Measuring What Matters: Context and Recommendations to Improve Reporting on Unemployment Insurance (2024)

Key Points

  • This report explores the unemployment insurance system’s current data and performance management practices, including features designed to inform policymakers and the public about deficiencies in the administration of that system.
  • It argues that the program integrity reporting structure is overly focused on established overpayments and reactions without equivalent attention to fraud prevention or resilience measures.
  • It suggests areas in which the Department of Labor should modify its current data-reporting requirements to improve transparency and understanding of system performance, particularly around anti-fraud reporting.
  • It concludes with a proposal for an aspirational alternative framework, or “scorecard,” to better understand and improve system performance in the future.

Read the PDF.

During the pandemic, improper payments on unemployment benefits led to massive taxpayer losses. And yet recurring questions about the administrative performance of the unemployment insurance (UI) system remain mostly unanswered:

  • How do we know that the system meltdown, rampant fraud, and customer service failures that occurred during the pandemic won’t happen again when the system is once again under extreme stress?
  • How can we better understand the consistent trend of elevated improper payments that has dogged the UI system for years—even when it was not in crisis?
  • How do we know which states are operationally prepared for future challenges and which ones remain vulnerable to repeating past failures?
  • What do “good states” do differently, particularly in terms of technology and operations?
  • Which state-by-state variations are due to specific differences in state law?

Several facts stand out about these concerns. First, these questions are not inherently political; the pain of pandemic failures did not break along partisan lines. Everyone would benefit from making sure the nation’s federal and state unemployment benefits system is better prepared for the next time more Americans need timely access to these important, and highly cyclical, benefits.1

Second, the pandemic experience reflects how a new group of stakeholders—federal taxpayers—bears many of the program’s responsibilities. In 1995, a Department of Labor (DOL) Unemployment Insurance Program Letter (UIPL) noted: “The success of the UI system as a whole is to be measured by service to its ultimate customers, principally claimants and employers.”2 But during the pandemic, American taxpayers bore the burden of several hundred billion dollars of federal general revenue that was directly and brazenly stolen by adversarial nation-states, cybercrime gangs, and sophisticated fraudsters. The opportunity cost of that lost federal revenue was enormous and offsets much of the good that extraordinary federal benefits were able to accomplish.

The interests of federal taxpayers have not traditionally been considered in UI performance operations because past benefits were generally supported by state payroll taxes. However, recent congressional responses to recession and the pandemic emergency indicate that large general revenue–funded federal programs could reappear in response to future recessions. That suggests that the interests of federal taxpayers should be considered more directly and that public transparency on performance is even more warranted. This is particularly true because programs supported by federal general revenue displayed the highest rates of improper payments and fraud during the pandemic.3

There are, of course, ongoing debates about what policy changes are most necessary to improve the system’s readiness and performance when it comes to paying benefits. But without reporting reforms, any specific policy change may provide limited evidence of improvement or a decline in such performance. The system’s current regime of performance reporting is opaque, and states are not always reporting consistently.4 The current reporting structure simply does not encourage the state behaviors or system outcomes that all stakeholders desire.

Read the full report.

Notes

  1. For a detailed review of unemployment benefit payments, including significant improper payments, during the pandemic, see Matt Weidinger and Amy Simon, “Pandemic Unemployment Fraud in Context: Causes, Costs, and Solutions,” American Enterprise Institute, January 29, 2024, https://www.aei.org/research-products/report/pandemic-unemployment-fraud-incontext-causes-costs-and-solutions.
  2. Mary Ann Wyrsch, “Unemployment Insurance Program Letter No. 41-95,” US Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, August 24, 1995, 5, https://oui.doleta.gov/dmstree/uipl/uipl95/uipl_4195.htm.
  3. US Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, “PUA Improper Rate Report,” August 21, 2023, https://oui.doleta.gov/unemploy/pdf/Pandemic_Unemployment_Assistance_Improper_Payment_Rate_Report.pdf; US Government Accountability Office, “Unemployment Insurance: DOL Needs to Address Substantial Pandemic UI Fraud and Reduce Persistent Risks,” February 8, 2023, https://www.gao.gov/products/gao-23-106586; and US Government Accountability Office, “Unemployment Insurance: Estimated Amount of Fraud During Pandemic Likely Between $100 Billion and $135 Billion,” September 12, 2023, https://www.gao.gov/products/gao-23-106696.
  4. This was particularly true during the pandemic for fraud-related performance measures. See US Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, “ETA 902P: Pandemic Unemployment Assistance Activities,” February 29, 2024, https://oui.doleta.gov/unemploy/DataDownloads.asp.
Measuring What Matters: Context and Recommendations to Improve Reporting on Unemployment Insurance (2024)
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