Trump's Labor Dept Threatens Blue States for Fraud — Florida's Rate Is Double California's

The Shakedown Letters Nobody Asked For

Acting Labor Secretary Keith Sonderling sent letters to every state and US territory demanding action to "combat waste, fraud, and abuse" in unemployment insurance programs, according to the Guardian. The letters threatened to withhold administrative funds from states — something the Department of Labor has never done in its entire history. Never. Not once.

Sonderling then went on Fox News Wednesday morning to clarify the threat. "I will essentially cut off the states' administrative funds and then they won't be able to administer this unemployment insurance due to the fraud," he said on air. He also claimed, while on television, in front of cameras, that Democrat governors run the states with the highest fraud rates. He provided zero evidence for this. Not a chart, not a dataset, not a footnote. Just the claim, delivered with the confidence of a man who has never been asked to show his work.

Three Blue States Named, No Data Provided

The Department of Labor's press materials singled out California, New York, and Illinois specifically. California, they noted, owes $20 billion to the federal government from a Covid-era loan. New York, they claimed, loses an estimated $2 million per day in "unemployment insurance fraud and improper payments" — though they helpfully declined to distinguish between those two very different things. Illinois, they said, has improper payments at a rate of 14%.

Here's the thing about improper payments: they are not fraud. The Guardian reports that improper payments are most often caused by outdated technology, and the estimated improper payment rate across the entire United States sits at 14.9%. Illinois is basically average. The Labor Department presented this as a scandal.

As for California's $20 billion debt, the Guardian explains it stems directly from a payroll tax structure that hasn't been updated since 1984, when the taxable wage ceiling was set at $7,000. Legislators from both parties have been trying to fix this for years. This is a known, documented structural problem, not a Democratic conspiracy to steal money.

The Florida-Shaped Hole in This Entire Argument

Florida is reporting an improper payment rate of 36.43%, based on data from 2021 to 2024, per the Guardian. California's rate is 16.85%. Florida's rate is more than double. Florida's governor is Ron DeSantis. Florida did not receive a threatening letter, or at least didn't get named in the press release calling out specific bad actors.

Sonderling appeared on Fox News to announce that Democrat governors are the problem. Florida exists. These two facts simply sit in the same universe together, unresolved, and the Department of Labor would prefer you not think about them at the same time.

Experts Are Not Impressed

Michele Evermore, a senior fellow at the National Academy of Social Insurance, told the Guardian that this press release is itself part of why fraud hasn't improved. "Fraud is still a problem and it hasn't gone away since the start of the pandemic but this press release is part of the problem, why the fraud isn't going away," she said. That's a burn delivered in the measured, careful language of someone who has spent too many years being professional about things that do not deserve professionalism.

Evermore's broader point is straightforward: no state is trying to pay fraudulent benefits to criminals. This is not a secret Democrat agenda. It requires a coordinated, government-wide response, not a round of finger-pointing at governors the administration has a political score to settle with. "It should be an all of government, all of society response, instead of calling out governors they have a political beef with," she said. "It's not the right way to soberly and stoically deal with a problem that everybody faces."

The Guardian also reports that back in May 2025, the Labor Department demanded states return unspent funds from the American Rescue Plan Act, funds that states were actively using to modernize unemployment systems and fight fraud. Experts criticized that move at the time too. It is almost like there is a pattern here.

A Number So Big It Breaks Your Brain

For context on the scale of the actual problem: the Government Accountability Office estimated that unemployment insurance fraud across the US between April 2020 and May 2023 ran between $100 billion and $135 billion, the Guardian reports. The Labor Department disputes that figure as overstated, which is fine, but also maybe explains why this is a serious issue worth treating seriously rather than as a vehicle for Fox News appearances.

The current administration's response to a documented, multi-billion-dollar fraud problem is to send letters with no data to every governor, highlight three Democratic states with statistics they misrepresented, skip over the Republican state with the worst numbers in the country, and then go on television to make unsupported claims. This is a choice that was made by adults.