Photo: St. Louis Fed
Among consumers eligible for unemployment benefits, just one-third actually bother to cash in, according to new data from the Federal Reserve Bank of St. Louis. The data applies to the last 22 years (1989 to 2011), save for during the recession, when elligible claims rose to 50 per cent.
The findings are key for a couple of reasons.
Back in July, CNN Money cited data that showed that the Dept. of labour had overpaid jobless claims by no less than $14 billion in 2011. In 2009, it was estimated that 11 per cent of all claims were overpaid, for a total of about $11 billion.
But since so many elligible workers are actually leaving their cash on the table, the agency should be more than capable of making up for lost funds.
For example, the 50 per cent of workers who didn’t apply for benefits in 2009 saved the government an estimated $108 billion.
That’s more than 10 times as much cash the Dept. of labour said was wasted on overpaying benefits the same year
There’s no denying overpaying jobless benefits is a problem –– most of them wind up in the hands of prisoners, identity thieves, retirees, and current workers –– but the report at least helps put that shortcoming into perspective.
Fraud is responsible for just 3 per cent of all benefits paid, the Fed found, while eligible consumers leave seven times that much cash on the table by not applying for benefits.
And overpayments are beginning to slowly improve. The Department of labour reported a 0.35 per cent drop in overpayments between July 2010 and 2011, and a 0.4 per cent drop in errors caused by people who didn’t register their employment status with their state’s labour department.
The BLS put together a map of each state’s improper payment history in 2011, when overpayments topped $14 billion:
Business Insider Emails & Alerts
Site highlights each day to your inbox.