Report: In 2011 Government Paid Out $3.3 Billion In False Unemployment Claims

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A new report claims that the U.S. government paid out billions of dollars in fraudulent unemployment benefit claims in 2011.

According to a report from the St. Louis Federal Reserve, the federal government paid about $2.2 billion to people who were actually working. The government handed out about $3.3 billion in fraudulent benefits overall.

Workers earning at least $900 a week, which works out to $46,800 a year, collected about a half-billion dollars. Those earning less than $300 per week received only $210 million of the fraudulent benefits, The Huffington Post reported.

The government paid out $108 billion total in unemployment benefits in 2011, so the fraudulent payouts were a relatively small percentage. Still, it is a concern that money intended to help the jobless went to people who might not really need it.

Unemployment benefit fraud is nothing new. 3,200 households making more than $1 million per year received unemployment benefits at some point during the economic downturn. Those households obviously would not have qualified for the benefits because of the amount of money they were taking in annually.

In their report about the subject, authors David L. Fuller, B. Ravikumar and Yuzhe Zhang concluded:

“Fraud due to concealed earnings represents the largest source of fraud in the U.S. unemployment insurance system. Individuals with relatively low earnings constitute a larger fraction of those committing such fraud. High-earnings individuals, however, account for larger dollar amounts of this fraud. Given limited resources to deter fraud and to recover overpayments, the unemployment insurance system faces a trade-off between the number of individuals versus the dollar amounts.”

Sources: The Huffington Post, The Wall Street Journal