Unemployment fraud climbs to $32 billion with no accountability in sight

If giving unemployment benefits to criminals sitting behind bars or fraudsters in foreign countries wasn’t enough to make your stomach turn, recently, we learned that California’s unemployment fraud initial estimate of $20 billion is closer to $32 billion and counting.

During the pandemic, millions of Californians sought unemployment benefits following government-created business closures and massive layoffs.

The enormous influx of unemployment claims was met with an unemployment office delaying payments for up to nine months. While it was easy and convenient for government bureaucrats to blame the delays on this surge, these computers and check processing problems were brought up and discussed 10 years ago, after our last economic recession.

Since then, those in charge, from the governor on down, had plenty of time to address California’s unemployment issues.

Full-scale fraud was committed by national and international criminal organizations and inmates sitting in California’s prisons. District attorneys throughout California found that the state paid more than 35,000 claims under prisoners’ names and 133 claims to criminals on death row. Some prison fraudsters collected unemployment benefits with names such as “Poopy Britches” and “John Doe.”

During a press conference, California Labor Secretary Su said, “There is no sugarcoating the reality. California has not had sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation.”

The $32 billion in fraud is gone, but that money came from somewhere and someone has to pay it back.

Much of the money paid to legitimate Californians and the $32 billion in fraud was borrowed from the federal government and will have to be paid back with interest from the state’s unemployment insurance trust fund, money funded through a tax on employers.

As employers pay higher taxes to make the unemployment insurance trust fund whole, that cost is passed down to you and me. We are already seeing the impact of food, clothes, and other household items costing more, on top of record inflation. Those higher costs consume family budgets, as gasoline prices remain high and energy costs skyrocket.

Where were the red flags or alarm bells when unemployment money was sent to San Quentin State Prison or other jails and prison facilities?  Why is nobody getting fired? Where is even the slightest shred of accountability for taxpayers?

Actions have consequences. But inactions have consequences, too. California was banning plastic bags and straws while our unemployment system was left in neglect. Now businesses and families face decades of higher costs because of the state’s misplaced priorities. We are all – literally – paying the price for incompetence.

About Ted Gaines
Senator Ted Gaines (Ret.) was elected to represent the Board of Equalization’s First District. He is a leading taxpayer advocate, defender of Prop. 13, and is committed to providing trustworthy and transparent representation for nearly ten million constituents in 30 counties of northern, eastern, and southern California. For more information, visit www.boe.ca.gov/Gaines.