During the pandemic, you probably heard many stories about people applying for unemployment benefits, saying that the EDD phone lines were down or payments were delayed.

However, the confusion has not completely settled yet. In fact, it seems that even bigger problems are emerging.

Recently, the federal Department of Labor has dispatched a strike team to California's EDD. They plan to look into fraud, improper payments, and overall financial operations. It's not common for the federal government to send such teams to state agencies. This is the second time, following Minnesota last December. Just the fact that California is the second target indicates that the situation is serious.

This investigation is said to be quite extensive. They will be checking the scale of fraud, the rate of improper payments, payment delays, data management issues, and the verification system for eligibility. The federal government has pointed out in a letter that the rate of improper payments has increased in recent years, processing speeds are slow, and there are issues with data quality. The California State Auditor has already designated EDD as a high-risk agency in 2023, and that evaluation has been maintained this year. This suggests that improvements have been slow for several years.

The financial situation is also quite serious. The unemployment insurance trust fund was essentially depleted during the pandemic. Since mid-2020, the federal government has started borrowing money, and there is currently about $21 billion in debt. During the pandemic, one in five workers applied for unemployment benefits, which severely worsened the financial situation.

This debt ultimately falls back on employers. If the state government cannot repay the federal loans, employers will have to pay additional federal unemployment taxes. For the 2025 fiscal year, it is reported that each worker is paying an additional $84 in taxes. This is among the highest in the nation. As long as the debt remains, the burden may increase every year, which is understandably concerning for those running businesses.

The scale of fraud has also not been accurately assessed. The California State Auditor estimated that potential fraudulent claims could exceed $30 billion between 2019 and 2021. In contrast, EDD's own report estimated it at about $10.4 billion. The significant difference in figures suggests that management has not been handled properly.

Cases of criminal prosecution continue to emerge. A former employee was sentenced to prison for assisting in false claims. There have also been cases of individuals setting up fake businesses to collect benefits. There have been numerous crimes exploiting loopholes in the system.

The most unfortunate aspect is that legitimate applicants have suffered. Many who were eligible were initially denied and later overturned on appeal. Processing delays are also severe and fall far below standards.

From the perspective of those paying taxes and working in California, this federal investigation feels less like a political issue and more like a matter of trust in the system. Given that California is said to have the largest economy, it is honestly disappointing to see the unemployment insurance administration in this state. I truly hope things change this time.