
Employment
UI Expansion Created Among the 30 empirical studies included in our literature review, six
Overall Economic Stability measured the benefits of UI expansion and found that an expansion of UI
programs during adverse times, such as the Great Recession of 2007-
and Improved Outcomes
2009 and the COVID-19 pandemic, helped maintain economic stability
for Individuals, According and prevented detrimental outcomes from getting worse.
to Empirical Studies
Stabilized economy overall. UI expansion during economic crises
helped create overall economic stability by helping to maintain consumer
spending and may have even increased aggregate spending during the
pandemic. 1 The studies in our review explained that by maintaining
aggregate demand in the economy, expanded benefits acted as an
automatic stabilizer by limiting reductions in expected revenue of firms
and further reductions in jobs offered. In addition, according to the
authors, the extra income from expanded UI benefits was particularly
important for families who did not have alternative income sources or
personal savings during periods of high unemployment or sufficient
access to other income transfer programs. 2
1Aggregate spending refers to total spending on all goods and services in the economy.
Aggregate demand shows the quantity demanded for all goods and services at the
existing price levels.
2The authors said that “UI may also serve as a substitute for other income transfer
programs (e.g., food stamps, retirement benefits, disability benefits, and cash welfare) by
providing temporary income support during unemployment spells, thereby alleviating the
need to participate in these other programs.” Rothstein and Valletta, “Scraping By.”
Page 68 GAO-22-104251 Unemployment Insurance
Appendix IV: Detailed Information about
Empirical Studies Reviewed
Three of the economic studies included in our literature review analyzed
real-time data during the pandemic and found that the UI expansion
helped sustain consumer spending to some extent, which had a
stabilizing effect on the economy. For example:
• One study analyzed the differences in consumer spending across
industries and regions in 18 Illinois counties to estimate the
relationship between earnings replacement from expanded UI and
credit and debit card spending. The study found that the higher
replacement rates led to significantly more consumer spending even
with increasing unemployment rates. 3
• Another study that looked at a sample of 6,254 families included in the
2016 Survey of Consumer Finances estimated that CARES Act UI
programs and a one-time cash assistance in the form of a tax credit
dramatically improved households’ financial security and that only
about half of working families would have been able to cover 6
months of expenses if they had to rely exclusively on their own liquid
savings and standard UI benefits. 4
• A third study analyzed JPMorgan-Chase Institute anonymized bank
account data for millions of households from January 2019 through
November 2020 and found that total spending during this time period
was about 2.0 to 2.6 percent higher as a result of the UI benefit
expansions. 5
A study conducted during the Great Recession evaluated the impact of UI
expansions on housing and found that the UI expansions reduced
delinquencies on loan payments, foreclosures, and mortgage defaults.
3M. Garza Casado, B. Glennon, J. Lane, D. McQuown, Daniel Rich, and B. A. Weinberg,
The Aggregate Effects of Fiscal Stimulus: Evidence from the COVID-19 Unemployment
Supplement, NBER Working Paper Series Working Paper 27576 (Cambridge, MA:
National Bureau of Economic Research, Apr. 2021).
4The Survey of Consumer Finances reports a household’s mortgage payments, rental
payments, property taxes, home insurance, condo fees, vehicle lease and loan payments,
student loan payments, credit card payments, other/miscellaneous debt payments, and
spending on food. See Bhutta, Blair, Dettling, and Moore, “COVID-19, The CARES Act,
and Families’ Financial Security.”
5The unit of observation is household-by-week and the primary analysis sample consists
of 844,000 households that get UI benefits via direct deposit from 31 states or the District
of Columbia. See “Ganong, Greig, Liebeskind, Noel, Sullivan, and Vavra, Spending and
Job Search Impacts of Expanded Unemployment Benefits.
