HOW DO UNEMPLOYMENT INSURANCE MODERNIZATION LAWS AFFECT THE NUMBER AND COMPOSITION OF ELIGIBLE WORKERS?

Transcription

1 HOW DO UNEMPLOYMENT INSURANCE MODERNIZATION LAWS AFFECT THE NUMBER AND COMPOSITION OF ELIGIBLE WORKERS? Stephan Lindner Austin Nichols The Urban Institute May 2012 Abstract In recent years, states have considered several changes to the Unemployment Insurance (UI) system, with the goal of expanding the pool of workers eligible for benefits. Those reforms are loosening the work history requirement (i.e., adopting the alternative base period), increasing eligibility for those seeking part-time work, and allowing workers who quit their jobs for compelling family obligations to be eligible for UI benefits. This paper presents estimates of how these changes affect the number and composition of workers eligible for UI. We find without such changes, slightly more than half of all individuals out of work would be eligible for benefits; if all these changes were universally adopted, more than 70 percent of them would be eligible. Adopting the alternative base period and ending ineligibility for part-time workers would expand eligibility among young low-wage workers with intermittent past employment and low but increasing levels of education. Expanding eligibility to workers who stopped working because of a compelling family reason would affect a broader swath of workers including those with high past earnings, high educational attainment, and stable employment before job loss. We would like to thank Gregory Acs, Pamela Loprest, and Wayne Vroman for helpful comments and suggestions, as well as Tom Callan for excellent research assistance. 1

2 1 Introduction Concern that the Unemployment Insurance (UI) system fails to reach a significant share of out of work individuals has prompted policymakers to consider changes to the program that could increase eligibility rates (Krueger and Meyer 2002; Vroman 2001). For example, the American Recovery and Reinvestment Act (ARRA) of 2009 included up to $7 billion in financial incentives for states to modernize their UI programs. Reform efforts include loosening the work history requirement by adopting the alternative base period (ABP), increasing eligibility for those seeking part-time work, and allowing workers who quit their jobs because of compelling family obligations to be eligible for UI benefits. This paper examines how these proposed changes could affect the number of individuals eligible for UI as well as the characteristics of the eligible population. To that end, we use the Survey of Income and Program Participation (SIPP) to describe the population targeted by each specific program change and then estimate the extent to which the change would increase eligibility for UI. For our analysis, we focus on 1997 to 2007 to obtain estimates representing the U.S. economy absent a severe recession. We find that if all of the proposed changes for modernizing UI were adopted, the share of out of work individuals eligible for UI benefits would reach 70 percent, 20 percentage points higher than if none of the changes been implemented. Different policy changes affect different subgroups of nonemployed workers. Changing work history requirements by adopting the ABP and ending ineligibility for part-time workers improves access to UI primarily for younger, low-wage workers with low but increasing levels of education and irregular past employment. By contrast, allowing family circumstances to influence eligibility primarily affects prime-age workers with regular employment records and substantial past earnings. Finally, we find that reforms implemented by individual states through 2008 had a moderate effect on expanding eligibility, though a significant part of the potential increase in eligibility remains untapped. The next section discusses UI program eligibility rules relevant for this analysis. It is followed by the empirical analysis, which first describes the population targeted by changes to UI eligibility rules and then assess the potential impact of such changes on nonemployed workers eligibility rates. In that section, we also compare the potential 2

3 increase in eligibility with the realized increase through reforms already implemented by some states. The final section discusses the results and offers some conclusions. 2 Overview of eligibility rules and prior research The Unemployment Insurance system is the primary insurance program against job loss and provides short-term cash benefits to millions of workers every year. Established as part of the Social Security Act of 1935, it is a partnership whereby the federal government regulates basic program features and states determine eligibility provisions and benefit payments. Benefit formulas vary by state but typically replace about half of past earnings between a minimum and a maximum level. Eligibility is based on both monetary and nonmonetary criteria. In what follows, we explain traditional or common policies as well as alternative provisions devised to broaden eligibility. 2.1 Determination of eligibility Figure 1 shows the eligibility determination process for receiving UI benefits and how reforms affect its stages. UI claimants have to pass three eligibility tests: monetary eligibility, availability for work, and whether the job separation had a good cause. Provisions shown at the left side of the figure have traditionally been used to determine eligibility; more recently, states have started to consider alternative provisions (shown on the right side). Monetary eligibility To determine monetary eligibility, states compare claimants past earnings with thresholds set by the state. Traditionally, states used only earnings in the base period, that is, the first four of the last five completed quarters before job loss. States typically specify a minimum earnings requirement for the base period, the quarter with the highest earnings, or both. For instance, in 2010 Illinois required earnings in the entire base period to be above $1,600 and earnings in the quarter with the highest earnings to be above $440. Some states stipulate alternative or additional eligibility rules such as positive earnings in at least two quarters or minimum hours worked during the base period. A state with such alternative eligibility rules is Oregon: claimants must either have sufficient earnings during the base period 3

