Moderator:
Robert Reischauer, Urban Institute
Panelists:
Richard A. Hobbie, National Association of State Workforce Agencies
Harry J. Holzer, Georgetown University and Urban Institute
Kelleen Kaye, U.S. Department of Health and Human Services
Wayne Vroman, Urban Institute
With the September 11 terrorist attacks decimating whole sectors of the already weakened U.S. economy, the attention of Congress and the policy community has increasingly turned to the plight of the unemployed. Will unemployment insurance, as it is currently structured, provide effective protection for the most vulnerable workers caught in the tides of layoffs and downsizing—part-timers, those unemployed for long durations, and low-wage earners? Do states have sufficient funds to provide unemployment benefits to all who are eligible? What short-term — as well as long- term — reforms should be considered to make the program a more effective component of the nation's social safety net?
These and other pressing questions were examined at a recent roundtable at the Urban Institute. Harry Holzer, Georgetown University and the Urban Institute, set the broad context for the discussion by describing today's unemployment insurance problems and policy challenges. Wayne Vroman, a principal researcher at the Urban Institute, provided compelling evidence that there are more than enough funds in most state coffers to meet the needs of all eligible claimants, but raised concerns about the eligibility requirements and the system's treatment of vulnerable workers. Kelleen Kaye, U.S. Department of Health and Human Services, documented the serious barriers low-wage workers face in qualifying for unemployment insurance, and Richard Hobbie, from the National Association of Workforce Agencies, described four current legislative proposals for reforming the benefit system. The discussion was moderated by Bob Reischauer, president of the Urban Institute.
Highlights of the Panel Discussion | Full Transcript of the Session
Highlights
Harry J. Holzer, Georgetown University and Urban Institute
"....even in a recession, a lot of people are not eligible for unemployment insurance and don't get coverage........ historically, we didn't worry much about that, simply because there was another program called welfare that picked up a lot of the slack....And it was an entitlement, so there was no question about their eligibility. And it was not an undue burden for the states because the states didn't pay the whole cost under a match and grant program, which AFDC was. The federal government picked up half or more of the extra cost during a recession....between these two programs, most people got covered one way or the other during a downturn. Now, of course, we all know that's changed." (Mr. Holzer discusses access to unemployment insurance and the current limitations and gaps in the safety net)
Kelleen Kaye, U.S. Department of Health and Human Services
"It does appear that at least during an economically prosperous time, which was 1997, most of the workers appeared able to meet the monetary eligibility requirements. What we find though is that if we then look at the non-monetary side, workers seem to have a much more difficult time. Twenty-seven percent appeared very unlikely to have a qualifying separation, and 64 percent seemed unlikely to be both looking for and available for work." (Ms. Kaye reviews the findings of her research on how unemployment insurance affects vulnerable groups)
Wayne Vroman, Urban Institute
"At the end of June, the 53 state programs had in their funds $53.8 billion. Those are monies that are reserved exclusively for the payment of unemployment insurance benefits, ....The federal funds are so full that there is to be a distribution back to the states under the so-called Reed Act....if you add up the state and federal trust funds, the total you come to exceeds $90 billion. That $90 billion is interesting to contrast with last year's payout of UI, which was about $20 billion. So even if this year the system pays out $30 billion, which is possible....there's lots of money in the system overall." (Mr. Vroman talks about the funding of unemployment insurance and the special problems faced by low-wage workers)
Richard Hobbie, National Association of Workforce Agencies
"..., the federal government should take some of this excess money that they've collected out of the federal unemployment tax, and finally, fully fund this program, not only for this year, but ensuing years, so that the system can provide re-employment services for UI claimants employment services and so it can administer the Unemployment Insurance Program efficiently"...(Mr. Hobbie surveys proposals currently being considered for unemployment insurance system reform and the challenges of administering the program)
Bob Reischauer, Moderator
"....when you look at reasons for people being unemployed, the reasons now would be very different from what they were when we had an expanding economy. When you have an expanded economy, a higher fraction (of the unemployed) are going to school, (taking time off for) family or something like that. When they're being thrown out of work because of the downturn, a higher fraction would be available for full-time work." (Mr. Reischauer shares observations on unemployment data and the weakened economy)
Questions from the Audience | Full Transcript of the Session
Harry J. Holzer, Georgetown University and the Urban Institute
....as I see it, there are sort of two pieces to this problem. One is that some workers, low-wage workers particularly....lack access or may lack access to any safety net at all during a downturn when job availability is going to be much more limited. The second....problem is people who do have access to a safety net....but those safety nets have limitations, either the duration of the benefits are limited and may not be automatically extended, or the level of support may not be what we'd like it to be, or there may be particular gaps like health insurance and other things.
