Unemployment insurance reform: elements of a social provisioning approach

Journal of Economic Issues, June, 2008 by Janice Peterson

In addition to regular UI benefits, which are typically available for a maximum of 26 weeks, (5) workers may be eligible for "extended" or "emergency" benefits during recessionary periods. The federal-state Extended Benefits (EB) program can provide up to 13 additional weeks of benefits to workers who exhaust their regular UI benefits in periods when state unemployment is sufficiently high to trigger the EB program. However, because the triggers were substantially modified in the 1980s, most states fail to meet the criteria for offering extended benefits even in a recession. Some form of federal temporary "emergency" benefits have been provided in every recessionary period since the 1950s; because of the decreasing importance of the EB program, federal emergency benefits have come to play an increasingly important role in extending UI benefits in times of recession (Nicholson and Needels 2006, 62-63; Vroman 2007, 4).

While the UI system provides a valuable cushion against income losses from temporary unemployment, many analysts argue that over the last two decades major gaps in the system have become evident--gaps that particularly affect low-wage workers, women workers, and workers experiencing long-term unemployment. Important indicators that highlight these gaps are the low rates at which unemployed workers receive UI benefits and the high rates of benefit exhaustion among those who do receive benefits (Nicholson and Needels 2006, 60-61; Stone, Greenstein and Coven 2007, 1; Vroman 2007, 6).

The UI recipiency rate has declined significantly since its high of nearly 50 percent in the 1950s. After reaching its lowest point in the 1980s, the UI recipiency rate increased modestly over the 1990s, but remains well below its 1950s level. Currently, only about one-third of unemployed workers collect benefits in non-recessionary years (GAO 2007, 12, 17; Nicholson and Needels 2006, 60). The receipt of UI benefits is particularly low among low-wage workers and workers in nontraditional employment arrangements, such as part-time work. The Government Accountability Office (GAO) recently reported that between 1992 and 2003, low-wage workers were at least twice as likely to be unemployed as higher-wage workers, yet they received UI benefits at less than half the rate of higher-wage workers in almost every year (GAO 2007, 20-21). (6) GAO also found that unemployed part-time workers were significantly less likely to collect UI benefits than those who were full-time, (7) and that this was true regardless of whether they were low-wage or higher-wage workers (GAO 2007 4, 13).

As Vicky Lovell of the Institute for Women's Policy Research has argued, low UI recipiency rates for low-wage and part-time workers translate into low UI recipiency rates for women workers, who are disproportionately represented among these populations. Six of every ten minimum wage workers in the United States are women, and nearly one-third of working women earn a poverty-level wage or less. In addition, while women comprise 42 percent of the full-time workforce, they comprise 67 percent of all part-time workers. Consequently, the UI recipiency rate for unemployed women is more than 10 percent lower than men's UI recipiency rate (Lovell 2007, 2-4).