Unemployment claims rising again, state opens “fraud analysis”

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COLORADO SPRINGS — Unemployment claims are rising again in Colorado as the third wave of COVID-19 refuses to relent.

Claims hit a low point during the pandemic on September 26, with 4,840. For the week ending November 7, 7,483 people filed for traditional unemployment assistance. Both reports are a drastic improvement from the spring when the highest week (ending April 11) took in 104,217 people filed for traditional assistance, though are still historically high.

According to the Colorado Department of Labor and Employment, an average of 4,800 claims in any given week during the Great Recession of 2009 and 2010. The highest week during that time paid out benefits to 7,749.

In 2020, an unemployment benefits program was created for workers in gig jobs (like driving Uber) and for people who are self-employed, called Pandemic Unemployment Assistance (PUA).

“The part that’s a bit suspicious, and I’d be surprised if there wasn’t some level of fraud, are the PUA claims,” said Tatiana Bailey, Ph.D economist and director of the UCCS economic forum.

Bailey said it’s similar to a situation seen earlier in the pandemic where PUA claims had sharp week to week increases. In the summer, CDLE identified over 5,000 claims of fraudulent unemployment claims.

The fraud, Bailey said was the result of organized crime rings using information stolen by identity theft to make fraudulent claims, even backdating claims to take the money meant for people who had lost their jobs.

The trend is similar now, Bailey said.

In the week ending October 31, 3,625 claims for PUA benefits were filed. For the week ending November 7, 7,281 claims were filed.

“We literally saw a doubling in PUA claims, so that’s a red flag right there. There’s no real good rational for self-employed workers to, all of the sudden, have double the number of claims. So, it’s very likely there is fraud there.”

In its weekly release, CDLE said they are conducting a “deep-dive fraud analysis” into the claims and will provide an update on its findings during it’s weekly release later this week.

The recent unemployment numbers are in similar industries, save construction, than what was seen during the initial shutdown at the begining of the pandemic.

Top 10 industries with highest initial claims for week ending October 24th (From CDLE)
#1 Accommodation and Food Services: 658 (14.9% of claims for week)
#2 Administrative and Support and
     Waste Management and Remediation Services: 511 (11.6%)
#3 Construction: 504 (11.4%)
#4 Healthcare and Social Assistance: 422 (9.6%)
#5 Retail Trade: 390 (8.8%)    
#6 Manufacturing: 284 (6.4%)  
#7 Professional and Technical Services: 258 (5.8%)
#8 Arts, Entertainment, and Recreation: 218 (4.9%)
#9 Wholesale Trade: 185 (4.2%)
#10 Transportation and Warehousing: 159 (3.6%)

“You also started to see it spill over into professional and technical [industries] and marketing firms, which kind of makes sense because everything has a domino effect,” Bailey said.

The spill into industries less affected by direct in-person commerce is inevitable, Bailey says, as the industries that have been most affected by pandemic-related shutdowns are the foundation of the economy. As cases continue to rise, the claims for unemployment will correlate.

“I don’t see any way around this winter being really difficult and having economic hardship, and unfortunately more businesses closing, permanently shuttering,” Bailey said.

To avoid more businesses shuttering it would take another stimulus or pandemic relief spending bill from the federal government, Bailey believes.

She says more benefits for families and relief loans for businesses have long run out at this time, particularly as the third surge in cases comes with more restrictions on business capacity and operations.

“Unfortunately, the politics has taken the front seat and the people who are hurting have taken a back seat.” Bailey said, “Some type of assistance is needed. I don’t like deficit spending but this is one time where you need to do it. Not only because it’s the right thing to do, but you’re going to do more damage to the economy by bringing large proportions of our working population to a grinding halt in terms of their spending.”

Late Monday Night, Governor Jared Polis announced in a statement, in lieu of federal leadership, he and the legislators are working on alternatives.

“Legislative leaders and the Governor’s office have been having productive conversations on how we can step up to help provide additional relief to Colorado businesses and hardworking families during these challenging times. Coloradans continue to wait for Congress to act, but we are committed to doing what we can as a state.”

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