Page 69 GAO-22-104251 Unemployment Insurance
Appendix IV: Detailed Information about
Empirical Studies Reviewed
This helped maintain home values, thus acting as an automatic stabilizer
for the housing market. 6
Prevented detrimental outcomes from worsening. Some studies
conducted during the pandemic noted that specific occupations, such as
service-oriented or low-paying occupations in the restaurant industry,
experienced more layoffs and reductions in hours than occupations in
other industries. The studies added that because these low-wage
occupations disproportionately employ people of color or women, UI
expansion likely also reduced existing inequities among this group from
getting worse. 7
Two studies in our literature review demonstrated how expanded UI
prevented worsening of inequitable outcomes in families’ consumption
and financial insecurity. Specifically:
• One study found that the substantially larger job losses among low-
paid workers, significantly increased inequality in labor earnings
during the pandemic. 8 However, the CARES Act UI programs
increased average earnings by over 50 percent for the bottom 10
percent of pre-pandemic earners and the bottom one-third of pre-
pandemic earners received 49 percent of the total payments from the
6This study evaluated the impact of UI expansions on delinquencies, foreclosures, and
home values after controlling for state-level economic conditions and household
characteristics. Their results showed that a $3,600 increase in maximum extended UI
benefits was associated with a twelve percent decline in layoff-related increase in
delinquency and nearly 15 percent of the layoff-related increase in foreclosures. See
Joanne W. Hsu, David A. Matsa, and Brian T. Melzer, “Unemployment Insurance as a
Housing Market Stabilizer,” American Economic Review 108, no. 1 (2018).
7For example, one study that examined the impact of COVID-19 pandemic on women’s
versus men’s employment, found relatively larger employment declines among women.
Using micro data from several national labor force surveys, they found both the
composition of women’s employment across industries and occupations as well as
increased childcare needs during closures of schools and daycare centers to be important
causes for this pattern. See Titan Alon, Sena Coskun, Matthias Doepke, David Koll, and
Michèle Tertilt, From Mancession to Shecession: Women’s Employment in Regular and
Pandemic Recessions, NBER Working Paper Series Working Paper 28632 (Cambridge,
MA: National Bureau of Economic Research, Apr. 2021).
8The study also explained that given the consumption patterns of low-income individuals,
where a big proportion of their income is spent rather than saved, expansion of UI likely
produced substantial multiplier effects and further stimulated aggregate demand. See
Guido Matias Cotes and Eliza Forsythe, Impacts of the COVID-19 Pandemic and the
CARES Act on Earnings and Inequality, IZA Institute of Labor Economics, Discussion
Paper No. 13643 (Aug. 2020).
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CARES Act UI programs, thus preventing the inequities from getting
worse.
• A study using Survey of Consumer Finances data also estimated the
pandemic’s effects on families by race and ethnicity and found that
the CARES Act UI and cash assistance programs had the biggest
positive impact on Black and Hispanic or Latino/a families’ financial
security. 9
• Studies also showed that in the absence of expanded UI, poverty
levels would have been higher during the Great Recession and the
pandemic.
• One of the studies conducted during the pandemic found that the
CARES Act UI programs effectively blunted a rise in poverty rates in
April 2020. 10 Specifically, the economic impact payments and UI
programs lifted more than 18 million individuals out of monthly poverty
in April 2020, but this number fell to around 4 million individuals after
the expiration of the $600 per week unemployment supplement. They
also found that the differences in poverty rates between Black and
Hispanic individuals relative to White individuals were magnified
during the pandemic and after the expiration of the Federal Pandemic
Unemployment Compensation (FPUC) $600 per week unemployment
supplement.
• Results from another study using Current Population Survey data
indicated that government programs during the pandemic, including
the expanded UI programs, significantly reduced poverty, which would
have risen by over 2.5 percentage points in the absence of such
programs. 11
• A study conducted during the Great Recession that analyzed Survey
of Income and Program Participation panel data found that poverty
rates and self-reported disability rose substantially after expanded UI
benefits introduced during recession were exhausted. 12
9See Bhutta, Blair, Dettling, and Moore, “COVID-19, The CARES Act, and Families’
Financial Security.”
10Parolin, Curran, Matsudaira, Waldfogel, and Wimer, Monthly Poverty Rates in the United
States during the COVID-19 Pandemic.
11J. Han, B. D. Meyer, and J. X. Sullivan, Income and Poverty in the COVID-19 Pandemic,
NBER Working Paper Series Working Paper 27729 (Cambridge, MA: National Bureau of
Economic Research, Aug. 2020).
12Rothstein and Valletta, “Scraping By.”
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Empirical Studies Reviewed
Empirical Analyses Show Our review of 13 studies that empirically analyzed the relationship
That UI Expansion Had between UI expansion and workers’ incentives to return to work found
limited disincentive effects on workers’ decisions to return to work.
