Failing Up: Biden to Nominate Julie Su as Next US Labor Secretary

President Joe Biden is nominating Julie Su, the current deputy and former California official, as his next labor secretary, replacing the departing incumbent, former Boston Mayor Marty Walsh.

Su, a civil rights attorney and former head of California’s labor department, was central to negotiations between labor and freight rail companies late last year, working to avert an economically debilitating strike. She also has worked to broaden employee training programs and crack down on wage theft. If confirmed by the Senate, Su would also be the first Asian American in the Biden administration to serve in the Cabinet at the secretary level.

Biden, in a statement on Tuesday, called her a “champion for workers.”

“Julie is a tested and experienced leader, who will continue to build a stronger, more resilient, and more inclusive economy that provides Americans a fair return for their work and an equal chance to get ahead,” he said. “She helped avert a national rail shutdown, improved access to good jobs free from discrimination through my Good Jobs Initiative, and is ensuring that the jobs we create in critical sectors like semiconductor manufacturing, broadband and healthcare are good-paying, stable and accessible jobs for all.”

Su was considered to lead the department when Biden won the White House but instead became the department’s deputy. Walsh announced his intention to leave the administration earlier this month to lead the National Hockey League Players’ Association. Su will serve as the acting secretary until the Senate acts on her nomination.

Biden had been under pressure from the Congressional Asian Pacific American Caucus and other Asian American and Pacific Islander advocates to select Su to head the department. This administration was the first in more than two decades to not have a Cabinet secretary of AAPI descent, despite its regular declarations that it was the most diverse in history. Vice President Kamala Harris and U.S. Trade Representative Katherine Tai are of AAPI descent but don’t lead a Cabinet department.

Su, if confirmed, would also expand the majority of women serving in the president’s Cabinet. She was confirmed by the Senate to her current role in 2021 by a 50–47 vote.

Su’s nomination drew swift support from Democrats on Capitol Hill, with Senate Majority Leader Chuck Schumer saying she would be “phenomenal” in the job.

“The president couldn’t have picked a better nominee,” he told reporters. “I’m really excited about her, and we’re going to move to consider her nomination very, very quickly.”

Sen. Bernie Sanders, I-Vt., who will preside over Su’s confirmation hearing as chair of the Senate health, education, labor and pensions committee, praised the selection. Sanders had urged consideration of Sara Nelson, the president of the flight attendants union, but made clear Su had his strong support.

“I’m confident Julie Su will be an excellent Secretary of Labor,” he tweeted. “I look forward to working with her to protect workers’ rights and build the trade union movement in this country.”

But Louisiana Sen. Bill Cassidy, the top Republican on the Senate health, education and labor committee who opposed Su when she was selected for deputy secretary, called her work overseeing the department “troubling” and “anti-worker.”

The committee should “have a full and thorough hearing process,” Cassidy said.

Rep. Judy Chu, D-Calif., who chairs the Congressional Asian Pacific American Caucus, said she was “overjoyed” by the selection, thanking Biden in a tweet for “nominating your first AAPI Cabinet Secretary!”

“It certainly is better late than never,” Chu said in a brief interview, citing CAPAC support for Su two years ago for the top Labor post and praising Su’s credentials as a leader and enforcer of labor laws including minimum wage and occupational safety standards. She said GOP criticism about Su had been fully vetted two years ago and that the coming confirmation process will show their charges “have no basis.”

Chu noted that Biden had said he would name a Cabinet that looked like America, and “he fulfilled that promise.”

Su’s nomination also comes at a key moment for labor unions, which have been facing a decline in membership for decades. Unions gained some momentum as workers at major employers such as Amazon and Starbucks pushed to unionize. But Biden — an avowed pro-union president — had to work with Congress to impose a contract on rail workers last year to avoid a possible strike.

Click here to read the full article in AP News

California EDD Blamed Fed Program for Fraud – New Numbers Show That is Impossible

Nearly $40 Billion Was Lost by the EDD

New federal Department of Labor figures regarding the massive looting of the nation’s unemployment insurance systems during the pandemic show that California’s improper payment figure has climbed again and is now estimated to be nearly $40 billion.

Labor Department Inspector General Larry Turner testified in front of Congress Wednesday that an estimated 21.5% of the $888 billion paid out in unemployment benefits across the country were improper.  That means $191 billion dollars were lost to fraud and other more typical bureaucratic incompetencies.

What that means for California is that nearly $40 billion – or about $1,000 per state resident – was lost in the wind.

The state Employment Development Department was contacted multiple times to elicit comment.  As has been typical in the past, the EDD did not avail themselves of the opportunity. 

In the past, the EDD has claimed that “95%” of the fraud losses were directly related to the federal PUA (pandemic unemployment assistance) program. The new figures show that could not possibly be true.