I think a lot of the discussion of at least some of the proposals we've heard to date, particularly from the administration, really focuses more on the second issue—some of the particular holes for limited sets of workers and limited sets of circumstances—and doesn't deal more broadly with the overall issues of access to some safety net, whether it be unemployment insurance or something else. Now, the basic fact that makes us concerned about this is, first of all, that right now only about a third of unemployed workers are covered by unemployment insurance.
That goes up somewhat during a downturn, and during the most recent downturn in the early '90s, that number was somewhere in the range of 40 to 50 percent. Nevertheless, even in a recession a lot of people are not eligible for unemployment insurance and don't get coverage. And there's a lot of different reasons for eligibility, and Kelleen is going to talk about those in a few minutes, so I won't go into that. Nevertheless, there are big holes in UI coverage.
Historically, we didn't worry that much about that, simply because there was another program called welfare that picked up a lot of the slack. And low-wage women, low-income women who didn't have access to unemployment insurance, could go on this other program. And it was an entitlement, so there was no question about their eligibility. And it was not an undue burden for the states because the states didn't pay the whole cost under a match and grant program, which AFDC (Aid to Families with Dependent Children) was. The federal government picked up half or more of the extra cost during a recession.
So we knew in a recession that the rolls were going to go up, and they did — estimates say five to ten percent for every percentage point increase in the unemployment rate. Between these two programs, most people got covered one way or the other during a downturn. Now, of course, we all know that's changed. On the TANF (Temporary Assistance for Needy Families) side, the entitlement aspect is gone, the states have much, much more discretion over who to let on and for how long, and states have much more....incentive to limit access to welfare because they bear the full cost now. In a block grant system, as opposed to a matching grant system, the states will bear the full cost of any increases in the rolls....
....We don't know how the states are going to respond to all this influx in the demand for recipients. And we haven't even touched on other populations like low wage men, who have much more limited access to TANF, and also very limited access to the UI system, and their needs ought to be on the table as well during this whole discussion...."
Kelleen Kaye, U.S. Department of Health and Human Services
What the data allowed me to do is to look at the reasons people gave for separating from their jobs. And you know, like slack work or laid off, that tends to be kind of the traditional UI applicant that we think of. But there are people that left their jobs for a lot of other reasons as well—going back to school, suffering health or disability, taking care of themselves or their family. All of those reasons are less likely to qualify in a great number of the states.
And so, if you take these reasons and kind of do a very back-of-the-envelope comparison with what the requirements are in the states that they came from, I came up with a rough guess of how many of these people would be likely to have a qualifying separation. And, in fact, I found that probably about 27 percent seemed very unlikely to meet this requirement of having a qualifying separation. 41 percent seemed like they were somewhat likely; they were in the middle. They might qualify, but a good share of them might not. And only a little over 30 percent would be very likely to meet this requirement. And this was just measured among people that met the monetary requirements. So even if they got past that first hurdle, they're still going to have what looks like a big problem qualifying for UI.
Now, there's a second set of non-monetary requirements that, as I said before, deals with being available for work and actively seeking work. And again, the data don't tell me that directly, but they give me a clue. If I look at people who are working for less than 52 weeks, and I see the reasons why—they were on layoff or said that work was not available—they probably would be available for work in the event that it was there. So they, we can imagine, would be quite likely to meet that requirement.
