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Columbia University Mailman School of Public Health

Unemployment Insurance

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The federal-state Unemployment Insurance (UI) program provides workers with partial wage replacement during temporary periods of unemployment. Benefit levels typically equal an average of 50 percent of previous after-tax earnings. Receipt of benefits is generally limited to 26 weeks, with an average receipt of 15 weeks. States have discretion to set eligibility criteria and benefit levels, and coverage rates vary tremendously. In 2006, states’ rates of UI receipt ranged from 17 to 57 percent of the unemployed, with a national average of 35 percent.

In addition, partial UI benefits are available to workers who are “partially” employed—workers whose hours were reduced by their employer, or persons receiving UI who have found short-term, part-time work, but continue to look for a permanent, full-time job. Partial benefit levels generally equal the (full) benefit amount for which a claimant is eligible minus the claimant’s earnings, after disregarding a portion of these earnings. Nationally, partial benefits constitute about 10 percent of the UI benefit weeks claimed each year.

Although UI eligibility varies from state to state, some basic requirements are common across most UI programs. All states require a minimum amount of earnings over a specified “base period” of one year, and in most states these earnings must be spread across more than one calendar quarter in that year. These requirements disadvantage many workers in low-income families. If a low-wage worker has worked only intermittently or part-time during the base period, he/she may not reach the necessary earnings—distributed over the necessary quarters—to qualify. In addition, workers who are new to the labor force may not qualify because both the current and most recently completed quarters of employment typically are excluded in eligibility determinations (primarily because of delays in wage reporting). Thus in the majority of states, those with earnings only in the most recent six months may have to wait between three and six months before these earnings are counted toward UI eligibility. Only about a third of the states permit UI claimants to use an “alternative base period“ to count more recent earnings.

UI claimants also must be available for and actively seeking work, and about half of the states require UI recipients to seek full-time work, even if they were not previously working full-time. Workers furthermore must be involuntarily unemployed—that is, laid off or quit for “good cause”, and states have wide discretion in determining what counts as “good cause”. A person who quits due to a child care conflict or illness but is now available for work, for example, may be eligible for UI in some states, but not in others. Low-wage workers, whose jobs typically provide less flexibility and fewer (or no) sick days in comparison to higher wage positions, are particularly affected by these rules.

As a result of these eligibility criteria, low-wage and part-time workers are less likely than higher-wage and full-time workers to qualify for benefits. For example, the U.S. General Accounting Office (GAO) reports that in March 1995, about 18 percent of unemployed low-wage workers received UI benefits in comparison to about 40 percent of higher-wage workers. The GAO found that the disparity held even when researchers compared those who worked for similar periods and took state differences in UI rates into account. In addition, unemployed women are significantly less likely to qualify then their male counterparts, in part because they are more likely to leave their jobs to meet family responsibilities that few states recognize as “good cause”.

UI is financed with federal and state taxes on employers. Federal rules determine which types of employment are covered by UI, and therefore which employers are subject to taxes (based on these rules, nearly all wage and salaried workers in are “covered” employment). Although the federal tax is uniform, state tax rates can vary in several ways, including employers’ record of unemployment claims.

National Participant & Spending Data

Data Notes and Sources

Data on Unemployment Insurance were compiled by NCCP in August 2007. Some state policy decisions may have changed since these data were collected.