The Philadelphia Daily News said 1,162 inmates got an average of $344 a week for an average of 18 weeks -- or more than $7 million given to convicts already being housed at the public's expense.
The oversight was possible because a Pennsylvania labor department database was only set up to cross-check applicants' Social Security numbers with those of people serving time in state or federal prisons. County jails weren't included, officials said.
Once approved, the labor department generally uses a direct deposit payment method, meaning prison officials never spotted checks arriving as they opened inmates' mail. Only a biweekly phone call is necessary to renew benefits.
Pennsylvania Gov. Tom Corbett said his administration has moved to correct the oversight.