New York, NY—Ten years after the Great Recession officially began, the unemployment insurance system that kept tens of millions of jobless workers and their families afloat and helped stabilize the economy during the recession is in far worse shape than a decade ago, leaving many states dangerously unprepared for the next inevitable downturn, according to a new report from the National Employment Law Project.
Severe and unprecedented benefit cuts, tighter eligibility restrictions, and harsh new disqualifications have combined to drive the “recipiency rate”—the percentage of unemployed workers receiving jobless aid—to a record low one in four. Application rates are falling because of policies that discourage workers from applying, while denial rates are climbing due to technical and bureaucratic hurdles.
“The unemployment insurance program is in trouble when three in four jobless workers are not eligible to receive help,” said George Wentworth, senior counsel with the National Employment Law Project and author of the report. “Following the Great Recession, a significant number of states not only cut benefits but also systematically made it harder to apply and qualify for unemployment insurance. These actions have taken a variety of forms, including more complex online filing systems, stricter work search documentation requirements, and a variety of policies that either discourage applications or increase the risk of disqualification,” said Wentworth.
Compared with ten years ago, there has been a steep decline in the percentage of jobless workers receiving unemployment insurance, which served as a critical economic stabilizer for millions of families during the recession. The report’s key findings include the following:
- The percentage of jobless workers receiving unemployment insurance—the “recipiency rate”—has declined by 25 percent since immediately before the Great Recession. In 2016, only 27 percent of unemployed workers received UI—a near historic low—compared with 36 percent in 2007.
- In 2007, only two states paid benefits to less than 20 percent of unemployed workers. In 2016, that figure grew to 12 states, including six states with recipiency rates below 15 percent (Florida, North Carolina, Louisiana, Georgia, Tennessee, and South Carolina).
- Nine states have significantly reduced the maximum weeks of benefits below 26 weeks, the national standard for more than 50 years. Recent research finds that the reductions in these states account for roughly 30 percent of the national decline in the percent of unemployed collecting UI.
- States are disqualifying more workers for reasons unrelated to the cause of their unemployment, especially through stricter work search documentation rules, reaching a denial rate of nearly one in every four claims filed.
- The percentage of unemployed workers applying for UI is dropping dramatically (by nearly one-fifth in the past five years). While some of this decline relates to improved economic conditions, state policies that discourage workers from applying for UI benefits and greater difficulty in online claim-filing processes are also major contributing causes.
- As states move primarily or exclusively to online claim-filing, disqualifications for procedural reasons have nearly doubled over the past five years, with 14 states denying more than 1 in every 10 claims for a reason that is essentially procedural.
- Of the 10 states with the steepest declines in the percent of the unemployed receiving UI, eight states (Florida, Georgia, Idaho, Indiana, Louisiana, North Carolina, South Carolina, and Tennessee) also ranked in the bottom 10 in multiple measures of access to benefits described in the report.
“These trends will be magnified when the next economic downturn happens,” said Wentworth. “As a matter of good public policy, we should be working to rebuild state unemployment insurance programs so they are positioned to help sustain workers and communities through the economic harm that comes with unemployment.”
The report lays out a variety of policy recommendations to help states reverse current trends and increase the percentage of unemployed workers who apply for and receive UI benefits. The report’s recommendations include the following:
- States should maintain the historic 26-week maximum duration for UI benefits.
- States should make sure that as they transition to online systems, weekly work search requirements do not become inflexible and overly punitive, but instead are administered in ways that help workers find their next job.
- States should ensure that UI claim-filing systems are accessible to workers, easy to understand and do not impose unnecessary obstacles to unemployed workers with challenges related to language, literacy, disabilities, technology, and internet access.
- States should improve application rates and accessibility by better publicizing UI and increasing employer outreach, providing accessible alternatives to online filing, ensuring compliance with anti-discrimination laws, updating good cause standards for filing mistakes to reflect technological change, and committing to making worker access and recipiency an enforcement priority.
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