Opening Statement of the Hon. Benjamin L. Cardin,
a Representative in Congress from the State of Maryland

Hearing on Unemployment Fraud and Abuse

June 11, 2002

Mr. Chairman, I look forward to hearing our witnesses' suggestions on reducing fraud and improving the administration of the unemployment insurance system. If people are receiving benefits that they are not entitled to, then we should take all necessary steps to address any potential fraud.

However, in evaluating program integrity, we must remember that benefits are sometimes denied inappropriately, just as they are sometimes paid inappropriately. For example, a recent study found that roughly $600 million in unemployment insurance benefits were wrongfully denied in fiscal year 1998.

Sometimes employers provided inaccurate information regarding an applicant's wages and other times the local unemployment agency made errors in assessing an individual's eligibility. The report, which we will hear about later today, suggests that very few of the wrongfully denied claims resulted from errors made by applicants.

This committee needs to know how the Department of Labor is responding to that analysis so we can ensure that jobless Americans are receiving the benefits to which they are entitled.

We also need to recognize that fraud can occur on the revenue side of the unemployment system as well as on the payment side. If UI taxes are not paid when due, the system will become under-funded. One area of particular concern pointed out by a recent report commissioned by the Department of Labor is the misclassification of certain employees as independent contractors, for whom employers do not pay unemployment taxes. Mr. Chairman, let me conclude by mentioning the fact that the 13-week extension of unemployment benefits that we passed in March just expired for those jobless workers who first filed for the extension. The Federal legislation included a potential 2^nd round of extended unemployment benefits, but very few States will qualify for that second 13 weeks.

I hope any discussion of additional UI reforms will consider the fate of those long-term unemployed Americans who are still looking for work, especially since the number of workers who have been unemployed for six months or longer has tripled over the last year. I also strongly believe that we should address barriers to low-wage and part-time workers receiving unemployment benefits.

Thank you.