Reviews the internal and external forces of change affecting the U.S. labor force within a global economy as of 2008 and the implications for the U.S. Unemployment Insurance (UI) System.

The report explores observed industrial shifts, trends in the U.S. business cycle, changes in the composition of the U.S. labor force, trends in the nature and cost of unemployment, and the current effectiveness of UI, since the program’s inception in 1935.

The report concludes with policy suggestions for enhancing UI program effectiveness in the new economy, while accurately identifying three competing objectives of the UI program that policy makers should take into account: provide adequate income to eligible claimants; control total program costs; and minimize the adverse incentive effects of the UI program on workers’ job search behavior. Changes in the system that improve the protection available to laid-off workers will often increase program costs or increase the adverse incentives to delay seeking employment. Through the use of a variety of data sources, the report describe observable trends in the structure of the labor market in tabular and graphical form. (Abstractor: Author and Website Staff)

Full publication title: UI BENEFITS STUDY: Trends in the Structure of the Labor Market and Unemployment: Implications for U.S. Unemployment Insurance

Major Findings & Recommendations

To address the problem of lengthening unemployment spells, policymakers might consider providing a longer period of regular UI benefit duration or altering the trigger mechanism for Extended Benefits so that workers receive automatic extensions in benefit duration when the unemployment rate is high or rising. To address the increased costs to the UI system associated with longer UI benefit duration, policymakers might also want to consider increasing the duration of the waiting period between the layoff date and the first week in which laid-off workers are eligible to draw a UI benefit. To partially protect workers against the risk of losing employer-provided health insurance when they are laid-off, the UI system might be extended to provide compensation that subsidizes the purchase of COBRA health insurance coverage for UI-eligible laid-off workers who had health insurance on their lost jobs. To encourage long-tenure, laid-off workers to look more energetically for new jobs, the current UI protection might be extended to provide reemployed workers with time limited earnings insurance benefits. (p.iv) (Abstractor: Author and Website Staff)