Limited Negative Effects
Specifically, the studies either found that expanded UI had no disincentive
on Workers’ Incentives to effects or if they found some effect it was limited to a small group of
Return to Employment workers. For example, eight studies we reviewed found that expanded UI
benefits either during the pandemic or the Great Recession had no
effects and four found limited effects on workers’ willingness to return to
work. For example:
• Eight studies found no disincentive effects
• Three of these studies analyzed earnings data for hourly waged
restaurant workers and food industry employees during the
current pandemic and found no evidence of a relationship
between high-earnings replacement rates from expanded UI
benefits—meaning the amount of pre-pandemic earnings that UI
benefits covered—and declines in employment. 13 Two of these
studies grouped individuals according to their earnings
replacement rates after receiving expanded UI benefits and found
that workers with more generous benefits did not experience
differential declines in employment when FPUC was in place and
that workers with higher replacement rates were no less likely to
return to work than workers with lower replacement rates. 14 The
third study divided U.S. states into four groups by their median
replacement rates and found that states with more generous
unemployment insurance benefits had milder declines in
13They used data from Homebase, which is a private firm that provides scheduling and
time clock software to small businesses, covering hundreds of thousands of workers
across the U.S. and Canada. Homebase’s clients are primarily small firms that require
time clocks for their day-to-day operations, nearly half of which are in the food and drink
industry. Workers are predominantly hourly, not salaried, employees.
14These studies controlled for state-industry-week trends to account for variation in the
pandemic’s severity and business restrictions. See Lucas Finamor and Dana Scott, “Labor
Market Trends and Unemployment Insurance Generosity during the Pandemic,” Economic
Letters 199 (2021) and Dana Scott and Lucas Finamor, Employment Effects of
Unemployment Insurance Generosity During the Pandemic, Munich Personal RePEc
Archive no. 102390, accessed May 24, 2022, https://mpra.ub.uni-
muenchen.de/id/eprint/102390.
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Empirical Studies Reviewed
employment and faster recoveries between March and July
2020. 15
• Another recent study we reviewed concluded that states’
withdrawal from paying increased UI benefit amounts did not
affect workers’ willingness to work. The study analyzed data
through the first week of August, 2021 to compare the effect on
the financial and employment patterns of unemployed workers in
states that stopped paying expanded UI benefits in the form of
additional $300 weekly payment (before their expiration), to
workers with the same unemployment duration in states that
retained these benefits. 16 Although the study found that states that
stopped paying expanded UI benefits saw employment levels
increase by 4.4 percentage points, it attributed most of this
employment gains to workers’ exhaustion of UI benefits and not to
states’ creating greater incentives for workers to find jobs by
stopping the $300 weekly payment. Through the first week of
August 2021, average UI benefits for these workers fell by $278
per week and earnings rose by $14 per week, offsetting only 5
percent of the loss in income. Average spending per worker fell by
$145 per week, as the loss of benefits led to a large immediate
decline in consumer spending. Moreover, the percentage of
workers covered by UI dropped by 35 percentage points among
workers who were unemployed and receiving UI at the end of April
2021, substantially larger than the 4.4 percentage increase in
employment levels. The study attributed most of this employment
gains to workers’ exhaustion of UI benefits and not to states’
creating greater incentives for workers to find jobs by stopping the
$300 weekly payment.
• Another study conducted an event study— an empirical analysis
to assess the impact of an event—to analyze the effect of the
sharp, and unprecedentedly large, reduction in the UI benefit
replacement rates due to the expiration of the FPUC and did not
find that this led to a sizable increase in employment. These
results were more pronounced for two groups that comprised a
15W. Bartik, M. Bertrand, F. Lin, J. Rothstein, and M. Unrath, Measuring the Labor Market
at the Onset of the COVID-19 Crisis, NBER Working Paper Series Working Paper 27613
(Cambridge, MA: National Bureau of Economic Research, July 2020).
16Kyle Coombs, Arindrajit Dube, Calvin Jahnke, Raymond Kluender, Suresh Naidu, and
Michael Stepner, Early Withdrawal of Pandemic Unemployment Insurance: Effects on
Earnings, Employment and Consumption, Harvard Business School Working Paper, No.
22-046 (Boston, MA: Aug. 2021).
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Empirical Studies Reviewed
vast majority of UI recipients, that is, among those without a
college degree or those in a non-high income group. 17
• Three older studies conducted during the Great Recession also
did not find significant disincentive effects of UI extensions during
that period. 18
• Four of our studies did find some disincentive effects but these were
limited to a certain group of workers.