PUA – which offered assistance to those who would not normally qualify for benefits like independent contractors, freelancers, etc. –  was only one of the federal unemployment programs created at the start of the pandemic and accounted for about 15% of the overall national (state and federal) payment total of $888 billion. Regular state funds, the FPUC (the $600 then $300 weekly supplement that was available for about a year during the pandemic,) and other programs made up the rest.

Turner added the fraud estimate percentage for the PUA itself – unlike all of the other programs – has not yet been determined though he expects it to be higher than the 21.5 % averaged by all other payment types.

The PUA program has been considered the easiest target for fraudsters as some states, like California, required virtually no identity conformation to qualify for the benefits, hence claims made in Sen. Dianne Feinstein’s name sailed through the system (as did claims made by thousands of prisoners, out-of-state residents, and foreign nationals.)

Eventually the EDD did bring in an outside identity verification firm – – which reportedly did staunch the fraud flow, though also causing legitimate claimants to have their benefits halted for up to two months.

The EDD still claims only $20 billion total was lost, of which 95% was PUA related.  However, California’s share of PUA spending is most likely to be in the $25 billion range (akin to the national 15% percent of the total state spending) meaning that 76% of all PUA expenditures would have had to be fraudulent and/or improper.

And if the national estimate of 21.5% is correct (it may be slightly lower at 20%, though as the PUA percentage has yet to be determined it may be higher) the EDD lost between $37 and $40 billion.  If the EDD’s 95% claim is to be believed, that would mean that the PUA program would have had to somehow manage to lose about $36 billion of the estimated $25 billion it spent  – a mathematical impossibility.

As noted above, attempts to have the EDD clarify the figures – and to explain the impossible estimate they have been touting for more than a year –  were met with silence.

It should also be noted the EDD has ludicrously claimed that their non-PUA fraud rate actually went down during the pandemic

The new figures also show that, while having only 12% percent of the nation’s residents, California accounted for about 21% of all unemployment expenditures during the pandemic and about 22% of the fraud and other improper payments made nationwide.

This raises the specter of international gangs specifically targeting the state because they quickly became aware of how lax the system was, a system the EDD took more than seven months to put in even the most basic safeguards. Identity experts have said previously that the EDD, even with its antiquated tech systems, could have added a “bolt on” security program for a few million dollars in about a week’s time very early in the pandemic.

Exactly how much California received – and lost – as part of the PUA system should become clearer when the Department of Labor completes its PUA audit in the coming months.

At the end of January, new EDD chief Nancy Farias – formerly a labor union “government relations” human – told the Sacramento Bee that she blamed the problem on the Trump administration for neglecting “state efforts to combat domestic and foreign criminals collecting billions of dollars fraudulently from overwhelmed unemployment systems.”

Exactly how the Trump administration could have been at fault remains unclear – for example, when the EDD finally added some security “friction” to the system, Trump was still president and his administration clearly did not stop them from hiring and, therefore, undoubtedly would not have stopped them from doing so earlier on in the pandemic.

It should also be noted the Trump administration provided the EDD with an additional $788 million just to cover the department’s additional administrative costs caused by the pandemic.  With a typical annual administration/operations budget estimated to be in the one billion dollar range, that amounts to an annual budget bump of about 40% during the pandemic.

Click here to read the full article in the California Globe

GLOBE EXCLUSIVE – EDD Has Paid Billions to Feds in Interest Alone

In the past 10 years the state has managed to not borrow to cover unemployment claims only twice

Since 1990, California’s unemployment agency – the EDD – has paid the feds $1,793,665,930 in interest alone to help keep its doors open and claimants paid.

That approximately $1.8 billion dollar figure does not include what the state currently owes in interest – another $48.8 million for this year so far as the agency has begun borrowing again, as the Globe reported here – nor is that figure adjusted for inflation to reflect value in current dollars.  

The inflation-adjusted number is significantly larger, approaching an estimated $3 billion.  

Not only does the loss of this literally wasted money contribute to the inability of the state unemployment trust fund to build a solid footing and has made reform of the agency more difficult, but it has also had to be paid for by state employers and workers, driving up business costs and being a general drag on the state’s economy. 

In the past 10 years – well before the pandemic – the state has managed to not borrow to cover unemployment claims only twice – in 2019 and 2020.  In that same time period, the EDD has paid $1.2 billion in interest, about $817 million from 2013 to 2018 and another $330 million this year.

Just since 2007, the state has borrowed $100 billion and since 2013 up to and including this year the EDD has paid about $1.2 billion in interest (the other $600 million interest paid occurred on borrowing between 1990 and 2007.)

It should be noted that much of the specifically-pandemic-related billions lent to the EDD were loaned interest free (as they were to every state.)

On top of this, the state – as of midnight Thursday night –  now owes another  $18,223,379,798.78 in principal and another $48,846,063.38 (as noted above) in interest.