4 ($1,035 in 2010) and during the quarter with the highest earnings ($690 in 2010), or have worked for at least 500 hours during the base period. More recently, states have adopted the ABP, which usually includes the last four completed quarters rather than work completed two to five quarters before job loss. The ABP does not alter the earnings criteria for benefits but rather which quarters earnings are considered. 1 Since the ABP includes earnings just before job loss, implementing this reform expands eligibility to individuals with shorter recent work histories. Availability for work All states stipulate that workers must be available for work, but they interpret this rule in different ways. Three different groups can be distinguished by the degree to which they allow individuals seeking exclusively part-time work (as defined as working 20 to 34 hours per week) to claim UI benefits: 2 Full access. Individuals seeking part-time work have the same access to UI benefits as workers seeking full-time work. In 2012, eight states interpreted the law in this way. Restricted access. Individuals seeking part-time work can claim UI benefits only under certain conditions. These involve either personal circumstances such as a disability (3 states) or past part-time work during six or more months of the base period (15 states). No access. Individuals seeking part-time work cannot claim UI benefits (22 states). Good causes In addition to the above requirements, applicants for UI benefits have to be out of work through no fault of their own. States have developed a list of such reasons, called good causes: 1 Because monetary eligibility is based on earnings in a given period before job loss, changes to that period can be considered changes to the monetary eligibility criteria for the program or, more precisely, a nonmonetary change to a monetary eligibility criteria. 2 Information regarding part-time workers comes from McHugh et al. (2002) and from the Department of Labor s information about approved applications for UI modernization incentive payments as part of the American Recovery and Reinvestment Act. See (accessed 04/30/2012). 4

5 short-term layoff, compulsory retirement, leaving employment because of an illness, and leaving employment in order to accept other work. Alternative good cause provisions recognize other reasons employees quit their jobs through not fault of their own: harassment at work, domestic violence, caring for sick family members, and moving for a spouse. Earlier studies have examined how traditional and new rules would affect eligibility and recipiency. The following section summarizes the main findings of that research. 2.2 Prior research Studies addressing reforms to the UI program have used either UI administrative claim records or population surveys. Administrative records have the advantage of providing precise estimates for the number of claimants affected by a reform, but they are limited to studying the population claiming UI benefits and pertain to particular states only. Population surveys are able to analyze broader questions of eligibility and can represent the whole country. Their drawback is lack of precision because of small sample sizes and misreporting by survey respondents. Vroman (1995) uses administrative information from the early 1990s from six states that had implemented the ABP at that time. He finds that 6 to 8 percent of all UI claimants were eligible for UI benefits only because of their earnings in the ABP. The percentage is higher among workers with low wages or part-time and intermittent hours of work prior to job loss. Because Vroman looks at states that had implemented the ABP, the observed increase in UI recipients can come from two sources: a higher success rate for existing claims and a larger number of workers filing claims. By contrast, O Leary (2011) uses administrative 5

