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Turning Hard Times to Good: Unemployment Insurance Reform

This article discusses the significance of unemployment insurance (UI) in the current economic situation, highlighting the need for reform and state initiatives to address gaps and improve access for low-wage, part-time, and women workers. It also explores the federal Extended Benefits victory and the role of EARN groups in advocating for UI reforms.

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Turning Hard Times to Good: Unemployment Insurance Reform

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  1. Turning Hard Times to Good: Unemployment Insurance Reform Andrew Stettner Deputy Director National Employment Law Project www.nelp.org December 9, 2008

  2. The Importance of Unemployment Insurance in Today’s Economy • Economic Situation: 1.2 million jobs lost this year, and 2.8 million more unemployed people than a year ago. 2.26 have been unemployed for more than six months, up from 1.3 million a year ago. • Economic Stimulus: UI effectively replaces lost consumer spending. Economy.com (January 2008) founded a $1.64 per dollar multiplier effect for UI compared to $1.02-$1.29 for tax cuts. • Poverty Reduction: UI cuts family poverty among UI recipients in half.

  3. Changing Workforce Struggle to Access the UI Safety Net • Low-wage workers: Low-wage workers twice as likely to be unemployed as high wage workers • Low-Wage workers only 1/3rd as likely as higher wage workers to receive UI benefits when they are laid off. • Part-time workers: 1 in 6 U.S. employees work a part-time schedule. • Only 28% of jobless part-time workers collect UI benefits, compared to 50% of jobless full-time workers. • Women workers: In 2007,69% of married and 77% of unmarried mothers were in the labor force. • In 41 states, unemployed men are more likely than unemployed women to receive UI benefits.

  4. Major Holes in State UI Safety Nets State UI Recipiency Rates, 2nd Quarter 2008 Less than 33%: SD, TX, CO, OK, DC, MS, UT, VA, GA, LA, TN, AZ, ND, KS, KY, MO, WY, ME, NH, OH, FL, NE Between 34% and 40%: SC, WA, AL, WV, NM, IL, MD, NC, CA, IN, MI, MN, NY Between 41% and 50%: IA, NV, HI, AR, RI, CT, AK, MT, OR, VT Above 50%: WI, DE, MA, NJ, PA, ID

  5. Families struggle to get by on meager jobless benefits Average Weekly Unemployment Benefit 2nd Quarter 2008

  6. Role for EARN Groups • Quality data on state programs available on a timely basis from US DOL. • Key form of worker protection always, and in the spotlight now. • EARN groups involved/recently involved in: New York, New Jersey, Ohio, Indiana, Minnesota, North Carolina, Texas, New Mexico, Oregon, Mississippi. • Hear from Joy at OCPP about how they’ve been involved.

  7. Major Shift Toward State Reforms Filling the Gaps in the UI Program • Since 1996, a trend has emerged with more than half the states filling the gaps in the UI program to benefit low-wage, part-time and women workers. • State Reform Highlights: • 13 new states (21 total) passed legislation which counts a worker’s recent earnings to qualify for benefits (“alternative base period”). • 8 new states (24 total) allow workers to collect unemployment while seeking part-time (not just full-time) work. • 29 states have adopted coverage for workers who leave their jobs due to domestic violence and other “family friendly” reforms.

  8. UI Modernization Act: Federal Help in Closing UI System Gaps • Provides $7 billion in “Reed Act” funds: Targeted to states that qualify for incentive payments to modernize their UI programs. • Helps 500,000 workers per year: targeting the long-term unemployed and the gaps that deny UI to low-wage, part-time and women workers. -One-third share requires “alternative base period.” -Remaining two-thirds share requires two of the following: Part-time provision, family-friendly voluntary quit provisions, extra UI for workers in training (Senate bill also includes dependent allowances and 26-week uniform duration of state benefits). • Rewards States: 19 states immediately qualify for $1.4 to $1.5 billion, plus 18 more states would qualify for at least three to four years of ABP benefits if they enact the reform. • Additional Administrative Help: UIMA also provides all states with a portion of a $500 million extra administrative grant to help with the crush of additional regular and extended benefit claims.

  9. Alternative Base Period: Shift helps 40% of those denied under SBP qualify under the ABP. Increases low-wage worker recipiency by as much as 17% (2-5% of all claims). Alternative Base Period

  10. Alternative Base Period Expands to 21 StatesCovering Half the Nation’s UI Claims ABP Enacted (20 States & DC) ABP Not Enacted (30 states)

  11. Families Seeking Part-Time Work Qualify for UI in Nearly Half the States UI Law for Part-time Workers Equity (9 states) Favorable (14 States and DC) Unfavorable (27 states)

  12. UI for workers who leave a job due to compelling family circumstances • UI Modernization Act supports reforms that make compelling family circumstances count as a good cause reason to leave work under UI law. • Leaving a job because of domestic violence. (29 states) • Leaving work to follow a spouse who is transferred to a new location. (15 states) • Leaving work to care for an ill child or family member. (16 states) • Different than family leave: Workers must be available for work.

  13. Federal Extended Benefits • Victory! 20-33 weeks of federal extended benefits available to workers exhausting state UI benefits through March 2009. (HR 6867). • 20 weeks in all states, adding 7 weeks to first extension • An extra 13 weeks in high unemployment states (6% unemployment and above) • Next steps: • Extending the program past March 2009. • Making sure states do a much better job enrolling people.

  14. Helping Families Survive the Recession • Benefit Increases: Alaska increased the maximum UI benefits from $248 to $370. Louisiana and Mississippi both made $20 or more increase in maximum weekly benefit. NY made major progress. Indexing is the key. • Raising the Benefit for Lower Wage Workers: Full time $8 worker gets $198 a week in Hawaii versus $160 a week in Mississippi. • Improving partial benefits: Supplements the income of the underemployed. • Increasing the duration of unemployment benefits: Only 9 states provide 26 weeks of UI to all claimants. New Jersey lengthened benefits in 2003 to respond to tough times. • Watch Out For: Freezes or cuts in the state’s maximum weekly benefit amount, or reductions in benefits to workers qualifying for less than the maxim. Business want to have their cake and eat it to.

  15. NELP’s UI Project • NELP is available and willing to help you with UI legislation or analysis. • Contact: astettner@nelp.org or 212-285-3025 x 303

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