A seemingly steady rise in U.S. job losses since March could disappear after Massachusetts cut its unemployment estimate to reflect a recent rash of fraud.
The number of people filing for unemployment benefits has risen over the past few months, suggesting the labor market is slowing and businesses are more willing to lay off workers. The increase in claims was taken as a sign by Wall Street
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The economy was declining.
New applications for unemployment benefits rose to a 20-month high of 264,000 from just 221,000 in early May, based on seasonally adjusted numbers.
However, most of the increase appears to have come from a large increase in fraudulent unemployment filings in Massachusetts. New jobless claims in the state rose to 35,000 in early May from around 7,000 a week in January and February.
The state has since moved more aggressively to weed out fraudulent claims, with reported filings dropping to about 21,000 last week.
Even this number seems too high. A year ago, new jobless claims in Massachusetts were at a low of 4,000.
Moreover, the state’s unemployment rate continued to decline last year. It dropped to 3.3 percent in April after the pandemic from 3.7 percent in May 2022.
Massachusetts admits fraud is rampant and says it is working to address the problem. Most of the fraud claims are linked to criminals who “stolen personal information in a national data breach,” the state said.
Massachusetts will eliminate fraudulent filings by correcting previous unemployment claims reports, said Matthew Kitsos, the state’s executive director of labor and workforce development.
The revised Massachusetts claims could reduce total U.S. claims for the past several weeks, if not the past several months. The U.S. Department of Labor did not immediately respond to a request for comment.
Economists estimate that the fraud in Massachusetts increased seasonally adjusted U.S. jobless claims by 10,000 to 20,000 a week.
Unemployment claims reports have been difficult to understand over the past year.
For example, the government’s annual update in March showed that new jobless claims were higher than previously reported at the start of the year. Earlier reports appear to have missed a major increase in high-tech firings on the West Coast.
However, the number of actual, or unadjusted, jobless filings is expected to drop significantly in 2023, said Richard Moody, chief economist for States Financial.
They are still very low — averaging about 220,000 a week — and show little deterioration in the strongest labor market in decades.
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