New GAO Report Shines a Light on Need for UI Improvements
The Government Accountability Organization (GAO) recently published a report regarding the need to transform the design, infrastructure, and integrity of the unemployment insurance (UI) program.
Why this GAO report matters
The report uncovers significant and long-standing UI program and infrastructure challenges, drawing on the perspectives of those involved in the day-to-day of UI administration, as well as stakeholders from the government, private sector, public-private partnerships, and academia.
Detailing the issues with UI administration and outdated IT systems that were exponentially magnified with the influx of applicants amid the pandemic, this report sheds a non-partisan light on the issues surrounding UI delivery and providing recommendations for improving operations.
Key takeaways from the report
- There are persistent challenges associated with getting assistance into the hands of those who need it, while keeping funds out of the hands of bad actors. Those who qualify for and need funds struggle to get access, while others have been able to fraudulently collect payments. Improper payments amount to a staggering $78 billion – a massive hit on resources intended for those in need.
- There is a significant disconnect in the lack of benefits availability for an array of non-standard workers. The report notes that “as an employer-based structure, the regular UI program does not cover workers for whom payroll taxes are not paid, such as independent contractors or self-employed workers . . . Furthermore, changes in the way people work also may have led to a decline in coverage. For example, researchers have noted that contingent workers, who may have irregular work and earnings histories, may be more likely to face difficulties in qualifying for regular UI” (15). Totaling more than 57 million individuals, non-standard workers currently account for 36% of the workforce and are on track to account for 50% in the coming years – a huge proportion of workers that are either excluded from or face difficulties qualifying for UI benefits.
- Updating UI systems to account for non-standard workers is crucial to both increase access and equity, and also encourage program integrity. For example, when Pandemic Unemployment Assistance (PUA) was instituted to support non-standard workers who didn’t otherwise qualify for UI, states reported that the lack of required income verification posed a major fraud vulnerability. The CARES Act allowed applicants to self-certify their eligibility, without providing proof of self-employment or prior income. The report notes that allowing participants to self-certify information on agency forms, rather than independently verifying information, “could cause an agency to miss opportunities to prevent program fraud and abuse.”
- When it comes to the approval process, time is of the essence. States are held to strict timelines between when an application is submitted and when an approval or denial must be issued. Tight approval deadlines, coupled with a huge influx of applicants, has led to applications being forced through as “approved” without the proper verification, and improper payments being issued.
- There is an urgent need to improve program integrity. Sufficient auditing systems will streamline UI approvals – improving the approval accuracy and decreasing the occurrence of fraud-related payments.
With many using outdated legacy systems, state and local governments want to secure technological upgrades. This report acknowledges the significant hurdles presented by funding limitations and the RFP process associated with upgrading UI systems.
Supporting over 5.5 million non-standard workers, we at Steady are pleased that the GAO report consistently mentions workers who earn in non-standard ways and spotlights the challenges that they face as it relates to receiving government assistance. We stand behind the report’s recommendation (Recommendation 2 - pg 66):
“The Secretary of Labor should study and advise the Congress and other policymakers on the costs, benefits, and risks of various options to systematically support self-employed and contingent workers during periods of involuntary unemployment outside of declared disasters, including considering options’ feasibility and approach to fraud prevention.”
Adrian Haro, CEO of the Workers Lab, said in a recent Real Clear Policy op-ed, “despite the fact that an estimated 57.3 million U.S. workers are in non-traditional employment relationships, our systems are still not designed to serve them — and we aren’t keeping up with the pace of change.”
At SteadyIQ, we are dedicated to helping non-standard workers access benefits by seamlessly verifying income, while also helping to maintain program integrity and reduce fraud. By plugging SteadyIQ tools into state agency systems, income verification can be automated – leading to quicker, more accurate approvals. The state of Louisiana found that once they implemented Steady’s income verification solution, the review-to-payment timeframe dropped from about three weeks to only 24 hours. This is further detailed in the recently published report by The Workers Lab, which we invite you to read.
SteadyIQ tools are also transformative from a program integrity perspective. Through our patent-pending processes, we can:
- Collect, clean, enrich, and analyze financial data from trusted sources, such as financial institutions and payroll providers
- Evaluate that data to detect fraudulent or suspicious activity
- Perform real-time data forensics to identify and prompt for other relevant sources of data
- Transmit the results directly to our partners, maintaining the data chain-of-custody
It is encouraging that the GAO report has exposed UI program challenges. We continue to partner with organizations on our common mission to remove barriers to program access and equity while maintaining program integrity.