Bringing Unemployment Insurance Into the 21st Century

Well, the Senate finally passed an economic recovery package. It’s got something to make just about everyone unhappy–and something to make everyone happy too, though most Republicans are still in a funk.

There will be tough negotiations in the days ahead. But one important item the House and Senate agree on is unemployment insurance. Both the House and Senate packages extend UI benefits through the end of the year and increase them by $25 per week.

That’s good news for the many eligible workers who’ve been laid off and for all who depend and care about them.

But the extension and increase won’t do a thing for the vast number of workers who aren’t eligible for UI. According to the National Law Employment Project, they’re about 63% of the total unemployed. A disproportionate number of them are low-income workers. Here’s why.

To qualify for UI, an unemployed worker must have earned at least a certain amount within a “base period.” States specify what that is. For the base period, they use total earnings during four consecutive quarters. They typically don’t count the quarter when the claim is filed or the quarter before that. This means that low-wage workers, particularly part-timers and those who worked intermittently, often don’t meet the earnings test.

Part-timers also get excluded by another requirement–that they be “able and available” for suitable work. A number of states interpret this to mean available for full time work. People who can’t work full time–because of family responsibilities, for example–are out of luck.

Workers can also be disqualified if they quit their jobs without a “good cause” related to their work. In some cases, this may make sense. But it denies benefits to workers who have to resign for compelling reasons–for example, because they have to care for a sick family member, move because their spouse is relocating or protect themselves from stalking.

Needless to say, both the full-time work and the “good cause” criteria screen out many more women than men. That’s because the UI program is still stuck in the labor conditions of the mid-1930’s.

Now here’s more good news. Both the economic recovery package the House passed and the version the Senate is debating offer states incentives to align their UI programs with the realities of today’s workforce.

The funds are to be doled out according to a one-third/two-thirds formula. To qualify for the first third, states have to certify that they use the most recent past quarter to calculate a worker’s earnings or will use it if the worker would otherwise not qualify.

The additional two-thirds are available if they certify that they provide benefits to workers in any two of four situations. These include paying benefits to individuals seeking part-time work and/or to those who have left their jobs for “compelling family reasons.”

According to NELP, these UI “modernization” incentives could cover 500,000 more workers. It also says that 19 states are already qualified. This means that a significant portion of $7 billion allocated for UI reform incentives could be swiftly transferred to depleted state coffers–and into the hands of unemployed workers.

As blogger Harry Moroz says, the UI initiative “reminds us that stimulus and good, long-term policymaking are far from mutually exclusive.” Let’s hope it survives intact in the final House-Senate compromise.


4 Responses to Bringing Unemployment Insurance Into the 21st Century

  1. […] in many states, unemployment insurance is reserved for low-income workers who aren’t at the bottom of the income scale. So are other […]

  2. […] i.e., long enough to have exhausted their regular state unemployment insurance benefits — if they every qualified. This is a higher number than reported for either July or […]

  3. […] long enough to have exhausted their regular state unemployment insurance benefits — if they every qualified. This is a higher number than reported for either July or […]

  4. […] Recovery Act gave states a financial incentive to eliminate such barriers in their UI […]

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