6 records from Kentucky, which does not have the ABP in place. As a consequence, he can only examine how much implementation of the ABP would increase the success rate for existing claims. He finds that about 1 percent of existing claims would be successful were the ABP in place. He also conducts a similar analysis for part-time workers and for individuals with an alternative good cause of job separation and finds even smaller increases. Turning to survey-based studies, Stettner et al. (2005) use the 1993, 1996, and 2001 panels of the SIPP to examine how a hypothetical nationwide ABP implementation would increase eligibility rates. Focusing on unemployed workers ages 16 to 65 in their first quarter of unemployment, Stettner et al. find that eligibility rates would increase by 6 percentage points. They also find, as Vroman does, that younger minority workers with low wages prior to job loss would benefit most from the ABP. More recently, Shaefer (2010) examines barriers to expanding UI eligibility and receipt for disadvantaged workers (defined as individuals in the lowest wage quintile before job loss and part-time workers who are primary wage earners). He uses a sample of unemployed workers from the 2001 SIPP and finds nonmonetary eligibility rules rather than monetary requirements to be the main barriers to higher eligibility and recipiency rates for disadvantaged workers. We follow Stettner et al. and Shaefer in that we use survey data for our analysis. Therefore, we do not look at a single state or a group of states but at the whole U.S. population of workers who have lost their jobs. We extend Stettner et al. s work by including all modernization efforts instead of just the ABP. In contrast to Shaefer, we do not focus on existing barriers but on how these barriers could be lowered. 3 Empirical analysis This section first describes the sample and how individuals affected by the various UI modernization efforts are identified. We then discuss how such reforms would change the number and composition of individuals eligible for UI benefits. 6

7 3.1 Survey data and sample selection The primary data source for this study is the SIPP, a nationally representative sample of the civilian noninstitutionalized population 15 years of age and older. People are interviewed once every four months for two and a half to four years, with each interview period called a wave. Respondents are asked to provide information about the preceding four months, called reference months. We use SIPP panels 1996, 2001, and 2004 covering the years 1996 to The results based on this time horizon show how UI modernization laws would change the number and composition of UI-eligible workers during normal economic times, when there is no deep and prolonged recession. For the purpose of our analysis, we focus on individuals who, during a panel, work for at least one month and are out of work for at least one month. We then select spells of nonemployment, that is, months during which individuals are out of work after job separation and either are actively looking for work (i.e., unemployed) or are not looking. A job separation occurs if a person was employed during one month and not employed during the next. We disregard spells when the individual is younger than 16 or older than 65 at the time of job separation. To calculate earnings in the base period, we also disregard spells starting during the first 17 months of a panel; therefore, our sample does not include the years 1997, 2000 to 2002, and Finally, we exclude spells with an unknown reason for job separation because we cannot determine whether a common or alternative good cause provision applies to them. The final sample includes 21,156 individuals and 26,714 spells of nonemployment. 4 We include all spells of nonemployment irrespective of whether individuals search, because we are interested in estimating how UI modernization laws could affect all people who might conceivably be eligible for benefits. Some states do impose minimum search requirements for UI recipients, but these requirements are only for those already on the program. Therefore, workers who are currently not searching could receive UI benefits as 3 We also disregard individuals with incomplete interviews (either because they refuse to fully answer all questions or because they are not available for one or more waves). Individuals who resided in Maine, Vermont, North Dakota, South Dakota, and Wyoming for also cannot be included because the 1996 and 2001 SIPP grouped these states together; therefore, these individuals state of residence cannot be identified. 4 There are more spells than individuals in the sample since individuals might report several job losses, each followed by reemployment. 7

8 long as they pass the initial eligibility test. In sensitivity analyses not shown here, we narrow our sample to include only individuals who search while being out of work (i.e., those unemployed) and fiund essentially the same results. 3.2 Identifying individuals affected by modernization efforts After selecting the sample, we identify groups of workers affected by the various reforms. We first identify the workers eligible for UI benefits because of their earnings in the base period, because of their status as full-time workers, and because they have a reason for job separation consistent with common good cause provisions. These workers would be eligible for UI benefits even if no modernization laws were passed. Next, we distinguish between three types of remaining workers according to the three proposed reforms: 1. ABP workers do not have sufficient earnings during their base period to qualify for UI benefits but do have sufficient earnings during the ABP. 2. Part-time workers are not seeking full-time work but are available for part-time work. 3. Workers with alternative good causes of job separation report a reason that is not part of the common good cause provisions but that is included in the alternative good cause provisions. For our analysis, workers in each of the three groups must be fully eligible for UI benefits under the assumption that only the respective policy change occurs. For instance, the ABP-eligible group includes workers who are only monetarily eligible for UI benefits because of their earnings in the ABP and who are available for full-time work and who report a common good cause of job separation. This way, each group pertains to a single hypothetical policy change corresponding to the question, what would happen to the number and composition of UI eligible workers if all states switched from not having that particular modernization policy to implementing it? By doing so, we estimate the potential change each policy individually can have for eligibility. The SIPP contains various information that can identify these three groups. For ABP eligibility, past earnings during the base period and the ABP before job loss can determine in combination with state UI laws who has sufficient earnings in the base period or the 8

