Felix Salmon of Axios has a “deep dive” out today on “America’s pandemic of unemployment fraud.” It looks like shit, but even worse, Salmon’s reporting is already being used as an excuse to publicly prosecute the distribution of unemployment money.
Salmon (who, full disclosure, is a former colleague of some Discourse Blog members), starts out with the terrifying premise that as much as $400 billion was stolen from states’ unemployment coffers during the pandemic. Where did he get that number? A security company called ID.me, which sells “secure identity proofing, authentication, and group affiliation verification for government and businesses across sectors.” (Shoutout to journalist Michael Hobbes for being one of the first to pounce on the Salmon story.)
In fact, ID.me is a contractor with multiple states including the Department of Employment Security in North Carolina, where I live. North Carolina used the company to “perform a highly secure identity verification process for unemployment claimants to help prevent unemployment fraud and protect the security of your DES account,” according to the NCDES. What’s a conflict of interest? I can’t remember. Is someone burning toast?
Salmon then cites a report by the Department of Labor’s inspector general that shows an “improper payment rate” of 10.6 percent, and conflates “improper payment” with fraud, when in fact improper payments are not synonymous with fraud. In fact, the same report defines the “improper payment” as:
“any payment that should not have been made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements; and includes any payment to an ineligible recipient.”
In North Carolina, for example, an NCDES official told state lawmakers earlier this year that the majority of unemployment overpayments — totaling some $70 million at that point, prior to the passage of the American Rescue Plan — was not due to fraud but rather applicant errors. (More on that later.) This has been a pretty popular local news story for the past year — people getting overpaid for their unemployment benefits for one reason or another before the state demanded they pay it back.
Later, Salmon cites a letter from House Republicans including Darrell Issa, a man worth at least $280 million, demanding an investigation into unemployment fraud. This letter not only cites ID.me for the “simply staggering” $400 billion number, it cites a guy named Felix Salmon, too. This is serious!
Then comes more free advertising for ID.me:
ID.me, a private company founded to make it as easy as possible for individuals to prove who they say they are, was most recently valued at $1.5 billion. It has emerged over the course of the pandemic as the leading provider of anti-fraud software for state unemployment offices.
Axios contacted ID.me as part of the reporting on our last story, because the company is a key part of the states’ anti-fraud architecture. We received no PR pitch or press release from them.
My shirt that says “I received no PR pitch or press release from the anti-fraud company to do a story about fraud” is raising a lot of questions about my story about fraud.
The smoking gun numbers that Salmon presents are also tenuous at best, as some responses pointed out. And it’s also worth noting that in the entirety of this piece (?) Salmon cites exactly three real-world examples, and one — a man who was actually named Tupac Shakur — isn’t even fraud! It’s not like the examples aren’t out there; they just don’t feature prominently in this piece definitively declaring that there’s a “pandemic” of unemployment fraud.
There are very significant problems with America’s unemployment systems, some of which Salmon touches on at a very surface level, but only in service of the broader narrative that “street gangs” and “international criminal syndicates” are robbing American taxpayers in broad daylight. Those problems include people not being able to get their fucking money, years of states allowing the state unemployment systems to fall into disrepair, and the fact that we didn’t have a better way of distributing all of this money during a national crisis to the people who desperately needed it most.
The result of promoting this narrative will not be “let’s fix the fraud problem and make sure the money gets to the right people.” It will be that Congress decides that it’s unwise to pump a massive influx of money into state unemployment coffers during a crisis, and that the next time we deal with something like this, we shouldn’t do that and instead make people jump through a million (or 400 billion) hoops to get their money. And you know what? We should also just kill the remaining American Rescue Plan unemployment benefits while we’re at it. (That’s already happening in exactly half of the states, by the way.)
Anyway nice job, Felix.
Correction, 6:28 p.m. ET: A previous version of this story contained a paragraph citing an estimate by California prosecutors on how much overall unemployment fraud had been committed. In fact, the estimate included only investigations into unemployment fraud involving incarcerated people.
Update, 6/21/2021, 11:38 a.m. ET: We’ve removed a tweet from an outisde source after Salmon pointed out in an email that it referenced the wrong unemployment program.