EDD’s debt-reliant funding is somewhat analogous to a person who has a credit card, runs it up to the, say, $5,000 limit, pays the minimum due, say $200, and then the next day spends $200 using the same card. Or it’s like borrowing $100 from a loan shark on the condition of paying $125 back next week but only paying the $25 “vig” week in and week out in order to keep the use of your knees (luckily for all involved, it is doubtful that the Social Security Administration – which administers the loan program – would send its goons to the EDD’s Sacramento offices to “collect.”) 

It should be noted that the feds do not refuse to lend the money and tend to consider state (borrower)-initiated payment plans in order to make sure unemployment benefits claimants actually get the money they are entitled to. In other words, no matter the debt the money will flow through the EDD to the laid-off worker, as it does today.

It is true that the EDD has managed to occasionally pay the principal down to zero, but that state of being “off the schnide” is far from the typical condition of the financial affairs of the agency.

Like all states, California is allowed to borrow from a program called Title XII, a part of the Social Security system set up decades ago to “backstop” unemployment agencies experiencing what are supposed to be temporary difficulties. For example, a textile-heavy state that sees its mill jobs disappear and shipped overseas can access the funds to meet the concomitant spike in demand for benefits.

Unlike many other states, California must pay interest. Notably, which states pay interest varies from year to year, though California has not managed to qualify for interest-free money since 1990. The number of states that do qualify is usually between 20 and 28, or about half on the money it borrows, at a rate that has ranged over the years from about 1.7% to 2.5%.

The amount paid in interest – interest that brings no other gain along with it, like a mortgage leads to homeownership – could have funded a number of Governor Newsom’s pet green projects. For example, at $100 million a year (averaged and adjusted for inflation), the interest paid could have switched the funding of the state’s “methane satellites” program from just a one-off expense of $100 million this year to a dedicated annually funded project – not that that would be a good idea and, yes, methane satellites are exactly what they sound like – the state budgeted $100 million to help launch satellites dedicated to detecting methane emissions – basically, cows with the vapors; for more on this see here.

The state has one of the highest unemployment tax rates in the country, but, problematically, the lowest “base” rate possible.  Taxes are paid on only the first $7,000 of income per employee, meaning the part-time intern costs the same to insure as the CEO even though the amount in benefits they would receive if laid off are wildly different.  The state has not changed this base rate in about 50 years, while the benefits offered have risen dramatically since.

Additionally, the rates employers pay vary depending upon whether or not they have had significant layoffs and other similar issues that strain the unemployment system; “stable” employers can expect to pay only about one-third the rate of “problematic” ones, but the interest obligation to the feds is essentially paid equally by everyone.

“I think what policymakers may not realize is that the (interest) from Title XII loans also increases taxes on employers,” said Audrey Guo, Assistant Professor of Economics at Santa Clara University. “And these surcharges are less equitable because they penalize all California employers, even those that may not have previously laid off employees.”

Rationalizing the current tax and base rate numbers, said Guo, could “increase the tax cost for employers at the minimum and maximum, but other employers would actually experience tax rate decreases.”

As to why this problem has continued for more than 30 years, it is not clear, though it is possible that EDD employees know they can’t get fired for incompetence nor be rewarded for innovating changes.

“I’m not sure why California has lagged behind other states,” said Andrew Johnston, assistant professor of economics at UC-Merced.  “But California’s largesse in some areas has meant that it doesn’t do basic service on the core of its social safety net, including its dilapidated education system and its bankrupt unemployment insurance program,” 

Click here to read the full article in the California Globe

EDD Debit Card Program Rife with Fraud, Reports of Unemployed Californians Not Getting Their Money

With rent due, Daryl Stanczack was counting on money from unemployment, but on November 1, he found he was overdrawn.

“You expect to get it,” said the Long Beach resident. “You expect to have it there.” 

He says he soon learned someone had duplicated his Employment Development Department (EDD) debit card and stole his benefits payment. But what surprised him even more was Bank of America’s response. 

The bank is responsible for issuing and administering the cards for the state of California.

“I got to the bank and they’re, ‘Yeah, this happens all the time,’” he said. “I’m like, ‘Wow, if this happens all the time they should change it, make it better.’”

He’s far from alone. In fact, a FOX 11 investigation found the EDD debit card program is rife with scammers, complaints and problems. 

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This past July, the federal Consumer Financial Protection Bureau (CFPB) fined Bank of America $225 million over the bank’s botched disbursement of unemployment benefits in multiple states during the height of the pandemic. 

But our investigation has found innocent people are still being left in the lurch. Enter the search terms “BofA” and “EDD” in the CFPB website and you’ll see more than 3 million complaints from about a dozen states.

