Fraudulent applications for unemployment benefits in Massachusetts have been behind a recent uptick in claims in the state, according to the local government.
The fraud has implications nationwide, because a surge in the state’s unemployment applications accounted for almost half of the total rise in initial jobless claims in the US last week.
“The increase seen in initial weekly unemployment claims is not reflective of individuals filing for unemployment insurance but rather fraudulent attempts on the system,” Matthew Kitsos, spokesperson for the state’s executive office of labor and workforce development, said in an emailed statement. The agency, which didn’t provide additional details on the numbers affected, added it is working to detect and prevent those fraudulent claims.
The US jobless claims report on Thursday showed Massachusetts, with a 6,375 increase from the prior week, accounted for almost half of the 13,969 rise in unadjusted applications across the country during the week ended May 6.
“The news out of Massachusetts suggests that while there may be some underlying upward pressure on initial claims, it’s not nearly as worrisome once we take this news from Massachusetts into account,” Omair Sharif, president of Inflation Insights LLC, said in a note.
The nationwide gain in initial claims, which reached the highest level since October 2021 on a seasonally adjusted basis last week, added to evidence that the US labor market has been cooling. But it turns out a large chunk of the rise was due to a single state that is experiencing higher levels of fraud.
The April jobs report, published earlier this month, showed a pick-up in hiring and wages, suggesting that the labor market was more resilient than anticipated.
Economists at Deutsche Bank AG led by Brett Ryan calculated that the rise in US initial jobless claims would have been significantly smaller absent distortions from the outsized gains in Massachusetts. They noted that the state’s continuing claims — from people who already received benefits in the prior week — were up only 5% since the first week of the year — below the national average.
“For now at least, we can probably rule out an imminent labor market collapse” in Massachusetts, the economists wrote in a note Friday.
--With assistance from Reade Pickert and Matthew Boesler.
(Updates with comments from economists in the fifth and eighth paragraphs)
