California Has Seen a Staggering Amount of Unemployment Fraud During the Pandemic

But where is the outrage?


"I'm madder than a penguin on Miami Beach over all the mealy-mouthed politicians whining about the economy and not doing anything about it," wrote pseudonymous columnist Ed Anger, in the now-online Weekly World News. The one-time tabloid, which recently ran a feature story about an alien orthodontist who finally returned home, had long published Anger's vitriolic and (hopefully) satirical screeds.

After sifting through news myriad stories about California's ongoing scandal at the Employment Development Department, however, I'm left wondering: Where is Ed Anger when you need him? I'm "pig-biting mad" about the ongoing unemployment mess, as an angry Anger might write. Yet California's elected officials and a weary public are treating it like any garden-variety bureaucratic failure.

This is one of the most infuriating scandals ever to plague our state. The department, which is responsible for paying out unemployment insurance claims, has been incapable of paying legitimate claims even as it has paid as much as $31 billion in fraudulent ones, often to inmates. Think about those staggering losses. They would be enough to make a dent in any number of the state's infrastructure, budgetary, and debt-related problems.

The stories are as unbelievable as the Weekly World News' latest Elvis sighting. Here's a desk-pounder from CBS Los Angeles: "A Fresno girl who just celebrated her first birthday is collecting $167 per week in unemployment benefits after a claim was filed on her behalf stating that she was an unemployed actor."

The Southern California News Group reported last month that one man "is suspected of using the identities of 23 inmates and others to obtain more than $3 million in state unemployment benefits."

Approximately 10 percent of the paid claims have been fraudulent, with another 17 percent under suspicion. This will be "the largest fraud investigation in the history of America," according to one expert interviewed by CALmatters. Part of the blame, it notes, is from "the state's own failure to cross-check unemployment applications with prison rolls."

Who are these incompetents who are running this agency? The EDD says it is "one of the largest state departments with employees at hundreds of service locations throughout the state." It has great pretensions, noting on its website—the same one that continues to crash and can't process legitimate jobless benefits—that it has "connected millions of job seekers and employers in an effort to build the economy of the Golden State."

If California is dependent on the EDD to boost its economy, then we are in the same boat as that proverbial penguin waddling through Miami. The Sacramento Bee reported last month that the department's website remains "plagued with difficulties." And "nearly six months after (Gov.) Newsom boldly promised to clear a backlog of 1 million unemployment claims at the EDD, the problem continues to worsen," the Bee's Gil Duran noted.

These failures aren't happenstance but are the result of mismanagement and incompetence at extreme levels. The COVID-19 situation applied additional strains on the department, but that's no excuse.

"Although it would be unreasonable to have expected a flawless response to such an historic event, EDD's inefficient processes and lack of advanced planning led to significant delays in its payment of (unemployment insurance) claims," wrote California State Auditor Elaine Howle, in an emergency audit released in January. The department's call center only answered 1 percent of calls that Californians had made to check on their claim status.

If you're not angry enough, consider this hard-to-believe fact. Julie Su, the state labor secretary who was responsible for the department, may receive a big promotion. Republicans pointed out the obvious as she faced Senate confirmation hearings to serve as President Joe Biden's pick for deputy secretary of the federal department of labor.

"So, while you may not be personally responsible for every case of fraud that happened, the fraud did happen on your watch," Sen. Richard Burr (R–N.C.) said during the hearing, according to news reports. "You ordered the agency to eliminate some important safeguards to speed up payments, which led to even more fraud." Su's confirmation vote is expected next week—and this unconscionable scandal is unlikely to stop her.

Meanwhile, Gov. Gavin Newsom doesn't seem to be paying any noticeable price for this matter either, even after he buried his bad-news EDD strike-team report showing that he won't be able to clear up the backlog as promised. The Bee chided him for dropping that report on a Saturday night, where it was unlikely to get much coverage. Nevertheless, Newsom's approval ratings are improving, as are his chances to deflect a recall.

Welcome to the world government, where no good deed goes unpunished and no level of incompetence goes unrewarded. Is this how you want the healthcare system to be run—by bumbling bureaucracies, dysfunctional IT systems, and elected officials who get promoted when things go awry? I don't know about you, but I'm channeling some serious Anger.

This column was first published in The Orange County Register.