Matt Weidinger explains the significance of recent federal government unemployment data.
Federal lawmakers created major temporary unemployment benefit programs during the pandemic, which collectively distributed a record $700 billion to unemployed individuals nationwide. Little attention has been paid to wildly divergent state shares of that funding. A review of federal funding provided to states per member of the civilian labor force reveals massive gulfs between the highest- and lowest-funded states, stretching from a 10-to-one ratio under the Pandemic Unemployment Compensation program to 62 to one under the Pandemic Emergency Unemployment Compensation program. Differing state benefit levels and unemployment rates explain some of those gaps, but other factors—such as varying degrees of fraud and abuse—likely also contribute.
When unemployment rises significantly, federal lawmakers expand unemployment benefits for the long-term unemployed and, in recent recessions, newly unemployed individuals. During the COVID-19 pandemic, that dynamic was on display as never before, with multiple temporary federal programs providing record expansions in the size and scope of unemployment benefits paid to tens of millions of recipients.1 In all, federal lawmakers created temporary federal unemployment benefit programs during the pandemic that collectively distributed over $700 billion to unemployed individuals nationwide.
A close examination of those temporary federal unemployment benefit expansions reveals a little-noted artifact: The expansions provided far greater federal relief in some states than in others, even after controlling for the size of the labor force. As this report finds, there were massive gulfs in funding per labor force member provided to the highest- and lowest-funded states, stretching from a 10-to-one ratio under the federal Pandemic Unemployment Compensation (PUC) program to 62 to one under the Pandemic Emergency Unemployment Compensation (PEUC) program.2 Differences in state unemployment rates and unemployment benefit amounts, which some federal benefit payments matched, fail to explain those wide differences.
That leaves another possible explanation: varying degrees of fraud and abuse, including as a result of criminals targeting states with weaker controls.
