Nationwide—In September, the U.S. economy added 254,000 jobs, according to the Bureau of Labor Statistics, while the unemployment rate ticked down to 4.1%. The unemployment rate among Black workers was 5.7%, compared to 5.1% among Latinx workers, 4.1% among Asian workers, and 3.6% among white workers. Continuing disparities in unemployment rates are a result of structural racism in the U.S. labor market, including persistent occupational segregation.
“Last month’s robust job growth is welcome. At the same time, 6.8 million workers were unemployed in September. They should be able to rely on unemployment benefits to sustain themselves until they can find a new job,” said Rebecca Dixon, president and CEO of the National Employment Law Project (NELP). “But in states across the country, unemployment insurance (UI) benefits are too low to support jobseekers, while a large share of unemployed workers is excluded entirely. States need more resources to better support unemployed workers and the economy, which means state policymakers must update UI funding mechanisms.”
A new policy brief from NELP and the California Budget & Policy Center takes a close look at the state of California, which pays lower benefits than most neighboring states even as it shuts out millions of unemployed workers, leaving them ineligible for UI benefits. At just $40 per week, California’s minimum UI benefit—the payment provided to workers who earned the lowest wages before becoming unemployed—is among the lowest in the country. Despite its meager benefits, the state’s UI system faces $19.8 billion in debt to the federal government.
California’s dilemma is an extreme example of the challenges facing many state UI systems, which pay worker benefits out of trust funds financed by state taxes. Most state UI systems are chronically underfunded because for decades state policymakers haven’t required businesses to pay enough into the UI fund to support the benefits workers need. A key solution in California and many other states is to increase the share of employee wages subject to state unemployment insurance taxes (known as the taxable wage base).
In September, 69,000 jobs were gained in food service and drinking places and 45,000 jobs were gained in health care. Manufacturing and the warehousing and storage industries lost jobs. These are among the workers who would gain from improved UI benefits supported by stronger UI funding, which is critical both during recessions and during periods of economic growth.
While state lawmakers must act to improve UI funding and expand benefits, the federal government can and should play a role. The Unemployment Insurance Modernization and Recession Readiness Act, introduced by Senators Ron Wyden (D-OR) and Michael Bennet (D-CO) and Representative Don Beyer (D-VA) sets nationwide standards for UI, mandating that states offer at least 26 weeks of unemployment benefits, raising benefit amounts to replace a greater share of workers’ prior earnings, and increasing coverage for part-time workers, temp workers, and workers whose earnings fluctuate over time. The bill also establishes a new, federally funded Jobseekers Allowance to support jobless workers who would not otherwise be covered by unemployment insurance and modernizes the Extended Benefits program that makes additional weeks of unemployment benefits available in times of high unemployment. State policymakers across the country should also act to improve their state unemployment insurance systems to better support workers and the economy.
