Unemployment Insurance: Payments, Overpayments and Unclaimed Benefits

by Sabrina I. Pacifici on October 28, 2012

Unemployment Insurance: Payments, Overpayments and Unclaimed Benefits, By David L. Fuller, B. Ravikumar and Yuzhe Zhang. Federal Reserve Bank of St. Louis.

  • Overpayments in the U.S. unemployment insurance system have received increasing attention of late. For example, CNN.com cited a recent study by the Department of Labor in reporting that 11 percent of all unemployment benefits were overpaid.1 Vice President Joe Biden, charged with leading the Campaign to Cut Waste, said: “Unemployment checks are going to people in prison. Unemployment checks are going to graveyards.” In this article, we examine the U.S. unemployment insurance system’s expenditures over a longer horizon. We begin by illustrating the benefits paid from 1989 to 2011. Next, we take a look at the overpayments. Finally, we discuss a fact that is less well-known: Not everyone who is eligible for unemployment benefits actually collects them. Over the longer horizon, these unclaimed benefits are much larger than the overpayments that have received recent attention.
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