9 ABP. For part-time work, it would be ideal to know if jobless individuals were available to work full-time, but that information is not available in the SIPP. Absent such information, we use hours worked in the past to determine who worked primarily full-time or part-time before job loss as a proxy of their availability for future work. Those who worked part-time in the past are considered unavailable for full-time work. Concerning good causes of job loss, we first attempted to match reasons of job loss or of not working with common provisions, similar to Shaefer (2010). However, it is not clear in many cases whether a specific reason of job loss disqualifies a worker from getting UI benefits. We therefore regard all reasons of job loss to be consistent with common good cause provisions as long as an individual does not report one of the two alternative good causes that can be measured in the SIPP: caring for sick family members and moving for a spouse. Workers who report exclusively such alternative reasons of job loss for a spell are nonmonetarily ineligible based on common good cause provisions but would be nonmonetarily eligible if the alternative good cause provisions were adopted. Appendix A discusses technical details regarding how these groups are defined. 3.3 Characteristics of workers affected by UI modernization laws This section describes the characteristics of the three groups of jobless workers and compares them with jobless workers who are eligible given common UI law. Table 1 displays the results for workers eligible under common UI law (first column) and workers who would become eligible if all states passed one of the modernization laws (second to fourth columns). Only 2.1 percent of all uncovered jobless workers would become eligible for UI benefits if all states introduced the ABP. This number is smaller than the 6 percent reported by Stettner et al. (2005), because we require these workers to be full-time workers and to report a reason for job loss included in common good cause provisions. 5 Moreover, our number is also considerably smaller than the 6 to 8 percent found by Vroman (1995). Perhaps the six states included in his analysis have particularly high levels of workers who qualify for UI benefits only through the ABP. Another possibility is that ABP-eligible workers are much more likely to claim UI benefits if the ABP is in place because they need cash benefits much more than other workers do. 5 The percentage of workers who are monetarily eligible because of the ABP is 5.6 in our sample, very close to what Stettner et al. (2005) report. 9

10 Compared with workers who are eligible based on common UI law, ABP-eligible workers are younger, more likely to be female, less likely to be married but more likely to have children, and less educated but more likely to have attended school during the last year and to attend school during the year following job loss. ABP-eligible workers have worked fewer months during the year before job loss and have a much higher poverty rate and lower earnings prior to job loss than workers eligible for UI under common law. However, their quarterly earnings uptick noticeably in the last quarter, which shows that the ABP helps individuals with a recent work history become eligible for UI benefits. ABP-eligible workers are also slightly less likely to search for a job and to find one within four months. 6 Finally, they rely more on SNAP and TANF benefits while being out of work, presumably both because they are more likely to be eligible for these programs and because they cannot access UI. 7 The third column of table 1 shows that part-time eligible workers constitute a much larger group than ABP-eligible workers, namely 12.8 percent. This large number of part-time eligible workers seems to be at odds with Shaefer s finding that full-time work requirements are not a barrier to higher UI recipiency rates. However, our findings pertain to potential eligibility whereas his pertain to observed participation; it is possible that few part-time workers in states that grant them UI benefits know they are indeed eligible. Part-time eligible workers tend to have similar characteristics as ABP-eligible workers, but there are a few notable differences. Part-time eligible workers earnings are much more steady and somewhat higher (except for the last quarter before job loss) as compared to ABP-eligible workers. Part-time eligible workers also tend to have worked most months 6 We use the first four months of nonemployment since we do not always observe nonemployment spells ending. Specifically, 39.8 percent of all spells end after a panel ends, therefore, we do not know their true length. 7 UI participation for ABP-eligible workers is almost but not equal to zero for several reasons. First, some states implemented the ABP during the time considered here. In addition, individuals tend to underreport earnings and income in surveys, which implies that some ABP-eligible workers have sufficient earnings in the base period to qualify for UI benefits even though their reported earnings are insufficient. Finally, some states have alternative monetary requirements such as minimum hours worked in the base period, which we do not consider here. Presumably, some who are monetarily ineligible based on their earnings in either the base period or the ABP would qualify for UI benefits because of such alternative monetary eligibility requirements. 10