Now, we have other people who said that they weren't working because they were ill or disabled, taking care of home or family, going to school—a variety of other reasons. And again, depending on which state they live in, they're more or less likely to qualify. Most of them will not qualify. So again, if I do that sort of ballpark comparison of the reasons they gave versus the eligibility requirements in their state, it suggests that 40 percent, in fact, were unlikely to meet the availability requirement.
Then you sort of lay over the top of that whether they were actually looking for work during that time. And those two factors put together suggest that 64 percent were unlikely to meet both of these non-monetary requirements. So that, as I said before, highlights that. While we tend to focus a lot on the monetary requirements, there are some really big issues on the non-monetary side that need to be thought about.
Now, the last set of results that I was asked to speak about concern part-time workers. And the fact is that in many states, people who apply for UI but say that they're only seeking part-time work are going to be automatically ineligible. And there have been a lot of reform proposals on the table essentially saying that if you apply for UI and are only available for part-time work, you could be eligible, provided that you met the monetary requirements and did so with some part-time work.
How important is that for the population of disadvantaged workers? There are a few things that speak to that. One is, are very many disadvantaged workers part-time? And, of course, as you would expect, quite a few of them are. Roughly one-third of the disadvantaged population of workers I looked at were part-time.
And, of course, the next question is, would they really be able to meet the monetary requirements, given that they're probably low-wage and they're only working part time? And surprisingly, the data that I looked at suggests that 70 percent of them would be able to meet the monetary requirements. So, the reforms could very well be quite relevant for these people.
The last part of the puzzle that I wanted to look at for part-time workers was....find out the reasons why they were doing so (working part time). And again, that gives us a clue as to whether they would really be seeking part-time work.
And, in fact, 39 percent said that they were part-time due to slack work. So these people, if they became unemployed, would quite likely seek full-time work if it were available. They're probably already potentially eligible, so the reforms may not have that much relevance for them. But 61 percent said that they worked part time because they wanted to, or for some other reason. And that suggests that this is a group of workers that probably would show up in the UI office saying they're seeking part-time work. And this is the group that the proposed reforms would be quite relevant for....
Wayne Vroman, Urban Institute (charts used in presentation)
The first area is to talk about UI claims in the context of the current uncertainty of what's happening in the labor market. We're not sure if it is a serious recession, and we probably won't know for a couple more months, at least.
The second area is to talk about the financial condition of the unemployment insurance system. There it's a good news story. There's lots of money in the state trust funds and lots of money in federal trust funds. In fact, so much money in the federal trust funds that there's about to be a disbursement back to the states because the money is flowing over the top of the legal requirements. So that provides a basis for some help to the states, potentially, as well as direct help from federal legislation that may be forthcoming.
The third item is to talk about access to benefits, and that will sort of explain itself as I go through it. So, going to the first area, here is the time path of claims for unemployment insurance benefits -- initial claims, which is people filing for the first time, and continued claims, which is people who are in the system who are filing for additional weeks of benefits. What the chart is showing is year over year changes for the various weeks within each month. So the first week of the year 2000 compared to the first week of 1999, that ratio coupled with similar ratios for the second, third, and fourth week....
....The last recession prior to the current situation we're in was 1990-92. There were several weeks and months during 1992 when claims were 65, 70, and 75 percent higher than they were in the same week of the previous year. So if you did the same kind of calculation in the early 1990s, we still do not have a situation where the increase in claims in the UI scheme are matching what they did in 1990-92, which, by longer historical criteria, was quite a mild recession.
The same kinds of ratios, if you show the claims growth during the early 1980s or the mid-1970s, that is, the two recessionary periods prior to the early '90s, the top end for the high claims months were more than 100 percent higher, relative to the previous year. So we're not in an environment that looks even like the mild recession of 1990-92, much less the more serious recessions of the mid-70s or the early 1980s....
....Okay, the second area is the status of UI trust funds. They're most easily described in terms of federal and state level. First, the state funds. At the end of June, the 53 state programs had in their funds $53.8 billion. Those are monies that are reserved exclusively for the payment of unemployment insurance benefits, not for anything related to administration, not for training, not for any of the other kind of measures that might be used to facilitate adjustments of workers in the labor force. There's lots of money in the state funds in the aggregate. That's more than a billion dollars per state, on average.
