Unemployment system plagued by delays, fraud and racial gaps during pandemic, says watchdog agency

Demonstrators participate in a protest asking U.S. senators to support the continuation of unemployment benefits on July 16, 2020 in Miami Springs, Florida.

The US Government Accountability Office said in two reports that the nation's unemployment system suffered multiple failures during the Covid-19 pandemic.

Unemployment insurance was added to the GAO's high-risk list, which outlines programs and operations vulnerable to waste, fraud, abuse or mismanagement.

Many long-standing issues remain unaddressed and pose a threat during a future crisis according to the federal watchdog.

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The GAO said that leaving them unaddressed would heighten the risk of the system not meeting fundamental program expectations of serving workers and the broader economy.

The unemployment program was strengthened by Congress. The unemployment rate peaked at 15% in April 2020. In the course of two months, the economy lost 22 million jobs.

Lawmakers increased the amount of weekly benefits, extended the duration of aid and made it available to millions of self-employed, gig and other workers who are not eligible for assistance.

Proponents say the funding helped households. The GAO said that fissures in program integrity became more apparent as workers filed a record number of benefits.

There were delays in receiving benefits for many workers. States aim to pay benefits in 21 days.

According to the GAO, by June 2020, the share of people who had achieved that outcome had fallen from 98% to 52%. In February, the share was over 60 percent.

Staffing levels, resource constraints, and outdated computer systems were to blame for the delays. The newly created federal programs had to be implemented from scratch in many states.

An anonymous North Dakota official compared implementing the Pandemic Unemployment Assistance program to building a million miles an hour house without really knowing what you're doing.

The temporary federal program for gig workers was called Pina.

Rep. Richard Neal, D-Mass. and chairman of the House Ways and Means Committee, during a hearing on Sept. 10, 2021.

Race and ethnicity were found to have differences in benefit payments. White applicants received aid at a higher rate than black applicants.

GAO said it's unclear why this happened. If criminals regularly used the stolen identities of Black workers to claim benefits and were denied, it would artificially reduce the share of black workers receiving benefits.

The chair of the House Ways and Means Committee said that it was unacceptable that applicants of color received benefits at a lower rate.

Criminals were lured by historically rich benefits and a system pressured by a lot of claims during the Pandemic.

The GAO said improper payments were 10 times greater in fiscal year 2020 than in the previous year.

States and the U.S. Department of Labor are cracking down on fraud. Some of the measures delayed benefits for legitimate people.

Many of the options offered by the GAO have been requested by worker advocates.

Increasing federal funding for benefit administration, improving and modernizing computer systems, and better allocating resources to address fraud were some of the suggestions it made.