In recent weeks, beneficiaries have complained that their funds have been frozen for a year or that they had thousands transferred out of their account. Bank of America says it froze accounts due to widespread fraud, but in a letter to California lawmakers, the finance giant admitted at one point as many as 488,000 accounts in California were frozen. 

Among them were legitimate beneficiaries who tell FOX 11 they were left without their money at a time when businesses were shuttered and they needed their money the most.

In a statement to FOX11 Bank of America said, “As California’s unemployment program faced tens of billions of dollars in fraud, Bank of America’s goal always was to ensure legitimate recipients could access their benefits. Bank of America partnered with the state to identify and fight fraud throughout the pandemic, identifying hundreds of thousands of suspicious cards and assisting the state in protecting billions of dollars.”

“We need more clarity about what banks can and cannot do in terms of freezing your money if there’s a problem,” says Lauren Saunders, the associate director of the National Consumer Law Center in Washington, D.C. 

The advocacy group takes on big banks as part of its mission to protect consumers. She says the state should have given beneficiaries should have a choice on how they get their payments.

The state of California rolled out the program back in 2010, partnering with Bank of America. The EDD argued many beneficiaries didn’t have bank accounts and so the EDD debit card was better than sending checks. 

Bank of America would issue the cards at no cost to the state and in exchange, California would get a share of the profits. Most of the fees come from merchants, who pay up anytime a customer uses the card, but Bank of America would also collect interest on the funds in people’s accounts. 

We wanted to know how much the agreement has brought in for the state. The EDD’s own documents show that it has collected almost $200 million from the agreement. The amounts were modest in the first year, bringing in hundreds of thousands of dollars a month. But then, during the pandemic, those numbers jumped to six million in just one month.  In fact, 2020 was a profitable year for the state, raking in $47 million from the cards.

“Is the fact that the state is making money off it impacting their choices?” Saunders asks. “We don’t know.”

No one from the EDD agreed to go on camera, and when we asked for specifics on how the profit share is calculated, the EDD press office said they needed to check with their attorneys, then didn’t get back to us. 

“We definitely should know how much the consumer is paying in fees.” Saunders said. “We should know
if there is a way of reducing those fees.”

We don’t know how much came from consumer fees, but last year Bank of America told California lawmakers that it had brought in $687 million, but had spent $927 million. The Bank added it had lost $240 million between January of 2011 and the same month in 2021 in part due to criminals and fraud.

The bank now wants out of the EDD card business, but California said, “no.” The state exercised an option in the contract to keep the program going.

As for Stanczack, he got his money refunded, but wishes he’d been given a choice on how to get his money. He now has a new card and just interviewed for a job in his field of commercial plumbing, which he hopes will mean he won’t have to worry about EDD scammers stealing his money again.

Click here to read the full article at FoxNewsLA

California Suspends Some Disability Claims, Citing Fraud

SACRAMENTO, Calif. (AP) — After stealing the identities of death row inmates and even a sitting U.S. senator to make off with billions of dollars in fraudulent unemployment benefits during the pandemic, scammers have now moved on to impersonating doctors to dupe California officials into giving them disability checks.

State officials on Monday said they had suspended 345,000 disability claims while they worked to verify the identity of about 27,000 doctors whose credentials were used to file disability claims for purported patients.

The Employment Development Department said most of those suspended claims were likely fraud attempts. But some of them are legitimate claims from people who can’t work because of an injury or are taking paid maternity leave. Now, those people’s checks have stopped while state officials try to sort out the mess.

“Here we are once again when this big bureaucracy that can’t tell the difference between the honest and the corrupt,” said Assemblymember Jim Patterson, a Republican from Fresno. He said many of his affected constituents “are at their wits ends because they are simply running out of money. They are at the end of their financial rope.”

The Employment Development Department oversees claims for both unemployment and disability benefits in California. State and federal officials relaxed rules for unemployment benefits during the pandemic, which had the unintended consequence of making it much easier for scammers to file fake claims.

In California, criminals used stolen identities to steal at least $20 billion in unemployment benefits since March 2020 as the state approved fraudulent payments in the names of death row inmates and even U.S. Sen. Dianne Feinstein.

Now, state officials say organized criminals are stealing doctors’ credentials to file fake disability claims. The state is using a computer program to verify the identity of these doctors to find those fake claims. They do this by sending the doctors an email from an official government account asking them to verify their identity by using a computer program known as

That’s a problem for Martha Mariscal, who says her doctor doesn’t use email. Mariscal hurt her foot and hasn’t been able to work at her grocery store job. She hasn’t received her disability check since December and has now exhausted her savings.

Mariscal said she hasn’t been able to reach anyone at the Employment Development Department. And, since her doctor’s office doesn’t use email, they have yet to receive anything from the state to verify her claim.

“We’re just in limbo, just waiting for their mercy,” she said.

Click here to read the full article at AP