Since you've got 53 programs—and this should be stated in contrast to the situation for TANF—again, Harry's earlier comments about the reserve funds in TANF basically not being very large at all. Certain states do have funding problems when you look at their state trust funds. If you take what's in the funds at the end of the June this year, compared to a high payout, and the high payout rate that's used in the Labor Department for their calculations of fund adequacy is the three highest years of payouts in the past 20.
If you use that as a measure of high payouts, three states had fewer than four months worth of benefits in their trust funds at the end of June. Two of these states are among the largest in the country, Texas and New York. And, of course, New York has additional problems with the events of early September. The third state was North Dakota. An additional four states had between four and seven months worth of benefits sitting in the trust funds—this is again, end of June—Illinois, Minnesota, Missouri, and West Virginia.
....When you look at the federal trust funds, at the end of June there was an additional $37.7 billion in three federal trust funds that are used for various purposes—UI administration, employment service administration, loans to the states, and the Federal State Extended Benefit Program.
The federal funds are so full that there is to be a distribution back to the states under the so-called Reed Act. The timing and magnitude of that are matters of some uncertainty right now, but if you add up the state and federal trust funds, the total exceeds $90 billion. That $90 billion is interesting to contrast with last year's payout of UI, which was about $20 billion. So even if this year the system pays out $30 billion, which is possible—I don't know if it's likely—there's lots of money in the system overall.
The third area is recipiency. On recipiency, briefly, I want to talk in three areas: entry into the program, long term unemployment, and associated benefit exhaustions, and interstate differences in recipiency. Entry into the program, overall, when unemployment occurs in the economy, about half of the new spells of unemployment are followed by an application for unemployment benefits. Application rates vary depending upon the circumstances of losing a job, and they vary quite sharply by geographic area. They're not the same, and nationally they're only about half of the people experiencing unemployment.
Within the unemployed population, low-wage workers have a special problem getting into the unemployment insurance system to collect benefits. Quite a good analysis was conducted and completed last year by the GAO and issued in December, titled "Unemployment Insurance's Role as Safety Net for Low-Wage Workers is Limited." Open up to the early pages of text in this report and the first three tables give you a display of how much more unemployment low-wage workers experience relative to high-wage workers and the lower rates of recipiency.
Low-wage workers, per spell of unemployment, receive UI at about half the rate as high-wage workers. So low-wage workers represent a special problem as far as gaining access to the unemployment insurance scheme. There have been proposals to remedy this. One is to have an alternative base period....
What the alternative base period does is roll the clock forward. The base period is always a 12-month period. In most states, the alternative base period would toss out those earliest three months from June, July, August of 2000 and replace them with June, July, August, September 2001. This change in the base period is especially important to low-wage, part-time, and intermittent workers....
Richard A. Hobbie, National Association of Workforce Agencies
....if you look at the administration's proposal, the administration's tried to target its extension of 13 weeks of benefits on individuals directly affected by the terrorist acts in the disaster emergency areas, primarily New York, Virginia, and New Jersey would be the states where the workers would receive benefits. There was some debate about New Jersey, but I believe they are included now.
And, also, it targets these benefits on states that have experienced an increase in unemployment, not necessarily high unemployment rates, but an increase in the total unemployment rate, not the insured unemployment rate, compared to the three months prior to the attack. The Cardin Bill is a bit broader. It would provide 13 weeks of additional benefits beyond the normal 26 weeks that states provide to all individuals who exhaust their benefits, regardless of whether unemployment has increased in the state and regardless of the level of unemployment.
So the Cardin Bill probably would cost substantially more than the administration proposal. And then, of course, the National Governors Association proposed helping workers who aren't eligible or covered by the normal unemployment benefits we have available in our system by using the Disaster Unemployment Assistance Program as a model in helping some of those workers I just mentioned earlier that don't normally get benefits. One of the problems with these proposals is that in current law, under the Extended Benefits Program in the states, individuals who receive extended benefits must engage in a systematic and sustained job search effort, and also, if they're offered a minimum wage job and they refuse, they will be disqualified from benefits.