• One study, for example, used Bureau of Labor Statistics’ Current
Population Survey micro data to estimate the amount of benefits
that would lead workers to refuse employment. To do so, it
examined workers with different skills (i.e., their education levels),
in different occupations, and across U.S. states. The analysis
showed that the $600 supplement had moderate disincentive
effects on job-finding rates in the first half of 2020 but only for a
small share of job seekers. 19
• A second study analyzed checking account bank data and found
that the rate at which workers returned to employment was
relatively constant between May and October 2020 despite
massive fluctuations in benefit levels over this time period. The
initial study claimed that these findings were inconsistent with the
presence of a large disincentive effect from the UI benefit
17A.Dube, Aggregate Employment Effects of Unemployment Benefits During Deep
Downturns: Evidence From the Expiration of the Federal Pandemic Unemployment
Compensation, NBER Working Paper Series Working Paper 28470 (Cambridge, MA:
National Bureau of Economic Research, Feb. 2021).
18See Henry S. Farber, Jesse Rothstein, and Robert G. Valletta, “The Effect of Extended
Unemployment Insurance Benefits: Evidence from the 2012-2013 Phase-Out,” American
Economic Review: Papers & Proceedings 105, no. 5 (2015); Henry S. Farber and Robert
G. Valletta, “Do Extended Unemployment Benefits Lengthen Unemployment Spells?
Evidence from Recent Cycles in the US Labor Market,” The University of Wisconsin Press
Journals Division 50, no. 4 (Fall 2015) and A. Figura and D. Ratner, How Large were the
Effects of Emergency and Extended Benefits on Unemployment during the Great
Recession and its Aftermath?, Finance and Economics Discussion Series 2017-068
(Washington, D.C.: Board of Governors of the Federal Reserve System, 2017).
19Specifically, their results show that the rate at which workers returned to employment
during the months of April through June in 2020 are lower for individuals whose post-
CARES Act UI replacement rates rise the most, however these results are statistically
significant for the month of May but only marginally significant for the months of April and
June. They explain that the fragility of these estimates suggests that the disincentive
effects of enhanced UI generosity on job search only affects a small fraction of the
sample. See Petrosky-Nadeau and Valletta, UI Generosity.
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Empirical Studies Reviewed
supplements for most workers. 20 However, the updated study with
newer data found small disincentive effects—the job-finding rate
increased by 0.76 percentage points after the expiration of the
$600 supplement and decreased by 0.56 percentage points after
the introduction of the $300 supplement. 21
• One of the studies compared the states that opted out of one of
the expanded UI programs in June 2021, with those that
continued with the programs until they expired in September 2021.
This study concluded that the expanded eligibility and generosity
of expanded UI benefits may have slowed transitions from
unemployment to employment. However, their evidence also
showed early termination increased financial stress among
people. 22
• A study conducted during the Great Recession found that UI
extensions resulted in over a 10-percentage point decline in the
probability that unemployed women would search for jobs, but it
found no significant impact on job-search behavior for
unemployed men. 23
Some studies explained that results showing limited disincentive effects
are understandable because workers usually make dynamic and not
static decisions about employment. In other words, workers consider
factors such as the limited duration of benefits, loss of the option to return
to their previous job, time required to find a new job, and the prospect of
20See Ganong, “Spending.”
21The authors explain that the job-finding rate was trending upwards prior to the expiration
of the $600 supplement and even after the increase, the rate was much lower than the
job-finding rate before the pandemic. See Peter Ganong, Fiona Greig, Pascal Noel, Daniel
M. Sullivan, and Joseph Vavra, Micro and Macro Disincentive Effects of Expanded
Unemployment Benefits (University of Chicago and JP Morgan Chase Institute and NBER,
July 29, 2021), accessed Aug. 31, 2021,
https://voices.uchicago.edu/noel/files/2021/07/disincentive_effects_of_expanded_ui.pdf.
22Harry J. Holzer, R. Glenn Hubbard, and Michael R. Strain, Did Pandemic Unemployment
Benefits Reduce Employment? Evidence From early State-Level Expirations in June
2021, NBER Working Paper Series Working Paper 29575 (Cambridge, MA: National
Bureau of Economic Research, Dec. 2021).
23Krishna Regmi, “Extended Unemployment Insurance and Job Search: Evidence from
Time Use Data,” BE J. Economics Anal. Policy 15, no. 2 (2015).
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Empirical Studies Reviewed
permanently lower wages after the career setback of being unemployed
in a recession. 24
• One study demonstrated that once workers consider the dynamic
factors, only workers who had low previous wages, an almost certain
return-to work offer, and very low wage losses with unemployment
would turn down their old job and remain unemployed while receiving
CARES Act UI benefits. 25 These cases may then explain the
anecdotal evidence of workers’ unwillingness to return to work.
