Offers analysis that finds the most vulnerable workers are often not able to access Unemployment Insurance benefits, then provides some recommendations that states and the federal government could take to improve the benefit’s accessibility for this population.
This brief explores how vulnerable workers connect to the Unemployment Insurance (UI) system in the wake of the Great Recession. “The limitations of the UI system have…surfaced during this period of high unemployment. Although researchers and policymakers usually refer to the ‘unemployment compensation system,’ in reality there are systems of unemployment compensation guided by broad federal principles but financed and governed by individual states. States vary significantly in their eligibility rules and, hence, in their protection of unemployed workers. Most unemployed workers do not collect state unemployment insurance...and eligibility rules do not reflect the changing labor market. The large numbers of claimants have drained state UI funds, leading some states to adopt more exclusionary rules for applicants.
This brief documents how workers with labor market disadvantages fare in this system.
Previous research has shown that certain characteristics—such as being black or Latino,
young (age 16–24), or a single mother; lacking a high school diploma; having limited English language ability; or having been born abroad—render workers more likely to end up on the unemployment rolls. These workers will be doubly hurt if upon becoming unemployed they cannot take advantage of UI benefits. This is not a minority of workers. Quite the contrary: in the nationally representative data analyzed in this brief, 65 percent of all workers who experienced unemployment in 2010 have at least one characteristic usually associated with labor market disadvantage. This brief examines state eligibility rules, employers’ roles, and the principle of ‘for no fault of their own’ as a preamble for understanding the ability of some workers to collect UI benefits. It also suggests approaches for strengthening the position of disadvantaged workers in the UI system” (p.1-2).
The brief was published in 2012 and looks at the issue of access to UI across the United States. It considers the following topics in detail:
- Complex and varying state rules for UI eligibility
- Varying levels of receipt of UI among states
- Additional aspects of the UI system that may adversely affect workers with labor market disadvantages
- Receipt rates among workers with labor market disadvantages
Major Findings & Recommendations
“The Great Recession officially ended in June 2009. But 21 months later, almost 13 million workers still find themselves without work, the unemployment rate remains above 8 percent, and over 40 percent of the unemployed have been jobless for more than six months. These lingering effects highlight the role of unemployment insurance in ameliorating the economic distress of unemployed workers” (p.1). However, while the brief notes that UI can help unemployed workers, it finds that the most vulnerable are not always able to access the benefit: • “Most unemployed workers with labor market disadvantages do not collect unemployment insurance. • State eligibility rules, the system’s contentiousness, and the ‘no fault of their own’ principle leave many disadvantaged workers behind. • Even with federal UI extensions, some states may reduce access to benefits” (p.1). “The Unemployment Insurance program leaves behind the most vulnerable unemployed workers. During the last few years…the federal government has made efforts to provide a stronger safety net for unemployed workers. However, it is challenging to effect such changes because unemployment insurance benefits are largely determined by state rules. Even with federal extensions of benefits through an extended benefit program or emergency unemployment compensation, the fact remains that a worker enters the system at the state level. The modernization incentive payments could have increased the number of beneficiaries with labor market disadvantages, but not all states requested those funds…Many workers in low-recipiency states were left without the expanded provisions of the modernization payments. The states that did not apply for modernization payments…tended to be states with low recipiency rates. For instance, Kentucky, Alabama, Indiana, Arizona, Texas, and Florida did not apply for modernization funds and are among the 10 states with lowest UI recipiency rates... As state unemployment insurance funds continue to face solvency problems and the federal government continues to cover UI recipients, there may be opportunities to promote changes that improve vulnerable workers’ access to the program. For example, the federal government could provide additional incentives for states to modernize their programs. Alternatively, the federal government could provide financial support more directly to vulnerable workers who do not have access to their states’ UI programs” (p.6). (Abstractor: Author and Website Staff)