DOGE Overhypes Unemployment Audit Result, Ex-Labor Officials Say

The Department of Government Efficiency misread data that found millions of fraudulent claims in the US unemployment system in a recent audit, and likely violated agreements with the states along the way, former Labor Department officials say.

DOGE wrote on its X.com account last week that after an “initial survey” of unemployment insurance claims going back to 2020, it found that thousands of claimants who were over 115 years old, between one and five years old, and had birth dates in the future received more than $382 million in benefits.

Labor Secretary Lori Chavez-DeRemer trumpeted the findings as “another incredible discovery” by DOGE in a post on X.com, adding that the DOL is “committed to recovering your stolen tax dollars. We will catch these thieves and keep working to root out egregious fraud—accountability is here.”

While fraud in the unemployment insurance system is an issue that has spanned multiple administrations, the high-profile scrutiny of improper jobless aid payments is the latest iteration of President Donald Trump’s agenda to root out “waste, fraud, and abuse” in the federal government, particularly in social safety net programs.

But the move marks the first time the DOL itself, not its separate and independent Office of Inspector General, has obtained this highly sensitive data, which includes bank account information and Social Security numbers of an estimated 46 million workers who sought assistance when they were laid off. Until the coronavirus pandemic, the federal government didn’t have access to state unemployment insurance data at all.

State workforce agencies agreed to hand the data over to the department’s IG to receive grant money aimed at modernizing jobless claims systems. Democratic lawmakers and former agency officials are now raising concerns that DOGE’s survey of the data violates those agreements and privacy laws, which only permit the data to be used for limited purposes.

“That was not the intention. That’s not what was communicated to states,” Andrew Stettner, former deputy director for policy within the DOL’s Office of Unemployment Insurance Modernization, said of the data sharing agreements.

The Employment and Training Administration, the DOL subagency that received access to the data from the OIG, “has nothing to do with fraud enforcement,” added Stettner, now at the Century Foundation.

And DOGE’s findings aren’t exactly new, Stettner and other officials said. They likely represent claims already identified as fraudulent that were altered to be easily traceable within state systems.

“DOGE is just now going through and finding this stuff that was flagged to make it easy to pinpoint the fraudsters by the state employment insurance agencies or OIG and acting like they invented the wheel,” said Michele Evermore, who helped lead DOL’s UI modernization office during the Biden administration.

DOL spokesperson Courtney Parella doubled down on the findings, emphasizing that “there is clear fraud in the unemployment insurance system,” and that the Trump administration is acting to “put an end to the abuse.”

“The mainstream media will do anything to avoid covering this administration’s efforts to clean up the abuse that thrived under Joe Biden’s leadership, who prioritized discriminatory DEI boondoggles over program integrity,” she said.

System Feature

In response to the wave of business closures during the pandemic, Congress created several emergency unemployment insurance programs aimed at getting much needed cash into the pockets of thousands of laid off workers.

To get the aid out as quickly as possible, initially there were limited verification requirements for a worker’s eligibility. The deluge in claims, combined with having to stand up new programs, led to an estimated $191 billion in improper pandemic UI payments, according to the DOL inspector general, with much of that attributable to fraud.

To help better track fraud, the DOL instructed states to create a “pseudo claim record” when they detect that an individual is being impersonated to separate the fraudulent activity from the individual’s Social Security number. To keep track of these pseudo identities, states would add a birth date in the future or other marker to flag that the record used to be fraudulent.

So while the figures touted by the Trump administration do represent fraud, they represent fraud that was caught and addressed by states, the former officials said.

John Pallasch, who served as employment and training chief during the first Trump administration, said that DOGE’s rush to secure a win on uncovering UI fraud didn’t take into account the expertise of career staff, and ignores the real issue of ensuring states are recouping fraudulently obtained cash.

“There’s a way to do everything they’re trying to do,” he said. There are staff “who understand the intricacies, who understand why someone might be coded as 150 years old in an SSA system.”

“In this work you can be fast or right,” he added.

Data Download

After facing legal challenges to DOGE’s attempt to get into data systems at the DOL, Trump issued a March 20 executive order directing the DOL’s IG to hand over unemployment information to the Secretary of Labor.

Just a day later, Chavez-DeRemer instructed the inspector general to give the DOL’s training administration “unfettered access,” according to guidance reviewed by Bloomberg Law.

Democrats have since been pressing the DOL for more details as to whether states that had submitted the data were notified of the disclosure and the agency’s plans to keep it secure, as required under the Privacy Act.

The information was provided to the OIG “due to a variety of contract conditions and subpoenas, all of which specified use only for responsibilities under the Inspector General Act,” Democratic Reps. Danny Davis (Ill.) and Terri Sewell (Ala.) said an inquiry about the legality of the disclosure.

“OIG officials did not know how DOL planned to use the data or whether it would be widely shared outside DOL,” they said in a March 31 letter to the DOL, which questioned how the data has been accessed. The Trump administration hasn’t yet responded to that inquiry.