• Another study noted that because health insurance and other benefits
are tied to jobs for many workers and expanded UI benefits are limited
in duration; it could limit workers’ perceived value of expanded UI, and
increase the value of working. 26
• Similarly, another empirical study estimated the lowest wage at which
a worker would be willing to accept a particular type of job
(reservation wage) for a wide range of U.S. workers during the
pandemic and concluded that only two occupations, food services and
janitors, may have preferred unemployment to accepting their pre-
pandemic jobs during the first week of June 2020. 27
Other factors affecting employment. Some studies included in our
review explored factors other than disincentive effects that could be
influencing the relationship between expansion of UI and high
24See Boar and Mongey, Dynamic Trade-Offs. Also see N. Petrosky-Nadeau, Reservation
Benefits: Assessing Job Acceptance Impacts of Increased UI Payments, Federal Reserve
Bank Working Paper Series 2020-28 (San Francisco, CA: Federal Reserve Bank of San
Francisco, Aug. 2020).
25This study estimated that, given the replacement rates, if workers made a static
comparison of their previous wage to the benefits available under the CARES Act UI
programs, then 68 percent of laid-off workers would not have returned to work if offered
their previous jobs over April to July 2020. See Boar and Mongey, Dynamic Trade-Offs.
26See Finamor and Scott, “Labor Market Trends.”
27Petrosky-Nadeau and Valletta, UI Generosity.28According to economic theory, high
levels of unemployment observed when UI is expanded could either be due to supply-side
factors such as disincentives to return to work or reduced efforts to search for jobs among
those receiving these benefits; or it could be due to demand side factors such as a
reduction in vacancies as firms go out of business or downsize during a recession. As
already described above, empirical studies show that UI expansion resulted in limited
disincentive effects on workers’ return to employment.
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unemployment observed during the pandemic and the Great Recession. 28
These studies found that factors such as longer labor force attachment or
reduced demand for labor could have been responsible for high levels of
unemployment observed during these adverse times; times during which
UI may be expanded. Other studies, not included in our review of
empirical studies have also pointed out fear of risk of illness and loss of
childcare as other potential factors. 29 The studies included in our review
also found that UI expansion may enable people to wait longer or search
more and potentially find jobs better matched to their skill level. The
authors claim that this could potentially increase the general welfare by
improving the labor markets.
• Longer labor force attachment. Seven studies analyzed the
relationship between UI expansion and unemployment during the
Great Recession of 2007 to 2009 and found that extended UI either
increased the overall unemployment rate by a small amount (ranging
from 0 percent to 1.4 percentage points) or extended the duration of
unemployment). Four of these studies explored the reasons for this
relationship and found that it was primarily due to more workers
28According to economic theory, high levels of unemployment observed when UI is
expanded could either be due to supply-side factors such as disincentives to return to
work or reduced efforts to search for jobs among those receiving these benefits; or it could
be due to demand side factors such as a reduction in vacancies as firms go out of
business or downsize during a recession. As already described above, empirical studies
show that UI expansion resulted in limited disincentive effects on workers’ return to
employment.
29One study noted that during the COVID-19 crisis, the risk of illness made unemployment
more desirable for workers who could not work from home especially those in the contact
or services sector. In these jobs, expanded UI likely enabled workers who had concerns
about getting infected to stay home rather than creating “disincentives” to go to work. See
L. Fang, J. Nie, and Z. Xie, Unemployment Insurance during a Pandemic kcFED
Research Working Papers 20-07 (Kansas City, MO: Federal Reserve Bank of Kansas
City, Aug. 2020).
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Empirical Studies Reviewed
staying attached to the labor force longer because of UI expansion
rather than refusing employment or reducing their job-search efforts. 30
• Reduced demand for labor. One study conducted during the
pandemic found that the sharp, and unprecedentedly large, reduction
in UI benefit replacement rates—roughly from 145 percent of wages
to 85 percent of wages—when FPUC initially expired in July 2020 did
not lead to any sizable increase in employment. 31 The study noted
that this could be due to the macroeconomic effects arising from a
reduction in consumption and aggregate demand from the reduction
in benefits that potentially led to lowering labor demand further.