11 during the last year before job loss. Finally, their UI participation rate is 7.4 percent, indicating that some are eligible for UI benefits. 8 The last column shows results for workers who would become eligible for UI benefits if all states adopted alternative good cause provisions. This is a small group of individuals with very distinct characteristics. The large majority of them are female and most of them are married. They have the highest number of children and are the most educated of all three groups. Their past earnings and the months they worked during the last year are almost identical to those of workers eligible under common UI law. However, they tend not to search for a job and only a quarter of them are reemployed within four months. Finally, their UI participation rate is similar to that of part-time workers, suggesting that these individuals, too, are to some extent eligible for UI benefits. The analysis thus far has established that the ABP and provisions extending eligibility to part-time workers would primarily target younger low-wage workers with lower past earnings. Alternative common good cause provisions would target a different group of workers who tend to be female, highly educated, and higher earners. Turning to the question of how these provisions together could increase eligibility, we note that some individuals are ineligible for UI under common law for several overlapping reasons (e.g., they do not have sufficient work histories under the base period and they are only available for part-time work). Therefore, the pool of jobless workers who could become eligible for UI if all three modernization provisions were adopted is somewhat larger than the sum of the increases in eligibility attributable to each provision implemented in isolation. Table 2 illustrates how this overlap would magnify the increase in eligibility rates if all three reforms were implemented together. The first row of the first column shows the baseline eligibility rate if no modernization laws were passed. Slightly more than half (53.6 percent) of all workers in the sample are eligible under such a scenario. The next three 8 There are two reasons for this result: some states in our sample allow part-time workers to receive UI benefits, and some of the individuals who have worked part-time in the past are available for full-time work in the future and are therefore eligible for UI benefits regardless of whether part-time workers can claim UI benefits. However, this does not imply that we overstate the fraction of part-time workers, since some of the individuals who have worked full-time in the past are only seeking part-time work in the future. When looking at future employment, we find that the number of workers in this group is about the same as the number who worked part-time in the past but full-time after reemployment. 11

12 rows show eligibility rates if only one policy were implemented. These increases correspond to the number of individuals in each group from table 1. Finally, the last row shows the eligibility rate if all modernization laws were implemented 75.8 percent, which amounts to a 20 percent increase over the baseline scenario. The second and third columns of table 2 show corresponding results for two subgroups: individuals with a family income less than 150 percent of the poverty level and individuals who have not attended college. These two groups of workers might benefit considerably from adoption of the modernization provisions however, this does not appear to be the case. Although they start out with lower baseline eligibility rates than all individuals, the increase in eligibility for these two groups is roughly the same as for the broader population of all jobless workers. 3.4 Realized change in the number of eligible workers The last part of the empirical analysis examines how UI modernization laws implemented thus far have affected the number of eligible nonemployed workers. Figure 2 shows how the number of states adopting the different UI modernization laws has gradually evolved over over the past 25 years. 9 By the mid-2000s, each of the three reform provisions had been implemented in about 20 states. ARRA resulted in more states adopting the ABP in 2009 and Based on these implementation dates, for each month included in the sample we calculate the number of nonemployed workers eligible for UI benefits based on both common provisions and provisions that have been implemented at that time. We contrast this number with the number of workers eligible based on common provisions only, as well as with the number of workers who would be eligible if all states had implemented all modernization provisions. Figure 3 shows these results as five-month moving averages (appendix table A2 shows estimates for each sample month). The gaps in the lines occur 9 Refer appendix table A1 to see precise adoption dates for each provision by state.under alternative good causes, the table shows the earliest date any of the reasons was adopted. If no date is given, the state has not implemented the provision as of December If the implementation date is January 1, 2000, the provision is in place but we do not have information prior to that date. For the subsequent analysis, we assume that such states already had the provision in place in

