Economy

This Is the State That Overpaid the Unemployed the Most

The U.S. Congress continues to debate a second COVID-19 economic relief package, even as many states send letters to Americans who may have received an overpayment during the first round of federal unemployment insurance payments. Unless Congress acts soon, the last of the direct federal payments to 3.3 unemployed workers will end on December 31.

Under the CARES Act passed in March, the federal government provided an additional 13 weeks of unemployment payments, in addition to a $600 weekly payment over and above the basic payments. The expanded $600 payments expired in late July. The extended benefits program, along with a program to provide payments to gig workers, is set to end this month.

The speed with which the act was passed and funds distributed to people who lost their jobs due to the COVID-19 pandemic naturally led to some administrative issues. In Texas, for example, state officials estimate that 231,000 people have been overpaid some $261 million this year. That’s an average overpayment of around $1,130 per person.

Extrapolating from state-level data from the U.S. Department of Labor for the three-year period from July 2016 to June 2019, the state most likely to have overpaid unemployment benefits is Michigan. During that period, Michigan overpaid benefits by a total of just less than $78 million. That’s out of a total of about $190 million in total improper (either too little or too much) payments. When Michigan’s Unemployment Insurance Agency (UIA) makes a mistake, the odds favor an overpayment.

As of early November, 2.3 million Michigan residents had applied for jobless benefits and collected some $25 billion. The number of recipients represents nearly half of Michigan’s total workforce of 4.9 million people.

The state’s UIA estimated that 185,000 people with active claims were not currently receiving payments, and the agency has seen about 111,000 fraud attempts. The agency sought identity verification from more than 500,000 claims and had so far found that 128,000 were legitimate claims and those were paid.

Fraud is suspected in most of the remaining identity verification cases, and while the state has not revealed how much money has been fraudulently received, the UIA did say that the state has recovered $30 million from imposters and has taken action to recover $45 million more. The state also has recovered about $1.3 million of $8.2 million in duplicate payments. Overpayments total $6.6 million.

The following table shows how much each state (plus the District of Columbia and Puerto Rico) have improperly paid out in unemployment benefits for the period between 2016 and 2019. The table includes Labor Department data for the percentage of improper payments based on a state’s three-year total, the percentage of overpayments based on the three-year total and the dollar amount of overpayments by state.

State Improper Payment Estimate Improper Payment Rate Overpayment Percentage Overpayment Amount
Michigan $189,940,328 41.27% 99.37% $77,894,529
Massachusetts $249,271,989 21.44% 96.92% $51,798,719
New York $270,438,298 13.80% 96.23% $35,914,206
California $434,992,802 8.02% 97.13% $33,885,939
New Jersey $203,406,561 13.06% 88.97% $23,635,842
Maryland $96,526,778 20.34% 99.51% $19,537,020
Illinois $165,276,511 11.27% 93.35% $17,387,089
Washington $115,071,325 13.78% 98.33% $15,592,165
Pennsylvania $142,397,709 9.10% 98.02% $12,701,876
Connecticut $71,509,152 16.63% 98.56% $11,720,350
Ohio $80,858,629 13.11% 97.64% $10,349,905
Wisconsin $55,372,907 15.01% 97.14% $8,073,370
Texas $79,718,089 7.96% 97.99% $6,218,011
Oregon $50,482,713 12.61% 96.03% $6,113,457
Colorado $39,163,931 12.41% 95.00% $4,617,427
Tennessee $27,168,938 17.05% 98.42% $4,558,948
Kentucky $25,936,535 17.43% 98.85% $4,468,865
Minnesota $55,086,536 7.55% 97.22% $4,043,352
Kansas $20,707,717 19.04% 98.63% $3,888,909
Rhode Island $21,104,519 18.13% 98.29% $3,760,825
North Carolina $17,050,493 22.23% 98.25% $3,723,828
Nevada $30,660,353 11.72% 97.27% $3,495,280
Virginia $27,885,336 12.01% 97.67% $3,270,950
Florida $29,962,886 10.84% 98.89% $3,212,021
Arizona $26,003,769 12.02% 99.50% $3,110,051
Iowa $33,919,345 9.52% 95.38% $3,079,877
South Carolina $16,184,246 11.01% 98.82% $1,760,846
Idaho $11,230,126 12.76% 95.92% $1,374,567
Missouri $17,308,202 7.32% 98.09% $1,242,729
District of Columbia $11,085,780 11.69% 92.39% $1,197,264
Indiana $13,150,194 8.88% 97.64% $1,140,122
Nebraska $8,074,446 13.10% 98.55% $1,042,411
Louisiana $9,789,818 10.70% 97.85% $1,024,994
Montana $11,357,136 8.86% 96.39% $969,899
Alaska $10,956,325 9.27% 93.31% $947,722
Alabama $10,331,587 8.96% 99.22% $918,478
North Dakota $7,456,901 11.20% 98.75% $824,733
Arkansas $9,131,706 9.16% 94.87% $793,545
Oklahoma $12,924,836 5.70% 94.91% $699,234
Wyoming $5,446,797 9.69% 95.77% $505,463
Mississippi $4,788,673 9.34% 98.93% $442,473
West Virginia $9,583,405 4.81% 94.39% $435,087
New Mexico $7,627,817 5.55% 92.97% $393,595
Georgia $9,683,205 3.92% 99.49% $377,645
Maine $4,055,199 8.27% 96.74% $324,416
Delaware $4,955,795 6.79% 93.52% $314,693
New Hampshire $3,151,543 10.31% 95.73% $311,057
Puerto Rico $4,912,325 7.05% 89.79% $310,950
Utah $5,858,665 5.23% 98.28% $301,135
Hawaii $7,586,641 3.61% 87.53% $239,738
South Dakota $2,030,182 7.85% 97.58% $155,512
Vermont $1,685,945 5.36% 94.40% $85,309
TOTAL $2,780,261,644 11.61% 97.07% $313,335,487