Oops Money Already Spent
Please consider States Overpaid Coronavirus Unemployment Claims
Cher Haavind, deputy executive director of the Colorado Department of Labor and Employment, says many overpayments stemmed from workers incorrectly reporting their earnings.
States can waive recovery of overpayments for most unemployment insurance when there is no fraud involved, but the Pandemic Unemployment Assistance program follows a different set of rules. It is administered as a form of disaster relief, and the statute that guides it blocks states from forgiving the debts.
Adding to the complexity, the PUA program gave new categories of workers—including gig workers and the self-employed—access to unemployment checks. But state unemployment systems were designed to calculate benefits based on traditional jobs, employer records, W-2 tax documents and verifying income with pay stubs. Re-engineering the systems to account for far more complicated self-employment income was bound to create problems, experts say.
In Ohio, thousands of workers have been overpaid through the regular unemployment-benefits system and Pandemic Unemployment Assistance, says Michelle Wrona Fox, a staff attorney at Community Legal Aid Services in Youngstown, Ohio. For some of Ms. Fox’s clients, the state is docking their remaining benefits by half to recoup its money.
“I’m seeing complete panic,” she says. Many of Ms. Fox’s clients waited two to three months to get benefits in the first place, she says, and some are facing eviction. “They’re in dire straits,” she adds.
A spokesman for Ohio’s Department of Job and Family Services says about 20% of PUA claimants, or 108,000 people, had been overpaid as of Aug. 31 because of a combination of errors by the agency and claimants, but adds most of the errors arose from individuals failing to claim income they earned in weeks when they also received benefits.
Tip of the Iceberg
The article highlights errors in Pennsylvania, Ohio, and Colorado.
Some received $10,000 or more too much. One person was overpaid overpaid by $13,969.
Three states is likely the tip of the iceberg.
Fraud?
I suspect so. Individuals failed to claim income they earned in weeks when they also received benefits.
The less money you reported, the higher the benefits you received.
Some of this was accidental. But how much was purposeful?
Checks Stopped
Meanwhile the checks stopped on September 5. That’s when the PUA benefits expired.
For discussion, please see Little Progress on Unemployment Claims but Checks Grind to a Halt.
It is not possible to lower payments to make up the difference, yet the money has been spent.
Mish
The hours and manpower devoted to clawing back crumbs that were doled out to the masses will probably far exceed the resources used making sure far greater sums to businesses and megafarms are honest and true.
Penny wise, pound foolish coming and going — bureaucracy maximizing waste and minimizing efficiency!!
The best solution was to give the money to the states to use in their existing unemployment systems. They already had systems in place to deter fraud. Let each state decide how to best implement it.
Trump appears to be wincing in pain while he breathes https://twitter.com/brenonade/status/1313263278613827585?s=21
Well, that explains why they gave him the dexamethasone. It doesn’t explain why he’s out of the hospital, nor why he isn’t wearing a mask. That’s the most selfish thing I’ve seen in my life. He is standing there, spreading virus into the air around him, and doesn’t care.
“It doesn’t explain why he’s out of the hospital”
The show must go on. I am sure that the military moved a bunch of medical equipment into the WH in the past few days. They are pretty good at setting that stuff up really quickly.
As a layman student of history with special interest in Roman history its fascinating to watch Trump struggling to be deified as a living God
Remove the toilets from their houses. They’re worth about $300,000 for a property tax credit in Crook County, IL.
Why does it matter when money is free to create ?
I thought PUA was 39 weeks of benefits:
“In general, PUA provides up to 39 weeks of unemployment benefits to individuals not eligible for regular unemployment compensation or extended benefits, including those who have exhausted all rights to such benefits.”
Does anyone really expect anything else from a government program? Got to wonder what will happen with single-payer Govt. health insurance.
Where ever there is government money, there is fraud. I’m sure this will end up as another bipartisan bill that won’t work. Funny how much of the fraud was from overseas… they got scammed but Nigerians. i wonder if a Prince was involved in that one too.
Yachts too. Different class of fraud though.
So….will this now result in people with no means whatsoever being billed for money they don’t have and never will have?
