Setting the Record Straight on New York’s Unemployment Insurance System

As previously printed in the Times Union.

New Yorkers right now are concerned about the state of New York’s unemployment insurance (UI) system. In recent weeks, press coverage, political rhetoric, and an audit by New York State Comptroller Thomas DiNapoli have assailed the system, sowing mistrust in one of our most vital social systems. But I want to set the record straight: the New York State Department of Labor has been taking steps to make the system more efficient, easier to use, and safer than ever.

In 2020, as the pandemic brought record unemployment, New York’s UI system became a lifeline to nearly five million New Yorkers. An unprecedented influx of unemployment claims and brand-new federal pandemic programs, in addition to limited staffing, new remote work challenges, chronic federal underfunding, and other factors, placed a heavy burden on the system. These challenges paved the way for delayed payments, operational breakdowns, and fraud – all of which were identified by the Department and later addressed in the Comptroller’s audit. Despite these factors, the Department of Labor distributed more than $105 billion – the equivalent of 50 years’ worth of benefits – in the two years since the start of the pandemic. These vital benefits helped keep New Yorkers afloat during this unprecedented time, supported millions of families, and kept New Yorkers safe.

However, the Comptroller’s audit alleged that $11 billion of those benefits were sent to fraudsters. That estimate – based on an extrapolation from a sample size of .01 percent of claims using an outdated and flawed model – greatly exaggerates the problem. The Department projects that, of the $105 billion in federal and state unemployment benefits paid out from January 2020 through March 2022, there was a potential of about $4 billion lost to fraud – $388 million of which would have been related to fraudulent state UI benefits.

To be clear, every dollar lost to fraud is unacceptable to me, the Department, and this administration. And since the start of the pandemic, my agency has taken steps to not only address fraud, but to improve the system overall.

The Department has taken a multifaceted and aggressive approach to cracking down on UI fraud. We have stepped up our fraud investigations and we are currently on pace to uncover $110 million in fraudulently obtained benefits this year from claimants working while collecting during the pandemic. We have implemented new technologies, including the ID.me identity verification system and multi-factor authentication, to help us detect and combat fraud as early in the process as possible. The Department also launched a public education campaign to empower New Yorkers to help identify and stop UI fraud. And every effort is underway to claw back stolen funds; we have already recovered a half billion dollars in fraudulent payments in the past two years.

We are also working to restore trust in the system by simplifying the UI process and improving the customer experience overall. Currently, we are halfway through a four-year, department-wide modernization process that includes streamlining the application process, launching the Perkins chatbot to quickly answer claimant questions, upgrading our phone system to improve the intake process, and making data on the UI system publicly available.

The Department is using every tool available to ensure that the UI system meets New Yorkers’ needs while complying with -- and often exceeding -- federal requirements. But to further strengthen the program, every state needs more federal investment. Congress must prioritize and secure sufficient resources for the Department to fully modernize and safeguard the UI system. 

At the New York State Department of Labor, our top priority continues to be safeguarding the UI system so New Yorkers who need these benefits get them swiftly and securely. The pandemic proved that we can support each other through the darkest times. That same perseverance will help us ensure this social safety net remains transparent, honest, and equitable as we emerge from the pandemic and move New York State forward.