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California: Highest Unemployment Fraud and Unemployment Rate

Commentary The California Employment Development Department (EDD) recently reported that its best estimate of fraudulent unemployment payments totals at least $20 billion. That makes it easily the largest fraud in U.S. history and is more than the entire state budget of about half of U.S. states. None of the money has been reported as recovered. As the investigation continues, California sits with the highest unemployment rate in the country at 7.5 percent. Might the two be related? From the outset of the pandemic, it was obvious there was a big risk of EDD fraud. It has historically been a problem, just like fraud in other government programs like Medicare. The government has always been an easy mark. Second, for the first time, benefits were handed out to independent contractors, like Uber drivers, rather than just employees. The state maintains good records of prior employment; it does not regarding contract work. …

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