Elon Musk and his Department of Government Efficiency (DOGE) announced recently that they had uncovered widespread fraud in unemployment benefits, identifying tens of thousands of claims linked to individuals over 115 years old, under 5, or with birth dates in the future.
Elon Musk, shocked by the findings, posted on X: “Your tax dollars were going to pay fraudulent unemployment claims for fake people born in the future! This is so crazy that I had to read it several times before it sank in.” He highlighted a case of someone with a 2154 birth date allegedly receiving $41,000 in benefits.
How the unemployment fraud may not be a fake problem
However, as a report in New York Times said, these “fake people” likely stem from a different issue than Musk implied. During the pandemic, when unemployment claims surged, up to 15% of claims were fraudulent, often involving stolen identities. To protect victims and track fraud, the U.S. Labor Department advised states to create “pseudo claim” records—fictitious profiles with implausible details, like future birth dates, to separate fraudulent claims from real identities.
Elon Musk’s team appears to have rediscovered these pseudo records, mistaking them for active fraud. Labor Secretary Lori Chavez-deRemer echoed DOGE’s claims in a White House cabinet meeting, but officials clarified that these cases reflect previously identified fraud, not ongoing government oversight failures.
“They’re trying to say the federal government has just been sitting there doing nothing to prevent fraud,” told Andrew Stettner, former director of unemployment insurance modernization at the Labor Department to NYT. “They are undermining the belief that federal agencies and states protect taxpayers’ dollars,” he reportedly added.
The Labor Department noted that a 2023 inspector general report flagged similar claims, which were later clarified as pseudo records. Spokesperson Courtney Parella stated, “We were not surprised to learn of the suspected fraud found in DOGE’s initial U.I. data analysis, which in many cases matches similar findings from previous inspector general reports.”
According to the report, critics argue Musk’s claims, like his earlier assertions about Social Security payments to deceased individuals, oversimplify complex systems and erode public trust. The unemployment program’s design during the pandemic prioritized rapid aid delivery, a decision signed into law by President Trump. While this led to some fraud, subsequent measures, including the 2021 American Rescue Plan, bolstered fraud prevention.
Michele Evermore, a senior fellow at the National Academy of Social Insurance, defended the approach to NYT. “This was a decision made by Congress and signed by President Trump that we were going to focus on getting benefits out the door quickly, and that we were going to cover as many people as possible.” She noted that the labor market’s swift recovery validated this strategy, despite initial vulnerabilities.
The Labor Department continues to investigate DOGE’s findings to address any lingering waste or abuse in the system.