If this applies in these proposals—and it's not entirely clear to me that it does, but it does apply in the Permanent Extended Benefits Program—states have said it's extremely hard for them to administer these provisions, because they've moved toward taking unemployment insurance claims remotely, either through centralized telephone call centers or over the internet. For example, Florida now takes about half of its initial claims over the internet. So there's no place for these individuals to go to demonstrate that they have engaged in a systematic and sustained work effort, and states just can't administer that.....
One of the points our association's making is that the federal government should take some of this excess money that they've collected out of the federal unemployment tax, and fully-fund this program, not only for this year, but for ensuing years, so that the system can provide re-employment services for UI claimants, employment services, and so it can administer the Unemployment Insurance Program efficiently.
I'm pleased to see that Mr. Cardin included a one time, $500 million authorization, which would be mandatory spending under his bill for administration of this system. And I might add that Mr. McCrery's bill, which probably won't be taken up in this context, also provides that full funding, not only for this year, but permanently. So that really is our primary concern from an association standpoint. We think, in the past, when Congress has responded to recessions, they've been very anxious to extend benefits to workers who really need benefits, but they've ignored the fact that there are programs out there, state agencies out there, who need funding to provide these benefits in a proper and efficient manner and on a timely basis, which is extremely important to us.
They haven't been providing that money; now's the time to correct the problem and that mistake that they've been making in the past, and spend a little money to make sure worthy unemployed workers get these benefits on a timely basis....
Robert Reischauer, Urban Institute and Moderator
First, a footnote to Harry's broad view, and that is, don't forget food stamps and the EITC (Earned Income Tax Credit). A lot of people who are losing their jobs are probably in the phase out range of the EITC. And while we bemoan high marginal tax rates when people's incomes are rising—when they're falling, in fact, it has a good effect of reducing the amount of income loss one might face.
With respect to Kelleen's presentation, I was even more optimistic looking at her data than she was. And that is, while you stressed that '97 was a good year, it was a good year only if you looked at the years before it. If you looked at the years afterwards, you know, it was a pretty dismal year. And so, the fraction of the people who were monetarily eligible in 2001, I would think would be a lot higher than it was in '97 when we had a 5.8 percent or whatever unemployment rate in the previous year. So I would think things would be good.
And also, when you look at reasons for people being unemployed, the reasons now would be very different from what they were when we had an expanding economy. When you have an expanded economy, employment growing, a higher fraction are going to school, or taking care of family or something like that. When they're being thrown out of work because of the downturn, a higher fraction would be, in fact, available for full-time work, and all of that.
The information that Wayne put out also may be a little more hardened when he was comparing the situation in the last year, the increases in new claims versus a year ago, to what happened during the '90-'91 recession. Because at that point, of course, going into the '90-'91 recession, we had a much higher unemployment rate, and so one would expect the new claimants, even when the economy was in its pre-recession state, would be a higher number, and so the percent increase would be larger numbers of people that you get now when we went through a year of basically four percent unemployment. And so, maybe the data aren't as gloomy even as were suggested.
Questions from the Audience | Full Transcript of the Session
Questions from the Audience
Bob Lerman, Urban Institute:
"A couple of points. First of all, ? if a person isn't available for work, they wouldn't be considered unemployed in any event, and it's not clear to me that this is a gap. Let me just go on and mention, in connection with that, I was kind of stunned about this issue about the work requirements. I mean, just as TANF is becoming more serious about work requirements, you're telling me that UI has pretty much abandoned them and that's kind of a strange outcome.
"Just a couple of other points....a lot of unemployment, as I'm sure all of you know, is very short term unemployment. And it would be interesting to know if it's true that almost all of the people — not almost all, but let's say 85 percent, are monetarily eligible. It might be that some don't take up unemployment insurance because their spells are very, very short, and I think that has to be more in mind....we want to keep in perspective some of these numbers, it seems to me. Maybe my numbers are way off, because I'm not a specialist in this area. But it does seem to me that you do need to think about the duration.
