Could Unemployment Fraud be Driving Inflation?

Remember “Fight for $15”? The rallying cry to increase minimum wage to the astronomical, small business busting figure of $15 an hour – a so-called living wage at the time? The Congressional Budget Office in early 2021 estimated that a $15 federal minimum wage would help 17 million workers, but kill 1.4 million jobs as businesses would not be able to afford to hire as many workers.

Fast forward to today and you hear very little about fighting for 15, but you do see signs every where begging for workers for higher rates than that. You also see reduced business hours for lack of labor and businesses still going under for lack of employees. Where are all the workers? Even at $15 an hour they can’t be found.

Meanwhile, menu prices and costs for everything at businesses that employ people at or near minimum wage have skyrocketed. Just as the opponents of Fight for $15 warned. With or without a law passed, higher wages at the low end of the economy are inflationary everywhere else. Of course it is more complicated than that. Gas prices also drive inflation, as do many other factors, but let’s look at this one.

One place some workers have gone is to the unemployment line. During the pandemic, Congress passed trillions of dollars in new spending, much of it for unemployment benefits. GAO estimates that fraud around unemployment benefits, normally around 8% more than doubled to almost 19%. That’s nearly $80 billion in fraudulent claims in 2021 alone. Remember, unemployment benefits were particularly generous during this time, up to 3 times as much as people could make working. The stakes – and the fraud – were high.

One such fraudster was Connecticut man Jason Turoczi who is accused of collecting $72,078 in fraudulent claims using the identities of his relatives, both alive and dead. He is further accused of helping others collect another $109,567 in fraudulent claims. 

$80 billion in fraud is enough to pay 1,109,908 Jason Turoczi’s very handsome salaries NOT to work at McDonald’s or your local Mom and Pop shop. Put another way, that is 5.3 billion hours NOT worked at $15 an hour. Think that has affected your local economy and the price inflation you see in your community? Those remaining businesses have to compete harder and harder through wage increases to attract a shrinking labor pool – shrunken by government’s careless provision of lucrative fraud opportunities. And the Bureau of Labor does not seem particularly interested in doing anything about it. 

In fact, if state governments DO do something about the fraud, they could be severely penalized if they get it wrong. Michigan is paying $20 million in settlements to claimants, because they tried to fight fraud. So why bother?

The government keeps churning out money for loosely monitored programs that are great opportunities for fraud, while good businesses suffer and have to raise prices to attract the remaining honest workers, or go out of business altogether.

This could be one factor in all the inflation you see around you. Outright FRAUD in the billions.

Meanwhile the dollar is buying less and less in the productive economy as time goes on. Will a course correction happen soon? Who knows, but why not protect a portion of your portfolio from these forces and solidify the value of your savings with gold?

Gold can't be printed at will. It can't be blanketed all over the economy, becoming more worthless by the day. There is a finite amount of it on earth. You can claim your portion by calling us today.