The voices of Urban Institute's researchers and staff
August 21, 2012

Has unemployment insurance helped those who need it the most?

August 21, 2012

The second in a two-part introduction to the Urban Institute's Unemployment and Recovery Project. Yesterday: an overview of the project as a whole 

The latest unemployment report confirms what most people already think: the economic expansion is not robust enough to lower unemployment significantly. Over 5 million people have been looking for work for at least six months without much success.

Many people have received unemployment compensation, as well as other benefits, to help them make ends meet while they search for jobs. But a large segment of the population has not had access to the unemployment insurance program. Recent research I completed with my colleague Austin Nichols under the Urban Institute’s Unemployment and Recovery Project reveals that this group is made up disproportionately of minorities. African Americans, in particular, are much less likely to have received unemployment benefits than non-Hispanic whites, according to data from the Survey of Income and Program Participation. Just under one in four African Americans who were unemployed in 2010 received those benefits compared with one in three whites.

 

How Do Various Characteristics Affect Your Likelihood of Receiving Unemployment Insurance Benefits in 2010? (Percentage Point Difference)

 

These differences exist even though the federal government enhanced unemployment insurance benefits. By extending and increasing aid to the unemployed through the Emergency Unemployment Compensation program, the federal government allowed people to stay on unemployment compensation longer. In addition, the federal government provided incentives to states to expand eligibility for benefits to a broader portion of the unemployed.

Differences in benefit receipt by race and ethnicity can be related to the types of jobs workers lost, the length of time they had been working before job separation, the industries in which they worked, and their personal characteristics (such as educational attainment). But even when you compare workers who are pretty much the same on these important variables, African Americans, and to a lesser extent Hispanics, were less likely to get unemployment benefits than whites. For example, although one of every four whites without a high school diploma received benefits, only one in eight African Americans with the same level of education did.

Other factors are clearly important. Being on the job for a short period of time before becoming unemployed means a worker is less likely to get benefits. So does living in certain parts of the country. Being a resident of a Southern state is associated with a lower likelihood of receiving unemployment compensation because many Southern states have less generous programs and more stringent eligibility requirements. But program features alone don’t explain all of the racial differences.

What happens when you account for all the differences between different groups of workers? The racial and ethnic differences are still there. The difference between black and white rates of receipt remains large and statistically significant—about 13 percentage points. The difference between Hispanics and whites is smaller than that but still significant.

The fact that African Americans are less likely to receive benefits after taking all these other factors into account means that many low-wage, unemployed, African American workers are likely suffering more economic hardship than their white counterparts, often with fewer assets to fall back on. Attention should be given to policies that would lessen these differences. Many of these policies—such as extending eligibility to workers with shorter job tenure, those who leave jobs for family reasons, and individuals seeking part-time work—would help all workers in those situations, not just African Americans or Hispanics. But other policies might be needed to counter or account for discriminatory actions that affect only minorities.

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