Other benefits of UI expansion. Studies included in our review also
found that UI expansion had beneficial impacts on the functioning and
efficiency of the labor market in general which potentially enhanced
general welfare. For example:
• One study conducted during the Great Recession of 2007 to 2009
found that UI expansion led to better matching between employers
and employees. Specifically, it found that increasing the generosity of
UI improved the quality of employee-employer matches because the
expanded UI allowed workers to search longer and eventually find
jobs better suited to their skills and ones where they were no longer
over-qualified. 32 That is, the UI benefits did not create a disincentive
to “work” per se but created an opportunity to find jobs better matched
30The Bureau of Labor Statistics defines the ‘‘labor force” to include all people age 16 and
older who are classified as either employed or unemployed. Thus the labor force level is
the number of people who are either working or actively looking for work. Farber,
Rothstein, and Valletta, “The Effect of Extended Unemployment Insurance Benefits”;
Farber and Valletta, “Do Extended Unemployment Benefits Lengthen Unemployment
Spells?”; Jesse Rothstein, “Unemployment Insurance and Job Search in the Great
Recession,” Brookings Papers on Economic Activity (Fall 2011) and Robert G. Valletta,
“Recent Extensions of U.S. Unemployment Benefits: Search Responses in Alternative
Labor Market States,” IZA Journal of Labor Policy 3, no. 18 (2014). Three of the seven
studies did not explore the labor market exits. Figura and Ratner, How Large were the
Effects; Gabriel Chodorow-Reich, John Coglianese, and Loukas Karabarbounis, “Macro
Effects of Unemployment Benefit Extensions: A Measurement Error Approach,” The
Quarterly Journal of Economics (2019) and Makoto Nakajima, “A Quantitative Analysis of
Unemployment Benefit Extensions,” Journal of Monetary Economics 59 (2012).
31The 145 percent replacement rate is based on the study conducted by Ganong and
colleagues mentioned above. Dube, Aggregate Employment Effects.
32A. Farooq, A. D. Kugler, and U. Muratori, Do Unemployment Insurance Benefits Improve
Match Quality? Evidence from Recent U.S. Recession, NBER Working Paper Series
Working Paper 27574 (Cambridge, MA: National Bureau of Economic Research, July
2020).
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Empirical Studies Reviewed
with employee skills. The study also found that this effect was greater
for women, minorities, less educated, and older workers, all of whom
are more likely to be credit-constrained. Lastly, the study found that
improvement in match quality resulted in higher earnings for workers
because now they were matched to jobs more aligned with their skills
and therefore received higher salaries; however, this did not result in
firms paying more in wages than before the pandemic.
• Two other studies—one conducted during the Great Recession of
2007 to 2009 and the other during the pandemic—found that, even if
UI expansion negatively impacts job-search efforts, it can have
welfare-improving effects by making labor markets tighter. Labor
market tightness is defined by the number of vacancies per
application. This means the lower the number of applications per
vacancy, the tighter the market and hence less competition among
applicants at a time when jobs are scarce. The authors claim that this
has a positive impact on welfare. 33
33For example, one study found that during the Great Recession a 10% increase in benefit
duration decreased state-level job applications by 1%, but had no robust effect on job
vacancies and therefore had a positive impact on labor market tightness. See Ioana
Marinescu, “Reprint of: The general equilibrium impacts of unemployment insurance:
Evidence from a large online job board,” Journal of Public Economics 171 (2019).
Similarly, a new study by the same author and two others conducted during the pandemic
found that although FPUC reduced job search efforts, it did not impact vacancy creation or
the number of workers hired because these vacancies were receiving an unusually high
number of applications during the pandemic anyway. See Ioana Marinescu, Daphne
Skandalis, and Daniel Zhao, The Impact of The Federal Pandemic Unemployment
Compensation on Job Search and Vacancy Creation, NBER Working Paper Series
Working Paper 28567 (Cambridge, MA: Federal Reserve Bank, Mar. 2021).
Page 79 GAO-22-104251 Unemployment Insurance
Appendix V: Studies Included in Literature
Appendix V: Studies Included in Literature
Review
Review
Our literature review included 30 academic studies that empirically
analyze the impact of UI expansion during the Great Recession of 2007-
2009 and the COVID-19 pandemic. These studies were selected after a
detailed assessment of each study’s research methodology, including its
data quality, research design, and analytic techniques. We based our
data collection and assessment on generally accepted social science
standards.
Bartik, A. W., M. Bertrand, F. Lin, J. Rothstein, and M. Unrath. Measuring
the Labor Market at the Onset of the COVID-19 Crisis. NBER Working
Paper Series Working Paper 27613. Cambridge, MA: National Bureau of
Economic Research, July 2020.
Bhutta, Neil, Jacqueline Blaire, Lisa Dettling, and Kevin Moore. “COVID-
19, The CARES Act, and Families’ Financial Security.” National Tax
Journal 73, no. 3 (Sept. 2020): 645-672.
Boar, C., and S. Mongey. Dynamic Trade-Offs and Labor Supply Under
the CARES Act. NBER Working Paper Series Working Paper 27727.
