Reemployment Incentives for Unemployment Insurance Beneficiaries: Results from the Washington Reemployment Bonus Experiment

Unemployment insurance is intended to reduce hardship by providing labor force members with partial wage replacement during periods of involuntary unemployment. However, in performing this income maintenance function, unemployment insurance may prolong spells of unemployment. Evidence from a field experiment conducted in Illinois in 1984 suggested that offering unemployment insurance claimants a modest cash bonus for rapid reemployment would increase the speed of return to work and reduce program costs. In 1988 a similar experiment, examining several different bonus offers, was conducted in Washington State. Evidence from the Washington experiment indicates that bonus offers do change job seeking behavior, but that only relatively generous bonus offers about six times the weekly benefit amount should be expected to significantly change the behavior of persons eligible for unemployment benefits.unemployment, insurance, bonus, experiment, Washington, O'Leary

Use of Supplemental Nutritional Assistance Program Benefits by Unemployment Insurance Applicants in Michigan during the Great Recession

During the Great Recession, both the Supplementary Nutrition Assistance Program (SNAP) and the federal-state unemployment insurance (UI) program experienced dramatic increases in participation. Using Michigan program administrative data on all SNAP (2006–2011) recipients and all UI (2001–2010) applicants, we examine SNAP use before and after UI application. Both past and future receipts of SNAP are highly negatively correlated with meeting UI income and job separation eligibility requirements. Unemployment insurance applicants with insufficient wage credits or job separations because of quitting or employer discharge are much more likely to have received SNAP in the past. Furthermore, such UI applicants are also more likely to receive SNAP soon after applying for UI benefits. The data also indicate that as of the start of the Great Recession, UI applicants who received SNAP subsequent to UI filing began receiving those benefits sooner compared with UI applicants prior to the downturn. The models also suggest that SNAP receipt after UI application was higher among ineligible UI applicants, applicants who quit or were fired from prior jobs, those with prior recent SNAP receipt, prime age workers, females, those with education of less than a high school diploma, those having three to five years’ prior job tenure, and those with a separating job in retail trade, health care, or hospitality

Are State Unemployment Insurance Reserves Sufficient for the Next Recession?

Regular state unemployment insurance (UI) benefits are paid from state reserves held in unemployment trust fund accounts at the U.S. Treasury. Employers covered by the federal-state UI system make contributions to reserve accounts based on taxable wages. The federal government provides incentives for forward funding of benefits to support UI as an automatic macroeconomic stabilizer in the economy. However, the Great Recession exhausted UI reserves for the majority of states, and not all of them have yet replenished those reserves. Based on patterns observed over the past 40 years, in this paper we simulate the effects on state and systemwide reserves supposing that a mild, moderate, or severe recession emerges in the coming months. Our results suggest that even a moderate recession would cause a majority of states to exhaust UI reserves and be forced to borrow to pay regular UI benefits. We note that recent experience with federal funding of extended and emergency benefits may have contributed to the current state UI financing posture, and we suggest that the taxable wage bases are insufficient. The UI system exists to help involuntarily jobless Americans while they are between jobs. By accepted standards of adequacy, benefit provisions are not excessive, but limits in the financing system make it slow to recover from debt. State reserve funds have not yet reached levels sufficient to weather another economic storm

Use of Unemployment Insurance and Employment Services by Newly Unemployed Leavers from Temporary Assistance for Needy Families: Final Report

