For many economists, the weekly economic number released at 8:30am every Thursday by the DOL is even more important than the one reported by the BLS on the first Friday of the month: that’s because, the conventional wisdom goes, initial jobless claims are are leading indicator into the labor pipeline, and therefore provide an advance glimpse into what the prior month’s jobless claims will look like.
All of this naturally assumes that neither the first, nor the second data set are essentially two completely fabricated, goalseeked and “adjustment-smoothed” propaganda tools meant to promote either fiscal or monetary policy.
But all that aside, one doesn’t even need to have a conspiratorial bent to realize just how unreliable this so very critical “leading” jobs indicator is.
Presenting the Florida jobless claims website.
According to the Miami Herald reports, on Friday, the state’s auditor general issued a scathing 45-page audit that joins mounting evidence that CONNECT – aka Florida’s Online Reemployment Assistance System or said simpler, jobless claims website – is a system in disarray.
The audit found lapses that seemed to touch on every facet of CONNECT, which now costs $77 million, more than $14 million more than the previous estimate of the website.
The audit covers the period between Feb. 24, 2014, and June 30, 2014, when 500,000 claims were processed. It identified numerous areas of concern, including:
- Security: The agency that oversaw CONNECT, the Department of Economic Opportunity, broke state law by requiring claimants to log on the system using their Social Security numbers. Agencies must not require SSNs when they aren’t imperative, but because the DEO did, it subjected users to unnecessary security risks.
- Timeliness: The DEO may have violated federal requirements to timely pay or resolve claims. The audit found that as of June 30, about 44 percent of the 408,256 documents being processed were in the “unidentified” queue. The agency didn’t have procedures to ensure these unidentified documents were handled in a timely manner.
- Fraud: Because of lax safeguards, 20,535 potentially ineligible claims were paid between March 1 and June 30.
- Accuracy: CONNECT’s automated functions repeatedly entered in wrong data, such as inaccurate postmarks on documents, that could help negate a legitimate claim. Other safeguards weren’t in place to prevent the incorrect entry of data, increasing the odds of an incorrect cancellation or an overpayment.
- Overpayments and erroneous charges: One claimant was wrongfully charged for an overpayment in the amount of $16,897. Another claimant who had a payment rejected in 2013 was automatically paid the old claim when he filed a new claim in 2014.
- No accountability: CONNECT had few controls in place to ensure the “confidentiality, availability and integrity of its data.” Furthermore, reports that the DEO must file with the federal government weren’t being filed, raising concerns that the agency wasn’t complying with federal requirements.
The DEO’s executive director, Jesse Panuccio, at first denied there were problems that might hinder CONNECT. He later told lawmakers that the project’s vendor, Deloitte Consulting, which has been paid $40 million for the project, was to blame.
The audit was made public Friday afternoon, the weekend before the legislative session begins. But Panuccio had the audit for weeks. On Feb. 16, he sent a letter to Scott defending CONNECT, repeating his claim that things have improved.
“By the time of the release of the audit findings, CONNECT was a much improved system,” Panuccio said.
Yet for thousands of jobless claimants who struggled to get payments of up to $275 they needed to pay bills, the audit validates what they have encountered.
Panuccio repeatedly claimed CONNECT was operating better than it performed before its launch. In the year before CONNECT debuted, Florida paid 78 percent of its initial claims on time, according to federal guidelines. But by October 2014, that number had dropped to 27 percent.
The report further exposes CONNECT’s faults, said Ali Bustamante, an economic policy analyst at Loyola University in New Orleans who reviewed the audit.
And that’s just one state’s “modernized” claims website. We can only imagine what is the deplorable state of accuracy of the other 49 states (we wouldn’t even touch “economic data” in DC with a 10 foot pole), and just how valid and “credible” any DOL data is when sourced from places such as this one.
In retrospect, one doesn’t even need to assume some grand conspiracy: in this specific case, the complete collapse in the data distribution chain leaves the lowly Department of Labor apparatchik no other choice than to guesstimate all the data. With the appropriate nudging from their politically connected superior of course.