Cambridge, MA: National Bureau of Economic Research, Aug. 2020.
Casado, M. G., B. Glennon, J. Lane, D. McQuown, D. Rich, and B. A.
Weinberg. The Aggregate Effects of Fiscal Stimulus: Evidence from the
COVID-19 Unemployment Supplement. NBER Working Paper Series
Working Paper 27576. Cambridge, MA: National Bureau of Economic
Research, Apr. 2021.
Casado, M. G., B. Glennon, J. Lane, D. McQuown, D. Rich, and B. A.
Weinberg. The Effect of Fiscal Stimulus: Evidence From COVID-19.
NBER Working Paper Series Working Paper 27576. Cambridge, MA:
National Bureau of Economic Research, Aug. 2020.
Chodorow-Reich, Gabriel, John Coglianese, and Loukas Karabarbounis.
“The Macro Effects of Unemployment Benefit Extensions: A
Measurement Error Approach.” The Quarterly Journal of Economics
(2019): 227-279.
Coombs, Kyle, Arindrajit Dube, Calvin Jahnke, Raymond Kluender,
Suresh Naidu, and Michael Stepner. Early Withdrawal of Pandemic
Unemployment Insurance: Effects on Earnings, Employment and
Consumption. Harvard Business School Working Paper 22-046, Aug.
2021.
Page 80 GAO-22-104251 Unemployment Insurance
Appendix V: Studies Included in Literature
Review
Dube, A. Aggregate Employment Effects of Unemployment Benefits
During Deep Downturns: Evidence From the Expiration of the Federal
Pandemic Unemployment Compensation. NBER Working Paper Series
Working Paper 28470. Cambridge, MA: National Bureau of Economic
Research, Feb. 2021.
Farber, Henry S., Jesse Rothstein, and Robert G. Valletta. “The Effect of
Extended Unemployment Benefits: Evidence from the 2012-2013 Phase-
Out.” American Economic Review: Papers and Proceedings 105, no. 5
(2015): 171-176.
Farber, Henry S., and Robert G. Valletta. “Do Extended Unemployment
Benefits Lengthen Unemployment Spells? Evidence from Recent Cycles
in the US Labor Market.” The Journal of Human Resources 50, no. 4 (Fall
2015): 873-909.
Farooq, A., A. Kugler, and U. Muratori. Do Unemployment Insurance
Benefits Improve Match Quality? Evidence from Recent US Recessions.
NBER Working Paper Series Working Paper 27574. Cambridge, MA:
National Bureau of Economic Research, July 2020.
Figura, A., and D. Ratner. How Large were the Effects of Emergency and
Extended Benefits on Unemployment during the Great Recession and its
Aftermath? Finance and Economics Discussion Series, Divisions of
Research and Statistics and Monetary Affairs. Washington, D.C.: Federal
Reserve Board, 2017.
Finamor, Lucas, and Dana Scott. “Labor Market Trends and
Unemployment Insurance Generosity during the Pandemic.” Economic
Letters 199 (2021): 1-5.
Ganong, Peter, Fiona Greig, Max Liebskind, Pascal Noel, Daniel Sullivan,
and Joseph Vavra. Spending and Job Search Impacts of Expanded
Unemployment Benefits: Evidence from Administrative Micro Data.
Chicago, IL: Becker Friedman Institute, Feb. 2021.
Ganong, Peter, Fiona Greig, Pascal Noel, Daniel M. Sullivan, and Joseph
Vavra. Micro and Macro Disincentive Effects of Expanded Unemployment
Benefits. University of Chicago and JP Morgan Chase Institute and
NBER, July 2021. Accessed Aug. 31, 2021.
https://voices.uchicago.edu/noel/files/2021/07/disincentive_effects_of_ex
panded_ui.pdf.
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Appendix V: Studies Included in Literature
Review
Han, J., B. D. Meyer, and J. Sullivan. Income and Poverty in the COVID-
19 Pandemic. NBER Working Paper Series Working Paper 27729.
Cambridge, MA: National Bureau of Economic Research, Aug. 2020.
Holzer, Harry J., R. Glenn Hubbard, and Michael R. Strain. Did Pandemic
Unemployment Benefits Reduce Employment? Evidence from Early
State-Level Expirations in June 2021. NBER Working Paper Series
Working Paper 29575. Cambridge, MA: National Bureau of Economic
Research, Dec. 2021.
Hsu, Joanne W., David A. Matsa, and Brian T. Melzer. “Unemployment
Insurance as a Housing Market Stabilizer.” American Economic Review
108, no. 1 (2018): 49-81.
