According to the U.S. Department of Labor, almost $19 billion in state unemployment benefits were paid in error over the last three years. Oregon paid an estimated $392 million in error ― about 12.2% of all state unemployment benefits paid during that period.
The Labor Department’s report only examined the mispayments within state programs, which usually last up to 26 weeks. These figures do not include the federal unemployment benefit extensions that allow many workers to claim up to 99 weeks (almost two years) of unemployment benefits.
While Oregon’s Employment Department recovers some mispayments, quarterly statements show that the majority is not recovered. The current federal-state system provides little incentive to state agencies to reduce administrative costs, fraudulent claims, or other payments in error.
Unemployment insurance is not unique in its problems. Reports abound of fraud, waste, and abuse in most areas of government. Consider the $100 billion lost annually in Medicare and Medicaid fraud, the $600 million paid to deceased federal employees, and the expensive Solyndra scandal. No wonder a recent Gallup poll showed Americans believe that government wastes half of all tax dollars.
Government is a poor substitute for personal accountability. Individuals provide far better accountability to each other and to themselves than government programs can. That’s why markets bring us amazing and affordable products while government brings us mediocre to poor programs and high costs. Until we recognize that and alter government accordingly, we will continue to waste hard-earned money on programs with big costs and little payoff.