Some Unemployed Americans Were Underpaid Through COVID-19 Relief Program, Report Finds

As the economy continues to sputter, a new report by the GAO alleges that a majority of states underpaid freelancers, contractors, and the self-employed.

As the economy continues to sputter, a new report by the GAO alleges that a majority of states underpaid freelancers, contractors, and the self-employed. (Shutterstock)

By Elle Meyers

December 1, 2020

Contract workers, freelancers, and the self-employed were not paid what they were due through COVID unemployment programs in a majority of states across the country.

Some unemployed Americans relying on federal coronavirus relief aid were underpaid, according to a new watchdog report. 

The report comes from the Government Accountability Office (GAO), an independent agency that reports to Congress. The nonpartisan watchdog group released a report on Monday that found the majority of states participating in the Pandemic Unemployment Assistance (PUA) program were underpaying claimants. 

The PUA provides financial assistance to self-employed and gig workers, people who often fall outside of criteria to qualify for traditional unemployment benefits. The program was created as part of the CARES Act, which was signed into law in March. 

The report indicated that many states were paying claimants the minimum benefit allowed instead of the total amount for which they were eligible, which is based on a person’s income prior to the pandemic. 

According to the GAO, average September PUA payments were “close to their minimum benefit amounts” that are set by the Department of Labor. (DOL) That was true across a majority of states.

“This suggests that many individuals in these states are receiving the minimum benefit, because the average is close to the minimum,” the GAO wrote in their report

The watchdog group noted that 70% of state data for the month of September showed benefit amounts that were “lower than the approximately $245 per week needed to remain above the 2020 poverty guidelines for a one person household.” 

Officials at the DOL attempted to offer an explanation for the discrepancies to the GAO. According to the report, the DOL said that some states initially decided to pay PUA beneficiaries the minimum benefit instead of calculating the amount they were eligible for so they could “facilitate implementation of the new program.”

However, states will eventually need to pay the difference between the minimum amount and the actual amount for which each claimant is eligible. It is still unclear how many states have started that process, according to the GAO. 

The GAO also found that the Department of Labor’s weekly unemployment estimates could be inaccurate. They noted that the department has overestimated and underestimated the true unemployment number. 

“That is because DOL presents state-reported data on the total count of weeks claimed, nationwide, as the number of people claiming benefits,” the GAO wrote. “The Department of Labor has traditionally used the total count of weeks claimed to estimate the number of individuals claiming benefits because the two numbers were a good approximation of each other.”

The pandemic has thrown a wrench into methods of  typical data measurement, and things like delayed claims and backlogs could skew the results.

The disheartening report comes as 12 million Americans could lose their federal unemployment benefits completely at the end of December as that and several other coronavirus aid programs expire


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