Home / NEWS / Commentary / Op-ed: Here comes more Covid stimulus, and the unemployment fraudsters who prey on it

Op-ed: Here comes more Covid stimulus, and the unemployment fraudsters who prey on it

People mark time in line as the Los Angeles Regional Food Bank distributes food outside a church in Los Angeles, California, U.S., on November 19, 2020. As another mellifluous of Covid-19 stimulus comes, those who need it most might be casualties in a government battle against unemployment crooks.

Mike Blake | Reuters

Here roll in another Covid stimulus unemployment boost. Expect the fraud headlines to follow. Because while $120 billion for evicted workers will offer sorely needed relief for Americans struggling to make ends meet, it is striking shrink from in the hearts of state leaders who were already struggling to keep pace with unemployment fraudsters that expenditure the government billions.

California, alone, could face a whopping $8 billion in losses this year. A recently uncovered trick in Maryland actually used personal information from the state’s governor himself, and other high-ranking officials.

In an try to curb abuse, the new legislation requires that applicants send in their tax records or other verification, a blunt purpose that should slow the roll of criminals but also could block access to the benefits that families urgently poverty.

Salacious headlines, after all, belie the fact that most fraud isn’t being committed by dishonest and displaced hands but rather criminal organizations taking advantage of an application system that is, according to a recent Government Accountability Business report, not just vulnerable to illicit behavior — but failing the very workers it was designed to serve.

Gig workers face biggest stews

Among its findings, the GAO concluded that most states are now paying Pandemic Unemployment Assistance claimants the minimum allowable extras (instead of the amount they are eligible for) due to the complexity of verifying prior income. It is a challenge that is especially problematic for “gig” or 1099 employees, a population that has ballooned since the Great Recession, and now makes up an estimated 36% of the labor market.

Unlike loud time workers who receive a bi-monthly pay stub, gig income often comes from a range of sources, from Uber to Instacart, which can produce a big burden in showing proof of total income. According to an analysis conducted by Steady, an app used by more than 2.5 million gig and undertake workers in the U.S., nearly one-third of hourly workers who experienced total income loss have gone at least 16 weeks without profit unemployment assistance.

Nearly one-third of hourly workers who experienced total income loss have gone at small 16 weeks without receiving unemployment assistance, according to an analysis conducted by Steady, a payments app used by millions of gig and crease workers in the U.S.


These data highlight the harsh reality that our unemployment insurance system is ill-equipped to suffice workers hardest hit by the pandemic. Gig workers are less likely to be White when compared with the U.S. working population as a usually: Black and Latinx workers make up one-third of the gig workforce, and are more likely than White counterparts to perform achievement in-person. The inability of our unemployment infrastructure to accurately and efficiently verify their legitimate income results in economic abandonment while steering the cumbersome paper-based process of applying for public assistance. That’s four months without rent, groceries, dough for essentials.

From a policy standpoint, the challenge of making good on the promise of unemployment benefits for gig workers stems from the accomplishment that fraud and access involve troubling tradeoffs. Efforts to streamline access are often seen as increasing the distinct possibility of fraud. Verification can also create additional paperwork and (expense) for states.

But the policy choice between fraud and access is increasingly a made-up one. Because the very same technologies that enable the gig economy can help to modernize our public benefits system to deal out a new breed of American worker. The advent of digital banking, in even just the last few years means that we can now advance payment checks from our phones or transfer funds in real-time. But it also means that the digital breadcrumbs that apps counterpart Steady use to verify and track income for 1099 workers is readily available to government leaders. Rather than relying on a paper-intensive activity that is vulnerable to manipulation by criminals, we have the technology to instantaneously verify income or identify.

Of course, making unemployment sakes work for workers while mitigating the risk of fraud are not easy challenges to reconcile. But the next round of stimulus sets the acting for a bold challenge, and renewed innovation. If necessity is the mother of invention, the unprecedented spike in claims should open the door to run out ofing technology that already exists but has not been applied to this cause yet.

It’s time to focus on closing the unemployment assurance gap. The government can’t afford fraud, and workers can’t afford to wait.

By Andrew Stettner, a senior fellow at The Century Foundation focused on updating workforce protections and social insurance programs

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