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June 2, 2011

Are Unemployment Benefits a Racket?

Amanda Haddaway

Maryland’s unemployment rate is currently at 6.8 percent, which equates to 203,416 people collecting unemployment benefits from the state. This number has actually decreased every month since September 2010, but many Marylanders are still out of work.


The numbers, however, fail to include how many of these people are still actively looking for employment.


There is no doubt that many out-of-work Marylanders are doing everything in their power to find and secure new employment. However, there are also Marylanders who have adjusted their lifestyle to fit within the confines of their unemployment payments and simply aren’t trying to find new jobs. Each time unemployment benefits are extended, those who play the system are granted an extended lifeline.


That’s where the Maryland unemployment system fails.


With so many Marylanders out of work, the Division of Unemployment Insurance, under the direction of the Department of Labor, Licensing and Regulation, has become lax in their enforcement of the rules that govern Maryland’s unemployment program.


Surely, it can’t come as a surprise that there are jobs out there and that many companies are struggling to find qualified candidates. Just open a local newspaper’s help wanted section, or go online to, or to


So, what does this all mean for the job seeker receiving unemployment benefits?


Those collecting unemployment benefits from Maryland “must make an active search for full-time work,” according to the Division of Unemployment Insurance website. There’s no definition of what this means, but a supplemental brochure on the topic advises job-seekers to keep track and document the employers they contact.


While there is the threat that this information will be double-checked by an employee in the Division of Unemployment Insurance, employers are not being contacted for verification. Therefore, it would be quite easy for someone receiving unemployment benefits to say that they’ve contacted XYZ employer and they aren’t hiring. This meets the requirement should anyone check and the money keeps rolling in for the unemployed person.


The problem in Maryland could be extended even further if the state’s unemployment rate stays at 6.5 percent of higher for July, August and September. An extended benefits program would be available for the unemployed for an additional 13 weeks of unemployment payments. The state will make a determination in late September about this possible extension.


It appears that other states are getting savvy to this problem and Maryland should follow their lead. Florida made a change to their program in March when it started randomly checking on their claimants’ job search records. There aren’t enough resources to check everyone every week, but the threat of a possible random check may be enough to get this state’s system back on track.


Florida’s process includes randomly contacting about 6,000 claimants each week. Those selected are instructed to contact the agency before filing their next unemployment claim.


The effort is a result of the state’s need to decrease spending on unemployment. According to an Orlando Sentinel article, the state has paid more than $13.6 billion in benefits and, in that time, it has overpaid – because of fraud or error – about $264.1 million. Less than 30 percent of that was able to be recovered.


Maryland’s financial picture isn’t any better than Florida’s and our state would be wise to implement the same checks and balances as Florida. We simply can’t afford to keep unemployed people on the rolls who aren’t doing their part to secure employment.


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