13 because we do not include spells beginning during the first 17 months of each panel, so that we may calculate base period earnings. The distance between the solid line and the dotted line in the figure shows the potential increase in eligibility, if all states had implemented all provisions. This corresponds to the more than 20 percent increase in table 2. The dashed line represents the actual number of eligible workers. It is close to the solid line during the mid and late 1990s because many states had not implemented one of the modernization provisions by then. Things look different by the late 2000s, when about one-third to one-half of the potential increase in eligibility had been realized. However, a significant portion of the potential increase still remains untapped. This result also does not change if the ARRA is taken into account because it primarily increased the number of states with an ABP, and we have shown that the ABP in isolation has only a very minor effect on eligibility rates. 4 Conclusion This paper shows that UI modernization laws can have a profound effect on the number and composition of unemployed workers eligible for UI benefits. On the one hand, the ABP and provisions regarding part-time workers primarily target young low-wage workers who have low but increasing levels of education and unstable employment history. Alternative good cause provisions, on the other hand, are aimed at workers with high past earnings, high educational attainment, and substantial labor force attachment before job loss. Overall, these reforms, if implemented together, can increase the number of eligible workers by over 20 percentage points. Many states have already adopted some of these provisions; however, because some jobless workers may be ineligible for UI for multiple reasons, the potential increase in eligibility has been far from realized. Although the size of the different groups is somewhat uncertain, our study clearly shows that these UI modernization laws can have a major impact on eligibility rates. These results suggest that implementing such reforms can effectively boost the number of nonemployed workers covered by Unemployment Insurance. However, the effectiveness of such reforms depends on how many of the individuals made eligible claim UI benefits. A large fraction of eligible workers who do not take up UI benefits think they are ineligible (Kaye 2001; Vroman 2009). Therefore, it is important to assess whether the increase in 13

14 eligibility rates through such reforms translates in a similar increase in UI recipiency rates. This way, we learn whether expanding eligibility is sufficient to increase recipiency or whether more outreach is needed to ensure eligible workers know that they can indeed claim UI benefits. 14

15 References Kaye, Kelleen, Re-examining Unemployment Insurance as a Potential Safety Net for Workers at Risk of Public Assistance Receipt, Paper prepared for the America s Workforce Network Research Conference. Krueger, Alan, and Bruce Meyer, Labor Supply Effects of Social Insurance, in Alan J. Auerbach and Martin Feldstein, eds., Handbook of Public Economics, first ed., Vol. 4, Elsevier, 2002, pp McHugh, Rick, Nancy E. Segal, and Jeffrey B. Wenger, Laid Off and Left Out: Part-Time Workers and Unemployment Insurance Eligibility How States Treat Part-Time Workers and Why UI Programs Should Include Them, Report. O Leary, Christopher J., Benefit Payment Costs of Unemployment Insurance Modernization: Estimates Based on Kentucky Administrative Data, January Upjohn Institute Working Paper No Shaefer, Luke H., Identifying Key Barriers to Unemployment Insurance for Disadvantaged Workers in the United States, Journal of Social Policy, 2010, 39 (3), Stettner, Andrew, Heather Boushey, and Jeffrey Wenger, Clearing the Path to Unemploymeny Insurance for Low-Wage Workers, August National Employment Law Project and Center for Economic and Policy Research. Vroman, Wayne, The Alternative Base Period in Unemployment Insurance: Final Report, Unemployment Insurance Occasional Paper 93-3, U.S. Department of Labor., Low Benefit Recipiency in State Unemployment Insurance Programs, June The Urban Institute., Unemployment Insurance Recipients and Nonrecipients in the CPS, Monthly Labor Review, 2009, 132,

