Two weeks ago, it appeared as though the Louisiana economy was once again headed for darker times. As other states were reinstituting stricter lockdown penalties and Mayor LaToya Cantrell was canceling Mardi Gras, the number of new Louisiana unemployment claims skyrocketed to over 40,000. It seemed the lack of travel to Louisiana might have resulted in unemployment claims rising to a level not seen since the height of the pandemic in early May.
But in some good news over the Thanksgiving weekend, the number of new unemployment claims quickly returned to the last month’s average level of just under 10,000. So, what exactly happened?
There are three distinct possibilities:
1. The numbers were accurate, though it was probably a one-time spike.
2. It was a clerical error.
Let’s examine each possibility.
It’s possible that the reported layoffs in real estate and professional services caused the spikes, but a lack of real world stories about those industries make this doubtful. If these kinds of layoffs were accurate, people would take notice.
A clerical error seemed a likely culprit, but the lack of correction, even over the holidays, also places some doubt in this scenario.
The last, and very possible, outcome is fraud. The Louisiana Workforce Commission itself is attributing the recent spike to fraud, saying each claim will be “rigorously reviewed for validity.” More troubling, however, is that the Commission also says 160,000 claims filed throughout the year are potentially fraudulent. This is a gigantic number for a state the size of Louisiana.
In California, officials just recently uncovered tens thousands of fraudulent claims made through the prison system, which cost the state hundreds of millions of dollars. California’s situation raises an important question for Louisianans – exactly how much is unemployment fraud costing working families in the state?
This recent blip should encourage Louisiana leaders to take a long, hard look at the state’s unemployment system. With the unemployment trust fund all but exhausted of money and some looking at potential new tax increases to replenish it, ensuring that every dollar being paid is legitimate is more important than ever. In the meantime, we can only hope that last week’s number signals a return to a slow but steadily recovering economy.