The US government’s COVID-19 relief benefits’ generosity turns out to very short-lived for thousands of unemployed Americans, as they were recently informed that they owe thousands of dollars in relief overpayments due to calculation errors made by employment offices.
According to a Wall Street Journal report, American workers that had received financial aid as part of the Pandemic Unemployment Assistance (PUA) program soon found themselves in even more crippling debt, after they were contacted by state employment offices informing them that they need to return thousands of dollars in excess payments that were sent to them in error. Although many recipients of the seemingly generous employment benefits assumed they were simply back payments accrued from prior months, they soon found themselves puzzled and hopeless when they were notified of the bureaucratic oversight.
Self-employed health coach Meggan Hurley was one of those such people, who upon receiving her relief check was astounded at the considerable amount. She even contacted the Department of Labor and Employment to confirm that the amount was in fact correct, and to ensure that she had filled out the necessary forms correctly. The unemployment insurance officers assured her that all is well and that there is nothing to worry about. However, come September, she received a bill in the amount of $13,969, which was the alleged overpayment.
This shocking issue has affected thousands of unemployed Americans across several states including Colorado and Pennsylvania, at a time when the labour force participation rate sits at a saddening 61.4%. To make the matter even more arrogant, an official at Colorado’s Department of Labor shuffled the blame onto applicants misrepresenting their income.
Some officials at other states – although unwillingly – admitted the error was partially the result of internal miscalculations, or at least a portion of the applicant’s fault. Ohio’s Department of Job and Family Services confirmed that up to 108,000 applicants had been mistakenly overpaid due to bureaucracy errors, while Pennsylvania’s PUA program suffered a software malfunction that lead to the overpayment of thousands of applicants.
Given that the federal government’s extension of pandemic unemployment benefits have already been phased out several months ago, any surplus benefits that Americans would have received has likely all been used up. In the meantime, the Labour Department punishes states that have overpaid recipients by reducing the amount of funds allocated towards the next round of benefits.
This means that the PUA overpayment mistake will likely come with backlash for those that are still in need of financial assistance. And, to really add salt to the wound, the debt accumulated from PUA overpayments will not be forgiven by state employment programs because they are classified as disaster relief.
Information for this briefing was found via the WSJ and BLS. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.