This study examines participation in Unemployment Insurance (UI) and Employment Services (ES) by adults who received cash welfare benefits through Temporary Assistance for Needy Families (TANF). Among those who leave TANF for employment, we measure the rates of subsequent unemployment, application for UI, eligibility for and receipt of UI benefits, and the use of Wagner-Peyser funded ES. We also investigate the correlations between UI and ES services receipt with reemployment and future independence from TANF. The analysis is based on person-level administrative program records from four of the nine most populated states between 1997 and 2003. Evidence suggests that three-quarters of new TANF leavers experience unemployment within three years, and one-quarter of the newly unemployed apply for UI benefits. About 87 percent of UI applicants have sufficient prior earnings to qualify for benefits. However, only about 44 percent qualify based on their job separation reasons. Among UI applicants, TANF leavers had much higher rates of voluntary quits and employer dismissals than did non-TANF leavers. Nonetheless, 50 percent of TANF leavers who apply for UI ultimately receive benefits. Public employment services (ES) are used by one-quarter of newly unemployed TANF leavers. Among UI applicants more than three-quarters use the ES whether they receive UI benefits or not, while 14 percent of newly unemployed TANF leavers who do not apply for UI choose to use ES services. Among TANF leavers who become unemployed and apply for UI, the rate of return to TANF is lower for those who receive UI benefits. Rates of return to TANF are highest among non-beneficiary UI applicants, and non-UI applicants with low recent earnings. A characteristics analysis of these groups provides a guide for targeting job retention and advancement services to TANF leavers

State Unemployment Insurance Reserves Are Not Adequate

Regular unemployment insurance (UI) benefits are paid from reserves held in state accounts at the U.S. Treasury. The Great Recession exhausted the majority of UI reserve accounts, and not all states have rebuilt reserves. We examine the adequacy of current state and systemwide UI reserves to weather a mild, moderate, or severe recession in the coming months. Our results suggest that a recession as severe as the average of those occurring since 1975 would cause 18 states to exhaust UI reserves. Our simulations account for the fact that several states have cut benefit generosity since the Great Recession ended. Results suggest that despite federal incentives for forward funding, reserves are insufficient in many states. By accepted standards, state benefit provisions are not excessive, but state-imposed constraints on financing make the system slow to recover from debt. We suggest modest actions for UI financing reform

How Federal Pandemic Relief Helped Replenish State Unemployment Reserves

Unemployment insurance (UI) is a joint federal-state program that pays temporary partial earnings replacement to involuntarily unemployed workers while they seek reemployment. During the COVID-19 pandemic, UI claims surged and became a primary source for income replacement for workers who lost their jobs. However, despite previous federal incentives for states to shore up their UI funding reserves, the scale of claims during the pandemic was unprecedented, and the federal government needed to step in to help pay not only for direct, expanded benefits but for additional assistance to states themselves. Although this effort helped backstop the successful operation of states’ UI programs, it continued the trend of the federal government paying for an increasing share of benefits during crises, and weakening incentives for state UI systems to be independent and self-financing

How Federal Pandemic Relief Helped Replenish State Unemployment Reserves

Unemployment insurance (UI) is a joint federal-state program that pays temporary partial earnings replacement to involuntarily unemployed workers while they seek reemployment. During the COVID-19 pandemic, UI claims surged and became a primary source for income replacement for workers who lost their jobs. However, despite previous federal incentives for states to shore up their UI funding reserves, the scale of claims during the pandemic was unprecedented, and the federal government needed to step in to help pay not only for direct, expanded benefits but for additional assistance to states themselves. Although this effort helped backstop the successful operation of states’ UI programs, it continued the trend of the federal government paying for an increasing share of benefits during crises, and weakening incentives for state UI systems to be independent and self-financing

Estimating a Performance Standards Adjustment Model for Workforce Programs that Provides Timely Feedback and Uses Data from Only One State

The purpose of this paper is to describe a methodology for adjusting performance standards for workforce programs offered by local workforce areas (LWAs). By performance standards adjustment, we mean a model that uses a statistical approach to attempt to better measure the relative performance of different local workforce areas in providing workforce system customers with value added in terms of the system\u27s desired outcomes. Our paper\u27s approach has four distinguishing features. First, the performance standards are based on the common measures proposed by the U.S. Department of Labor, which include short- and longer-term employment outcomes. Second, the model is estimated using data from only one state, which allows each state greater flexibility in adapting the adjustment model to the state\u27s needs and available data. Third, the model is estimated using data on individual customers, which offers some estimation advantages, particularly when data from only one state is available. Fourth, since some of the common measures are not available until long after the program year is completed, we include real-time predictions of the current performance of the LWA and an assessment of whether or not it will meet its performance standards when the common measure data is eventually available. This more timely feedback on performance provides administrators the opportunity to better manage their operations and offer services that best meet the needs of their customers