According to a new study, the amount of unclaimed unemployment benefits in the U.S. are far more than the overpaid benefits, the government claims to have made.
A recent report by the U.S. Department of Labor suggested that many Americans take advantage of the employment insurance system. According to the report, between 2009 and 2001, 11 percent of the unemployment benefits were overpaid. However, a recent study conducted by Concordia economics professor David Fuller, found the number is far smaller than the amount of unclaimed benefits.
People do not claim these benefits for various reasons, While some are unaware that they are eligible for these benefits, others think their unemployment period is too short to make a claim.
"Some of the unemployment benefit payments were indeed overpayments, as was widely reported by the media," said Fuller. "These overpayments could stem from simple typographical mistakes on one extreme to out-right fraud on the other. For example, an individual's benefit may be accidentally set too high because the wrong formula was used. Deliberate acts of fraud, on the other hand, represented roughly a fourth of the total overpayments during 2007-2011."
Fuller said that while cracking down all the overpayments made during that time would help reduce expenditures in one way, it could also lead to more unemployment people coming forward to claim their benefits.
"On average," said Fuller, "only 63 per cent of the unemployed eligible for benefits in the U.S. have been collecting them over the past 22 years. If all of those who are eligible for unemployment benefits were to start collecting those benefits, as could easily happen if the U.S. continues to have high unemployment, the additional expenditures could be massive."
"In the U.S., benefits are financed by taxes levied on firms," explains Fuller. "So the firm you work for essentially pays for your benefits," he said.
With unemployment rates being stable and not very favorable in recent times, Fuller warns that governments could expect more people coming in to claim their unemployment benefits in the near future.
