After years of foot-dragging, State Labor Commissioner Roberta Reardon in a Times Union op-ed last week finally gave an estimate of how much in unemployment insurance benefits her agency paid out to fraudsters during the Covid-19 pandemic.

Reardon estimated that $4 billion of the $105 billion in total UI her agency paid out from January 2020 through March 2022 was lost to fraud. That’s a much lower fraudulent payment rate than the Comptroller estimated in an audit report last month; he projected at least $11 billion out of $76 billion in UI the agency paid out from April 20 through March 2021 was lost to fraud.

The Comptroller extrapolated from a U.S. Department of Labor statistical model that estimated New York’s UI improper payment rate nearly quadrupled during the pandemic. Reardon doesn’t disclose her sources and methods, consistent with her pandemic-long tactic of veiling as much information for as long as possible from the public, the media and even the Legislature.

Reardon only coughed up a fraud number after several years of foot-dragging, after last month’s elections were conducted, and after the Comptroller’s subsequent audit report (which her agency successfully delayed for many months by stonewalling information requests) that yielded the eye-opening $11 billion number that finally forced a response.

Since the early months of the pandemic, the Legislature, the business community and the media tried to get information from Reardon about the state’s susceptibility to UI fraud. It’s not hard to understand why.

Two million New Yorkers were thrown out of work in the early months of the pandemic. And the state paid out 218 million individual UI claims payments   from April 2020 through March 2021 —a 3,140 percent increase over the prior year — via a legacy mainframe system using COBOL and other outdated program languages, along with primitive manual workarounds to which the agency was forced to resort. 

The avalanche of UI claims filed with and paid out by the agency quickly emptied out the state’s UI trust fund, forcing New York to borrow $9 billion from the U.S. Treasury and triggering steep penalty payroll tax hikes on Empire State employers, who fund the state UI insurance system via such taxes. 

Some of Reardon’s peers in other states were far more forthcoming in ringing the fraud alert bells. Way back in January 2021, California officials reported that $11.4 billion in unemployment insurance benefits the state had paid out since the pandemic’s onset —roughly ten percent of the total — involved fraud. Another 17 percent of payments were under investigation. 

But when state legislators, including Sen. George Borrello, asked Reardon how much New York had paid out in fraudulent claims, she refused to provide an estimate of how much actual or suspected fraud had occurred —or even to share data the Labor Department held that addressed the question.   

It’s only now, after endless stonewalling, that Reardon came out with an estimate — albeit with no evidence. And absent data, we should take her number with a grain of salt. One of the few data points Reardon released pre-election was that her agency had detected and avoided $36 billion in fraudulent claims. But the Comptroller’s audit found that, when asked, the agency couldn’t produce data or analysis to support that boast.  

The most disturbing line in Reardon’s op-ed is the one accusing the Comptroller and others trying to get sunlight on the UI system, “one of our most vital social systems.”    

Countless New Yorkers – both employers and laid off employees — had direct experience with the antiquated, overloaded UI system during the pandemic. Surely, few of them came away with full faith in its integrity, nor should they have. And what may have exacerbated that mistrust was witnessing a Labor Commissioner behaving as though her primary job is to shield the public and its elected representatives from knowing how the system is holding up.

About the Author

Peter Warren

Peter Warren is the Director of Research at the Empire Center for Public Policy.

Read more by Peter Warren

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