The Department of Labor’s weekly reports on unemployment claims rely on “inadequate” methods and, as a result, “incorrectly presented” data on the number of claimants, according to a report by the Government Accounting Office (GAO).
In normal times, the Department of Labor uses the number of initial unemployment claims that states report on a weekly basis to estimate the total number of claimants in a given week.
But as the epidemic has shaken the U.S. economy, this method has led to inaccurate aggregation, which is likely to overestimate the number of people collecting unemployment insurance.
“Because of the backlog in processing past claims, individuals claimed several weeks of benefits at the same time for previous weeks of unemployment as well as other data problems, these traditional estimates were not correct for the pandemic.” GAO found.
In other words, if a single person submits more than one application during a reporting period, which would be rare in normal times, the Ministry of Labor’s methods would count each claim as a separate applicant. A claimant jumping from one program to another in a one-piece system can be counted more than once.
In California, which reports its new claims every two weeks, GAO says the total number of claims can be nearly 50 percent more than the total number of people.
Similarly, not all states report their data in the same time frame, which can skew the data from week to week depending on which states they report.
These discrepancies mean that Ministry of Labor data that 20.4 million people have applied for unemployment benefits through some program since mid-November can be extremely inaccurate.
The GAO report estimated that 11 million people were unemployed by October, compared to just 5.9 million before the pandemic, although that number is not expected to be part-time and eligible for other benefits. The Department of Commerce estimates that 10 million people north have remained in the ranks of the unemployed since the beginning of the year.
Errors in the data could make it difficult for Congress and other policy makers to respond to the true economic impact of the epidemic.
“Without making accurate accounts of the number of people relying [unemployment insurance] as close as possible to real-time benefits, policymakers may be asked to respond to the current crisis, ”GAO warned.