Similar problem with the withholding tax deferment. People who never had to save to pay their taxes……and who probably never had a lot of savings pre-COVID anyway..how are they going to be able to play catch-up?
Answer, they won’t be able to pay…and neither will people who got too much unemployment.
In spite of some fraud (and there is some, no doubt) the best thing is to forgive it. Otherwise it will turn into a nightmare.
i mean back taxes can be paid whenever + interest. Low monthly payments are an option.
So is bankruptcy.
The iron rule of economics is: That which cannot be paid, will not be paid.
A lot of suffering and misery could be avoided if people could accept a little more easily that inflicting more pain on others than you’re enduring yourself never leads you to win anything.
Forgiveness: One of the only good things I can praise in America is the relatively forgiving bankruptcy laws (well, until Bush) in comparison to most every other country where debt is perpetual.
First, why assume that these people have “no means whatsoever”? The fact is that the normal picture of the poor unemployed person, getting half his/her normal salary doesn’t apply at all. These “poor unemployed people” were getting more than their regular salary, sometimes double or triple their normal wages. Worse, in the cases mentioned here, they were double dipping, earning money, and collecting outsized unemployment at the same time. It’s no wonder that sales of big ticket items, such as cars, were very, very strong.
If you were collecting unemployment on top of your wages, would you have “no means whatsoever”? Some may have no means to pay it back, others no doubt can pay it back easily. It’s easy to picture a bunch of poverty stricken people out there, but look at the stats! Personal income did not fall during Covid, it shot up dramatically due to excess benefits, while spending fell, resulting in huge increases in net savings. There are no doubt people suffering, but on average, Americans have done just fine.
Next, as far as the withholding tax deferment, that was stupid. I declined to do it, and had no complaints at all. I had several employees express a preference, in fact, that I not do it. Nevertheless, how it was “supposed” to work, was that you didn’t withhold it now, and then after the first of the year, you collected double on FICA and Medicare taxes. They would have no choice – they would pay it back. The question is, how much would it affect them to go 3 months with double FICA withholding? I didn’t want to go there, so I opted to not offer the deferment.
My employees wouldn’t be able to make rent and groceries if they had double FICA withheld to make up for deferment. So, in that kind of scenario, deferring the payments is asking for trouble. It just is. My entry level people make $15/hr. You can’t live on that here anyway, unless you’re willing to share rent, or your spouse has a better job…something.
The solution was not sensible, therefore, and should not have been offered by any employer in the first place. It’s an invitation to get in trouble…and for someone already drowning, it might be a lifeline they grab regardless……groceries today and worry about FICA later.
I doubt the government will be able to convict many real working people of fraud. It isn’t going to be politically acceptable, especially when the demographics are better understood. What if a lot of perpetrators turn out to be members of ethnic minorities?
It won’t even be politically popular to claw back overpayments…and I doubt much would be collected anyway.
I’m not condoning fraud. Just being realistic.
Most of my people make $10-12/hr, and I didn’t want to put them in a situation where they have to pay double FICA; I didn’t see it as helpful, but make no mistake, it would have been paid back. With business down 30-50% this year, I’m not making any more than my entry people, and my employees are getting far less hours than last year. No one is complaining. We know it is what it is. We just spend less. A lot less. I haven’t spent a penny this year on clothes, home furnishings, furniture, appliances, electronics, nor do I dine out or even buy frozen food. Other than rent, my expenditures are down about 80%. Yet, I get by, and my savings continue to go up. I’m not going to spend more than I make.
As for those out of work, we already have a system for dealing with them. They get unemployment, food stamps, housing assistance, energy assistance, medicaid, and a few other things. Yet, for some reason, we think that on top of all that, they should get an extra $15/hr equivalent. Does it bother me that unemployed people have a spendable income probably 10x mine? A little. But what bothers me more is when people talk about them as if they are in such bad shape, yet they overlook the people who run small businesses, and the people who still have jobs, but are working less hours. I’m not asking for pity, or benefits, just a stop to the perpetual whining. Let the safety net we have in place already work.