The Labor Department has eliminated $400 million in DEI-related spending, calling it wasteful and tied to fraud in the unemployment system.

Labor Department Targets Equity Grants in Efficiency Push

The U.S. Department of Labor announced on Tuesday that it has terminated $400 million in spending related to diversity, equity, and inclusion (DEI) initiatives, part of its Government Efficiency program (DOGE). The funds had been allocated under the American Rescue Plan Act (ARPA), a $2 trillion COVID relief package signed in 2021 by President Joe Biden.

The department stated that all Unemployment Insurance ARPA grants were canceled, citing an “infrastructure crisis riddled with fraud, waste, and abuse” in the current unemployment benefits system. Among the canceled initiatives were efforts to fund an Office of the Unemployed Workers’ Advocate, hire equity monitor staff, and develop equity-focused analytics tools and assessments.

According to department officials, these projects failed to meaningfully improve access or efficiency in the unemployment system and instead prioritized bureaucracy over effective service delivery. “The Biden administration was given a historic opportunity by Congress to fix it but instead squandered it on bureaucratic and wasteful projects,” said a department spokesperson.

The Labor Department stated it will now work directly with state workforce agencies to rebuild the system and address widespread fraud. Officials pledged to improve access for all Americans and enhance accountability in how federal unemployment funds are administered.

Earlier this year, DOGE identified thousands of unemployment claims submitted by claimants with suspicious age data, further highlighting vulnerabilities in the system. Labor Secretary Lori Chavez-DeRemer had previously described the findings as evidence of “nearly $400 million in fraudulent unemployment payments.” She reiterated the department’s intent to pursue fraudsters and recover stolen taxpayer dollars.

This $400 million cut follows an earlier move by the department to return $1.4 billion in unspent COVID-19 funds to the U.S. Treasury’s General Fund, with ongoing efforts to recover an additional $2.9 billion. The DOGE program now reports that its actions have resulted in savings of more than $1,055 per American taxpayer.

According to the most recent update on the DOGE website, dated May 11, the Labor Department ranks among the top five federal agencies in executing efficiency-driven spending reductions. The department’s latest actions underscore a broader shift toward fiscal oversight and public accountability in managing pandemic-era relief funds.