California Crackdown On Benefits Fraud Sparks 72% Plunge In Pandemic Jobless Claims

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by Tyler Durden
Friday, Sep 18, 2020 - 07:20 PM

The last few weeks have seen improvements in jobless claims data stall at extremely high levels, gravely disappointing those expecting a continued v-shaped recovery back to the old normal...

The leading 'culprit' for these elevated levels of unemployment benefits seekers has been California.

The last two weeks have seen Cali claims far above other states...

And at an aggregate level, the biggest driver of composite jobless claims levels across America has been the Pandemic Unemployment Assistance (PUA) - a federal relief program intended for self-employed workers and independent contractors...

So, what is going on?

The answer is simple:

It's fraud!

As Bloomberg reports, between mid-August and the first week of September, applications for PUA doubled in California to more than 524,000, far above claim levels when the federal program first launched in April, the state’s Employment Development Department said Thursday.

But, EDD admitted rather stunningly that after taking action to deter suspected scammers from filing false applications in hopes of getting payments, PUA applications dropped sharply to 145,790, a decline of more than 72%.

In addition, Bloomberg reports that California’s figures show a wide discrepancy with nationally-reported data on continuing PUA claims in California. While the federal Department of Labor reports that more than 6 million Californians are claiming PUA benefits each week...

...the state’s labor department shows that figure below 2 million, pointing to further data-reporting issues.


Some have suggested that the national figures may reflect states catching up with backlogs rather than representing the most recent levels of actual job losses.

No matter what - or who - is to blame, the fraud issue in California underscores the widespread unemployment data challenges - including clerical errors and double counting - that state employment departments have faced since the pandemic began in March.

“Aggressive efforts to fight fraud are yielding results in curbing the recent uptick in suspicious Pandemic Unemployment Assistance (PUA) claims in California,” the state’s employment department said.

Fed Chair Powell even admitted on Wednesday that all this data was full of noise and little signal when he cast doubt on the reliability of the national PUA figures, saying during a press briefing that the “actual counting of the claims is volatile” and it’s difficult to “take much signal about the particular level.”

Or put another way - hold your nose and buy stocks, ignore the terrible data, ignore the fraud!!