Unemployment insurance reform: elements of a social provisioning approach

Journal of Economic Issues, June, 2008 by Janice Peterson

Notes

(1.) In FY 2006, the UI program covered about 130 million wage and salary workers and paid about $30 billion in benefits to about 7 million unemployed workers (GAO 2007, 6).

(2.) More recently, Jeffrey Kling (2006) has proposed a model for UI reform that includes individual UI savings accounts ("Temporary Earnings Replacement Accounts") in combination with wage-loss insurance and low-wage co-insurance.

(3.) The House version of the bill (H.R. 2233) was introduced by Representative James McDermott on May 9, 2007. The Senate version of the bill (S. 1871) was introduced by Senator Edward Kennedy on July 25, 2007.

(4.) Today, UI coverage extends to nearly all wage and salary workers. Self employed individuals and agricultural workers on small farms are generally not covered under UI (GAO 2005, 5).

(5.) The National Employment Law Project (NELP) reports that only eight states (plus the District of Columbia) provide a maximum of 26 weeks to all workers, and the average worker runs out of UI benefits after 23 weeks (Emsellem, Stettner and Semidey 2007, 10).

(6.) The Government Accountability Office (GAO) reports that even with similar work tenures, unemployed low-wage workers were less likely to receive UI benefits than unemployed higher-wage workers. For example, 55 percent of unemployed higher wage workers who had worked at least 35 weeks during the year collected UI, while only 30 percent of unemployed low-wage workers with similar work tenures collected UI (GAO 2007, 22).

(7.) GAO reports that between 1992 and 2003, among unemployed workers who had worked at least 35 weeks during the year, part-time workers receive benefits at a rate of 29 percent, compared to 50 percent for full-time workers (GAO 2007, 3-4).

(8.) The exclusion of earnings from the most recent quarter reflects the fact that when most states designed their UI programs they generally lacked access to this data; with improved computerization of UI records, this is typically not true today (Stone, Greenstein and Coven 2007, 5).

(9.) NELP reports that 31 states only consider wages earned and/or time worked in the first 4 of the prior 5 completed calendar quarters preceding the claim in determining UI eligibility (GAO 2007, 25).

(10.) NELP reports that 32 states do not consider workers eligible for UI if they are only available for work part-time (GAO 2007, 13).

(11.) NELP reports that 35 states do not recognize serious illness or disability of a family member as good cause for leaving employment (GAO 2007, 26).

(12.) The Advisory Council on Unemployment Compensation (ACUC), headed by Janet Norwood , issued three annual reports (1994, 1995, 1996) and made 50 recommendations for improving the UI system (Chasanov 2007, 1; Norwood 2002, 188).

(13.) The Unemployment Insurance Modernization Act (H.R. 2233 and S.1871) extends the Federal Unemployment Tax Act (FUTA) surcharge, and would use $7 billion to provide funds to states that adopt certain UI reforms. The Senate bill includes all of the provisions of the House bill, but goes further, expanding the range of UI reforms for which states would receive federal financial incentives and makes these incentives stronger (Stone, Greenstein and Coven 2007, 7-8; Emsellem, Stettner and Semidey 2007, 5-10).