"And again, the whole point of the unemployment insurance — it's not simply Bob Reischauer's point about the share being higher for these other reasons — if people are returning to school or something, it isn't really clear that that's a gap in UI."
Ms. Kaye: I'm glad you raised that point, because actually, if you look at the last page of my paper, you'll find exactly that same point. And I think it's important to point out that when I undertook this research and came up with these results, it wasn't necessarily to say....there is a gap in the UI program. ....if these people aren't looking for work or aren't available, they may not be in the labor market, and that may not be part of the mission of the program.
"But my intent was to say, we can't assume that these people are covered. If they are no longer part of the TANF system and they are in the labor market, and clearly, some of these people are probably struggling to balance the need to participate fully in the labor market versus the need to take care of their families. And I think that could be a bigger issue among the low-wage population. I have heard assumptions (that) we don't have to worry about them because they're in the UI system — not necessarily saying they should be — but we can't make that erroneous assumption that they are."
Mr. Hobbie: Bob's point about the contrast between increased emphasis on job search in TANF and the decreased emphasis in unemployment insurance is really well taken, and, in fact, it's worse than you even know. Steve Wandner published a book a couple of years ago about unemployment insurance, and there's a chapter in there on quality control efforts of the Department of Labor and states' reactions to the Department of Labor's attempts to measure payment error rates. And one of their policy reactions was to relax their job search requirements in their law, in their practice....And the result was, because that was a large source of the payment error, their payment errors went down dramatically and they looked a lot better in the quality control system as a result. I find that very troubling. And, of course, it's also due to states being very constrained on what they can do with the limited funding they get. They just don't have enough people to really enforce serious job search requirements. It's a major problem."
Julie Kashen, Office of Senator Edward Kennedy
"I wanted to first say that Senator Kennedy actually also is working on legislation very similar to the Cardin Bill. I also wondered if you could, Ms. Kaye, talk about how the average population was defined in your paper?"
Ms. Kaye: "In my paper, I defined the average population as those people that had a recent history of receiving either TANF/AFDC, Medicaid or food stamps. And there are a lot of different ways that you can define it, and I'm sure that the results would be sensitive to that definition. I was looking for sort of a broad definition of what kind of population do we think might be at risk for sort of sliding back on to some kind of public assistance."
Vicky Lovell, Institute for Women's Policy Research
"I have a question and a comment. If we can assume that a lot of vulnerable workers in the low-wage labor market are cycling in and out of the labor market , are re-qualification requirements in the states going to be a particular problem for a worker who may work a low wage job for a period of time, be laid off or lose their job, apply for and receive unemployment insurance, then be in the labor market again, then once again lose their job? And the comment is, when we talk about the adequacy of the UI program for these workers, we have to look not only at access to benefits, but benefit levels themselves...."
Mr. Hobbie: On the second question, low wage replacement rates in UI, I believe are a problem for average to above-average workers. For example, some of the workers laid off who worked at National Airport were surprised at the very low wage replacement rates they had for Virginia unemployment compensation. UI benefit formulas in states tend to be progressive, so low-wage workers tend to have higher replacement rates....The first question is really hard to answer, and it relates to some of the non-monetary qualifications. If they lost a job through no fault of their own, and they go back to work a little bit and then are laid off again, chances are they will be eligible for UI. Now, that's a gross generalization....you have to look at each state to see how they handle it...."
Mr. Holzer: "If I could follow up on that. I think there are lots of categories of people. We don't know the size of a lot of these groups — the cyclers or problem groups....When you look at the last recession, and even in a recession period, over half of the unemployed at a point in time aren't receiving UI. Now, part of that might be for short duration reasons and lack of take-up and things like that, but there are lots of categories of people...part of the reason unemployment goes up in a recession is not just more people losing their jobs, but a slower rate of people finding new jobs, since they may have left for a lot of reasons that Kelleen indicated; they're just finding much more difficulty getting back in than they thought. And those people may not have access. I also am concerned about a potentially fairly large pool of people that left welfare and have been working off the books. So they don't even show up in ?our data sets....So there are all kinds of circumstances that may leave people without access."
