Small business owners pay price for people collecting unemployment illegally


by Chris Nagus / News 4

Posted on July 9, 2012 at 4:47 PM

Updated Monday, Jul 9 at 4:56 PM

ST. LOUIS (KMOV) -- The United States Labor Department is overpaying $14 billion when it comes to unemployment benefits.

Here in Missouri, the state borrows from the federal government to pay unemployment. The state is currently in the hole hundreds of millions of dollars.

Those who collect illegally have been a problem for a long time.

In February, 2011, the Missouri Department of Labor busted 147 people for stealing unemployment benefits.

At the time, Missouri owed $780 million to the feds to pay those benefits. But recently the state made a big principal payment, which brought the debt down to just under $563 million.

But it’s come at a cost to Missouri business owners, who have been paying for it in fees.

Last summer, St. Charels County business owner Dennis Denny called News 4’s Chris Nagus. Denny was upset after noticing an extra $54 fee tacked on the payroll at his business.

It turned out turns out every business in the state was paying extra to cover the interest on the massive debt owed by Missouri to the feds to cover unemployment.

“As a small employer we pay our federal unemployment state unemployment, now I’m paying interest on a debt,” Denny said at the time.

The unemployment benefits are a vital lifeline for those who need them. Overpayments generally go to people who aren’t actively looking for a job, those who quit jobs and those who continue to file claims despite going back to work.

Here in Missouri, the department of labor works to recover stolen funds.

Data for 2010 shows the state recovered $6.4 million in stolen benefits.

News 4 is working to get updated numbers from the state for 2011.