Michael A. MacDowell
The Department of Labor’s own Inspector General’s Office recently reported that $77 billion of the $413 billion unemployment benefits paid by the Department of Labor in 2021 was wrongfully paid. This amount represents 18% of all their unemployment benefits.
These incorrect payments do not include an additional $865 million in “unknown payments” — allocations to recipients that have not been identified. And these Department of Labor mistakes don’t include the $100 billion illegally obtained from the Paycheck Protection Fund (PPP) and administered by the Small Business Administration. These and other misallocations were reported as part of the Payment Integrity Act 2019, which requires federal departments and agencies to report any or all improper payments in government benefit programs to the Office of Management and Budget (OMB).
Few can deny the humanitarian intentions behind the potpourri of benefits to individuals, organizations and businesses during the pandemic. Many of the programs helped families during the economic storm caused by the pandemic. However, the indisputable fact remains that significant amounts of taxpayers’ money were wasted on ineligible people, businesses and institutions.
The “opportunities” for dishonest activities were more abundant during the pandemic. Consequently, the poor management of government programs has become more visible to the public. However, the problem of mismanagement of government programs is a perennial problem. These departments and agencies are just too big and desperate to be managed by people with extremely little business experience.
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For example, the Department of Labor is one of the smallest of the 15 federal departments, its annual operating budget is $14.6 billion, and it employs 16,922 people. Managing an organization of this size is a monumental task, even if the workflow is constant. And when large government financial allocations happen quickly, as was the case with pandemic relief funds, weak governance structures inevitably lead to missteps. In these times, organizations are most in need of executives with managerial and business experience. However, as measured by both education and experience, the management expertise of individuals responsible for major federal government programs does not seem up to the task today. The current administration has few senior leaders with business experience. The average business experience of Biden appointees is 2.4 years according to a recent survey conducted by Stephen Moore, a Wall Street Journal editorial board member and White House correspondent Jon Decker, who examined the backgrounds of sixty-eight of the current CEO. . branch officers.
Some might argue that actual business experience is an abomination to the philosophy and policies of the current administration. But whatever your political views, few can find fault with well-run organizations that many departments don’t seem to be. It doesn’t take an MBA from an Ivy League college to know that there will be people and institutions that will get around the rules when “free” and rapidly dispersed government funds become available. However, there were few plans to minimize fraud within these programs, although the pandemic has inspired allocations to the Department of Labor, the Small Business Administration and other agencies in advance.
Since these departments have failed in their management responsibilities, it now becomes the role of Congress to fulfill its oversight duties. Congress must ensure that those responsible for fraudulent activities that led to billions of dollars stolen from US taxpayers are found and prosecuted. And Congress must act quickly, given that unemployment claims could rise again. But executives from congresses and governments seem to be preoccupied with other things they consider more important. We may need department heads and other bureaucrats who have more business experience and managerial skills commensurate with the seriousness of their position.
Michael A. MacDowell is president emeritus of Misericordia University and a trustee of the Calvin K. Kazanjian Economics Foundation.