Mr. Vroman: "....It's undoubtedly the case that former TANF recipients have earnings which are much higher — many more of them are in the labor force. But going from having a substantial previous work history to getting a first payment for unemployment benefits does have to satisfy the non-monetary requirements as well. And this (a chart which showing (1) the proportion of people who filed for benefits in the 1990s who satisfied the monetary qualification and (2) the proportion of applicants who actually got a first payment) is the most recent evidence, at the national level, of how these two factors have moved during the past decade, which was one of extraordinary growth and good times in the labor market. So it's a very interesting question, and reasonable people can draw different conclusions about what is happening right now with respect to former TANF recipients who are losing their jobs."
Evelyn Ganzglass, National Governors Association:
"....From a policy point of view, I'd just like to hear your assessment of the political reality of trying to modify the unemployment insurance system, versus a general funded program that may be administered in conjunction with the unemployment insurance system, versus looking at other strategies, whether in existing programs or trying to create some temporary other assistance program to deal with this (non-qualifying) population, just from the financing point of view. Even though there is money there, it's largely an employer-financed system. What is your take on that?"
Mr. Hobbie: "....In this current context where Congress has focused on temporary changes for economic stimulus purposes, we ought to focus on general revenue funding of emergency unemployment compensation programs and other programs to help workers who aren't otherwise going to get help from our normal programs. In addition, I think we ought to look at the McCrery (Rep. Jim McCrery, Repub., Louisiana) bill and other proposals that might be added to the McCrery bill, such as the benefit provisions that were in the package last year, and really focus on reforming the UI system to deal with some of these well-known problems once and for all?in the interim, I think we should focus on the temporary measures....except for extending UI benefits 13 or 26 weeks, there's not a lot more we can do in the UI system in the near term."
Mr. Holzer: "In terms of looking outside the UI system, we know there have been all these discussions of TANF reauthorization that come up next. I haven't seen a lot of movement in those discussions, to make that program more counter-cyclical in the short term. There was a set of hearings held last spring. The House Ways and Means Committee, the Subcommittee on Human Resources did have some hearings on the contingency fund. But in that environment, somehow, nothing seems to have come out of those discussions....There weren't any alarms going off making this a more pressing problem to move ahead on. Maybe that will change now — maybe those conversations will resurface, and the idea of some kind of counter-cyclical funding stream to the states, related to TANF or even more general, will bubble back up to the surface."
Bob Lerman, Urban Institute:
"The food stamp issue comes into play here, because an unemployment shock to some people who have a moderate level of assets might limit their access to food stamps, or other limitations would be that they are just not used to applying for food stamps and they are not that knowledgeable about food stamps. And yet, you know, it is a household size condition program that would cover people in families based on need. I think we've seen big drops in the food stamp caseloads, and that might be another area to push on.
Mr. Vroman: "As you know, there's also legislation at the state level. It's interesting to look at some of the recent developments there, and I'll take the example of California. California just passed a bill to substantially raise benefits January 1 of next year. It's going from a position of having about the lowest benefits relative to average wages of any state in the country. But the maximum, next January, moves from $230 to $330 per week. That bill passed this year when it was recognized that there is an economic problem and the likelihood of a recession.
"There was a serious proposal last year in California to institute an alternative base period. It went through both the House and the Senate in California and was vetoed by the same governor who just acceded to this benefit increase to the maximum benefit. And I think to expect state legislation to be enacted....(for) large scale changes in UI that serve the difficult-to-serve low-wage population is not something that recognizes the way legislation occurs at the state level.
"....interest groups are much more likely to do something that is mainstream — raising the maximum benefit, doing something to change the tax rate that employers face, that have a broad-based impact throughout the state — rather than going for special needs populations. (That) is a much more likely form of legislation. Twelve states have alternative base periods. To get to that number of 12, it's taken a period of 11 years. The first alternative base period came in 1987. So in the national experience....the rate of adoption has been about one state per year. Even though states are the locus of a lot of UI legislation, they're not, in the aggregate, going to do a great deal that serves this population.
