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Some unemployed Americans were underpaid by COVD-19 relief program, watchdog says

U.S. Government Accountability Office (Coolcaesar/WikiCommons)

Some unemployed Americans have been underpaid under a federal COVID-19 relief program, a watchdog found.

The U.S. Government Accountability Office — a nonpartisan, independent agency that works for Congress — on Monday released a report that found a majority of states have been paying Pandemic Unemployment Assistance claimants the minimum benefit allowed instead of the amount for which they’re eligible based on their prior income.

The PUA program, created under the CARES Act signed into law in March, provides payments to Americans who are unemployed for reasons related to the COVID-19 pandemic but who would otherwise not be eligible to receive state unemployment insurance benefits, including gig workers and those who are self-employed.

The report comes as 12 million Americans could lose their unemployment benefits next month, when certain relief programs are set to expire, and as congressional Republicans and Democrats and the White House have been unable to reach a deal on another coronavirus relief package.

Unemployed Americans underpaid

In September, average PUA payments ranged roughly from $114 to $357, the report found, and in the majority of states reporting, average weekly payments were “close to their minimum benefit amounts.”

“Specifically, 27 of the 41 states reported average weekly PUA benefits paid that were within 25 percent of the state’s minimum PUA benefit amount; 10 of these states reported average benefits within 10 percent of the minimum,” the report says. “This suggests that many individuals in these states are receiving the minimum benefit — because the average is close to the minimum.”

In 70% of state’s reporting data for September, average weekly PUA benefits were “lower than the approximately $245 per week needed to remain above the 2020 poverty guidelines for a 1-person household,” the report says.

Officials with the U.S. Department of Labor told the GAO that many states decided to initially pay PUA recipients the minimum benefit instead of calculating how much they were eligible for in order to “facilitate implementation of the new program.”

States must eventually pay the difference between the minimum and the amount claimants qualify for, according to the GAO, but the Labor Department says it doesn’t know how many states have started the process of doing so.

Unemployment estimates

The report also found the Labor Department’s weekly reports hasn’t offered an accurate estimate of the total number of Americans claiming unemployment insurance benefits.

It’s possible the department has both overestimated and underestimated the number, the GAO says.

“That is because DOL presents state-reported data on the total count of weeks claimed, nationwide, as the number of people claiming benefits,” GAO says. “DOL has traditionally used the total count of weeks claimed to estimate the number of individuals claiming benefits because the two numbers were a good approximation of each other.”

But those estimates are “not appropriate in the context of the pandemic” due to data issues, including backlogged or otherwise delayed claims, the group says.

“For example, state backlogs in processing claims led to individuals submitting claims for multiple weeks of retroactive benefits during single reporting periods,” it says. “So, by using claims counts to represent the number of people, many individuals are counted more than once in DOL’s estimate.”

In its most recent report, the Labor Department estimated that another 778,000 Americans filed initial unemployment claims during the week ending Nov. 21. In October, the unemployment rate was 6.9%, down from 7.9% in September and 8.4% in August.

The Labor Department agreed to provide clearer data in its future reports, the GAO says.

“Without an accurate accounting of the number of individuals who are relying on these benefits in as close to real time as possible, policymakers may be challenged to respond to the crisis at hand,” the report says.

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