Unemployment Insurance (UI) Department of Labor

The Federal-state unemployment insurance (UI) program, established by the Social Security Act of 1935 (SSA), is a unique Federal-state partnership, based on Federal law but administered by state employees under state law. The program is designed to provide benefits to most individuals who are out of work, generally through no fault of their own, for periods between jobs. In addition to providing individuals with funds to pay for necessities while searching for the next job, the UI program provides a stabilizing impact on the economy during times of increased unemployment. States also administer two federal unemployment compensation programs – Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Ex-service members (UCX). The states also administer an Extended Benefits (EB) program in times of significant unemployment when the unemployment rate triggers for EB are met. In addition, Congress periodically enacts temporary episodic programs in times of recession, such as the Emergency Unemployment Compensation (EUC) program during the most recent recession and its aftermath. UI Improper payment estimates are based on the results of the Benefit Accuracy Measurement (BAM) program, which examines a nationally statistically valid sample of payments from the State UI, UCFE, and UCX programs (the three largest permanently authorized unemployment compensation (UC) programs).

Agency Accountable Official: Geoffrey Kenyon, Principal Deputy Chief Financial Officer

Program Accountable Official: Portia Wu, Assistant Secretary of ETA

Total Payments
$33.1B
Improper Payments
$3.9B
Improper Payment Rate
11.6%

Supplemental Measures

Current Measure: 8.7%

Target: None: this is an informational measure

Description: Total overpayments plus total underpayments minus the amount of overpayments recovered by state workforce agencies.

Update Frequency: Quarterly

Data Current as of: June 30, 2016

Current Measure: 7.69%

Target: None: this is an informational measure

Description: All overpayments minus work search overpayments plus total underpayments

Update Frequency: Quarterly

Data Current as of: June 30, 2016


Program Comments

In response to the level of improper payments in the UI program, the Department has developed a comprehensive and continuously evolving Strategic Plan to address several root causes of improper payment.  The Strategic Plan is designed to specifically target UI program root cause categories.  The Department actively works with states to reduce improper payments. All states have been “called to action” to ensure that UI integrity is a top priority and to develop state-specific strategies to bring down the overpayment rate.  Specific attention and assistance has been given to those states with high improper payment rates.

Therefore, the Department implemented the above supplemental measures as required by Executive Order 13520. These supplemental measures, developed in consultation with OMB beginning with the FY 2014 reporting period, are important metrics that provide additional insight into root causes and possible corrective actions.  Monitoring and reporting on the “net improper payment” rate is a positive incentive for states to improve IP recoveries. States making progress on both reducing overpayments and increasing recoveries will realize significant reductions in the “net improper payment” rate and will have achieved considerable improvement in efficient use of UI trust fund dollars.  The improper payment rate excluding work search as a supplemental measure allows for the review of improper payment rates without the influence of work search errors. During the recent quarters, work search errors are driving much of the increase in the improper payment rate as states have implemented stricter work search requirements. A 2016 review of structural issues in the UI program that impact the estimated improper payment rate was conducted by independent UI subject matter experts, statisticians, and economists. The group found that it is not feasible for states to prevent work search improper payments; they can only detect and recover them. Since there are many challenges identifying realistic strategies to bring down the work search component of the overall improper payment rate, tracking the improper payment rate excluding the work search rate recognizes the inability of states to actively prevent these improper payments and helps to assess progress made on the other root causes.

Additional information can be found within our Agency Financial Report.