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This brief, part of the Urban Institute's "Recession and Recover" series, examines how the Unemployment Insurance program responds during a recession and how that response may differ in the current recession from its response in the past.
State unemployment insurance programs provide
weekly unemployment benefits to eligible workers
who lose their jobs through no fault of their own. This
safety net program is especially important during
recessions, when the unemployment rate increases,
since it also bolsters consumer spending.
The unemployment rate in November 2008 reached
6.7 percent, which is not unusually high during recessionary
periods. However, in the two most recent recessions
(1990–91 and 2001), monthly unemployment
peaked at just under 8 percent and just over 6 percent,
respectively. Most predict that the current recession
will peak at over 8 percent.
While over 90 percent of jobs in the United States are
covered by unemployment insurance, not all unemployed
workers receive benefits. In fact, only 36.3 percent
of the unemployed in 2007 received benefits. Some
choose not to claim benefits, and others who do apply
are found ineligible because they did not earn enough
or work long enough before losing their jobs.
States determine a worker’s eligibility based on his
or her covered earnings for a 12-month
period before being unemployed. Traditionally,
this period excluded the
three months immediately before
unemployment. Many states are trying
to increase these workers’ recipiency
rate by changing the eligibility, or base,
period. Nineteen states have adopted
an alternative base period that allows
consideration of higher earnings in the
most recent three months to determine
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