Marinescu, Ioana. “Reprint of: The General Equilibrium Impacts of
Unemployment Insurance: Evidence from a Large Online Job Board.”
Journal of Public Economics 171 (2019): 70-85.
Marinescu, Ioana, Daphne Skandalis, and Daniel Zhao. The Impact of the
Federal Pandemic Unemployment Compensation on Job Search and
Vacancy Creation. NBER Working Paper Series Working Paper 28567.
Cambridge, MA: National Bureau of Economic Research, Mar. 2021.
Matias Cortes, Guido, and Eliza Forsythe. Impacts of COVID-19
Pandemic and the CARES Act on Earnings and Inequality. IZA Institute of
Labor Economics, Aug. 2020.
Nakajima, Makoto. “A Quantitative Analysis of Unemployment Benefit
Extensions.” Journal of Monetary Economics 59 (2012): 686-702.
Parolin, Zachary, Megan Curran, Jordan Matsudaira, Jane Waldfogel,
and Christopher Wimer. Monthly Poverty Rates in the United States
during the COVID-19 Pandemic. New York, NY: Center on Poverty and
Social Policy at Columbia University, Oct. 2020.
Petrosky-Nadeau, N. Reservation Benefits: Assessing Job Acceptance
Impacts of Increased UI Payments. Working Paper Series 2020-28. San
Francisco, CA: Federal Reserve Bank of San Francisco, August 2020.
Petrosky-Nadeau, N., and R. G. Valletta. UI Generosity and Job
Acceptance: Effects of the 2020 CARES Act. Working Paper 14454. San
Francisco, CA: Federal Reserve Bank of San Francisco, May 2021.
Page 82 GAO-22-104251 Unemployment Insurance
Appendix V: Studies Included in Literature
Review
Regmi, Krishna. “Extended Unemployment Insurance and Job Search:
Evidence from Time Use Data.” BEJ Economic Analysis Policy 15, no. 2
(2015): 653-683.
Rothstein, Jesse. “Unemployment Insurance and Job Search in the Great
Recession.” Brookings Papers on Economic Activity (Fall 2011): 143-213.
Rothstein, Jesse, and Robert G. Valletta. “Scraping By: Income and
Program Participation after the Loss of Extended Unemployment
Benefits.” Journal of Policy Analysis and Management 36, no. 4 (2017):
880-908.
Scott, Dana, and Lucas Finamor. Employment Effects of Unemployment
Insurance Generosity during the Pandemic. Munich Personal RePEc
Archive 102390. Accessed May 24, 2022. https://mpra.ub.uni-
muenchen.de/id/eprint/102390.
Valletta, Robert G. “Recent Extensions of U.S. Unemployment Benefits:
Search Responses in Alternative Labor Market States.” IZA Journal of
Labor Policy 3, no. 18 (2014): 1-25.
Page 83 GAO-22-104251 Unemployment Insurance
Appendix VI: Comments from the
Appendix VI: Comments from the Department
of Labor
Department of Labor
Page 84 GAO-22-104251 Unemployment Insurance
Appendix VI: Comments from the Department
of Labor
Page 85 GAO-22-104251 Unemployment Insurance
Appendix VI: Comments from the Department
of Labor
Page 86 GAO-22-104251 Unemployment Insurance
Appendix VI: Comments from the Department
of Labor
Page 87 GAO-22-104251 Unemployment Insurance
Appendix VI: Comments from the Department
of Labor
Page 88 GAO-22-104251 Unemployment Insurance
Appendix VII: GAO Contact and Staff
Appendix VII: GAO Contact and Staff
Acknowledgments
Acknowledgments
Thomas Costa at 202-512-4769 or costat@gao.gov
GAO Contact
In addition to the contact named above, Mary Crenshaw (Assistant
Staff Director), Chris Morehouse (Analyst in Charge), Sandra Baxter, Namita
Acknowledgments: Bhatia-Sabharwal, Mary Edgerton, Sara Shore, and Elizabeth Spurgeon
made key contributions to this report. Aditi Archer, Jessica Ard, Seto
Bagdoyan, Daniel Concepcion, Shana Deitch, Holly Dye, Alex Galuten,
Susan Irving, Nicole Jarvis, Jeanine Navarrete, Mimi Nguyen, Paula
Rascona, William Shear, Almeta Spencer, Walter Vance, Erin Villas, and
Adam Wendel also made significant contributions to this report.
(104251)
Page 89 GAO-22-104251 Unemployment Insurance
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