Bob Reischauer, Moderator:
"Let me ask each of you, if you could make one change (to the unemployment insurance system), ....forgetting about the institutional politics or the cost, and the federal government was going to pay for this....What would you do?"
Mr. Holzer: If I'm limited to one....I might say maybe have the top proposal under Congressman Cardin's (Rep. Benjamin L. Cardin, Dem., Maryland) legislation have a broader separate program for people that, for one reason or another, don't meet the eligibility requirements within the regular program."
Mr. Hobbie: I would agree with that — a broader, general revenue-funded program that helps individuals who either were not covered by the current UI program or are not currently eligible. And I would include, although this is difficult, some self-employed persons who've lost their work and can't find anybody to ride in their taxis near airports. But it would have to be time limited, maybe more than one year."
Mr. Vroman: You already have the vehicle, the Disaster Unemployment Assistance Program, which is administered through the local offices of the UI scheme, so that you could have an administrative entity that's already in place provide a different kind of payment, DUA. DUA, in fact, can make payments to the self employed. Now anyone who sympathizes with state administrators in the UI scheme would be cringing....because it's imposing a whole new set of administrative requirements on the states that are already stressed in terms of their current obligations relative to their staffing. But that would be the vehicle, and the mechanism for doing it is in place."
Ms. Kaye: Well, I'm not here today to impose anything on anybody, because I have my humble researcher data analysis hat on today. But I do think that it would certainly be wise to give more attention to the notion of part-time workers. It seems like a lot of states are moving in that direction anyway. And, at least for some of the disadvantaged workers that we're concerned about, and the difficulties they are facing in balancing the need to participate in the labor market and their family needs, I think that is definitely worth looking at a lot more seriously."
Comparison of Unemployment Insurance Proposals
| Provision |
Administration |
National Governors' Association |
Congressman Cardin
(D, MD) |
Congressman McCrery
(R, LA)
(Comprehensive Reform Less Most Benefit Provisions) |
|
Extended Unemployment Benefits |
Up to 13 additional weeks in:
(a) states with a total unemployment rate 30% higher than the 3 months before Sept. 11; (b) states where President declared an emergency or major disaster due to terrorist attacks. |
Expand Disaster Unemployment Assistance to cover unemployed workers not eligible for unemployment benefits because they are not covered or they have insufficient earnings in the base year. |
Up to 13 weeks to any claimant who has exhausted his regular state benefits |
Repeal special eligibility requirements requiring a systematic and sustained work search and disqualification for refusal of a minimum wage job offer. |
| Funding of Extended Unemployment Benefits |
Full federal funding from UI Trust Fund |
General revenues |
Full federal funding from UI Trust Fund |
Current law 50%/50% federal state UI Trust Fund |
| Other Unemployment Benefits |
$3 billion of National Emergency Grants for (a) COBRA health insurance; (b) income support for those in training; (c) income support for those not eligible for UI who have sufficient attachment; and (d) additional job search and training services. |
Accelerate "Reed Act" distributions to provide $9.3 billion to state accounts of the UI Trust Fund. Funds can be used by states for benefits, administration of UI, and Employment Services |
States would enter into agreements to: (a) use more recent wages in last completed calendar quarter to determine monetary eligibility of unemployed workers; (b) make eligible in all states unemployed workers seeking part-time work; (c) increase claimants weekly benefit amounts by the lhigher of 15% or $25. |
None.
(Comprehensive UI/ES reform of last year had McCrery bill plus permanent benefit eligibility expansions similar to that described in the adjacent box under (a) and (b). |
| Administrative Funding |
None |
Accelerated "Reed Act" funds can be used for administration if appropriated by state legislature. |
$500 million for UI administration and reemployment services |
(a) Permanent increase in funding of administration of UI and Employment Service of over $500 million; (b) Such funding would be moved to the mandatory side of the budget. |
Source: Richard Hobbie, Unemployment Insurance Director, National Association of State Workforce Agencies, 2001.