16 Appendix A Specification of UI modernization laws in the SIPP We primarily use the Department of Labor s Significant Provisions of State Unemployment Laws and information about the ARRA approval process in order to identify state rules and implementation of modernization provisions. 10 In some of these cases, we were also able to determine implementation dates using state laws. Monetary eligibility We use reported earnings during the last 18 months before job loss in combination with states UI rules to determine monetary eligibility. First, quarterly earnings for the last five completed quarters are calculated. The base period includes the second to fifth completed quarters before job loss. The ABP includes the first to fourth completed quarters before job loss. State monetary eligibility rules set minimum thresholds with respect to earnings in the highest quarter, in the two highest quarters, or in all four quarters of either the base period or the ABP. Most states have only one such requirement (typically for the quarter with the highest earnings), but some states have more than one requirement. In about half of all states, earnings for all four quarters must also exceed earnings in the quarter with the highest earnings by a certain percentage (typically 50 percent). A worker is ABP eligible if his or her earnings in the base period exceed all of a state s minimum requirements at the time of job loss. Similarly, a worker is ABP eligible if his or her earnings in the ABP exceed these requirements. Good cause provisions To be nonmonetarily eligible, a worker must be out of work through no fault of his or her own. The SIPP asks two questions to classify whether a worker meets a state-specified common good causes of job loss. First, respondents are asked why they stopped working if they did so during a wave. Second, respondents out of work for the whole wave are asked why they do not work. We first attempted to match reasons of job loss or of not working with common provisions as Shaefer did (2010). However, this approach is imprecise, as appendix table A3 illustrates. The table displays UI take-up rates by reason of job separation and shows that UI participation rates are low for some categories (such as going to school), even though these are not disqualifying reasons for nonmonetary eligibility. Conversely, UI participation for being discharged or fired is high (27.76 percent), but we would expect that most workers who report such a reason are nonmonetarily ineligible. Therefore, we ultimately decided to treat all reasons for job loss or not working as qualifying common good causes, or more precisely, as not disqualifying causes, as long as they do not exclusively report a compelling family reason. Individuals who do not report a reason for not working have an unknown nonmonetary eligibility status and are excluded from the final sample. 10 See (accessed 4/30/2012). 16

17 With respect to alternative good cause provisions, harassment and domestic violence are not a part of the SIPP, but the survey contains information that allows us to identify two groups: individuals who care for sick family members and those who moved because of a spouse. The first group is defined as individuals who stopped working because of a family obligation or who do not work in order to take care of a family member and who have a spouse with a work limitation. This reason (and no other reasons for being out of work) was recorded for 9.8 percent of all nonemployment episodes. The second group was identified by a change in the subjects current address four months before or after job loss if the spouse works for at least one month during both the four months before and the four months after a move. In most cases, the spouse works all of these months. If not, then typically he or she works four months either before or after a move, but for the other time period, no work is recorded (either because the spouse does not work at all, or because the couple lives apart and no information is provided). Of all job separations, 5.1 percent occur at the time of such a move. If a worker does not report a reason for not working and also has no compelling family reason, then his or her nonmonetary eligibility status is unknown. This happens for two reasons: First, a spell ends between waves (and therefore, why the person stopped working is not asked), the spell is less than four months long (and therefore, the person is not out of work for all of the four months), and the person is not a part-time worker or has not moved for his or her spouse. Second, contingent workers are not asked why they do not work. We report all percentages conditionally on an observed reason of job loss. Availability for work We proxy availability for part-time work using past work status. Specifically, we regard all individuals who worked part-time during the majority of months in the base period as part-time workers. Part-time work is defined as working between 20 and 34 hours per week. If a state has implemented the ABP, then part-time status is determined for the base period and ABP separately. The SIPP provides information about usual hours worked per week at each job, which is used to identify months worked full-time or part-time. 17

18 Figure 1: UI eligibility determination Source: U.S. Department of Labor, (accessed 4/30/2012). 18

19 Figure 2: Number of states that adopted an Unemployment Insurance modernization policy Source: U.S. Department of Labor, (accessed 4/30/2012). ABP = alternative base period 19

20 Figure 3: Implementation of Unemployment Insurance modernization laws and U nemployment Insurance eligibility rates, Source: U.S. Department of Labor, (accessed 4/30/2012). Notes: All percentages use person weights. Five-month moving averages are used. Gaps represent spells beginning during the first 17 months of each panel (not included so that we may calculate base period earnings; therefore, our sample does not include the years 1997, 2000 to 2002, and

21 Table 1: Workers characteristics by eligibility for Unemployment Insurance Common ABP Part-time Alternative UI law eligible eligible good causes Percent eligible Age Male (%) White (%) Married (%) Household size Number of children < Completed high school (%) Completed some college (%) In school last year (%) In school coming year (%) Number of months worked last year Earnings last quarter ($) 6, , , ,360.5 Earnings second to last quarter ($) 6, , , ,293.7 Earnings third to last quarter ($) 6, , ,163.6 Earnings fourth to last quarter ($) 6, , ,211.0 Earnings fifth to last quarter ($) 5, , ,000.9 Family income < 150% of poverty level (%) Looking for job while out of work (%) Reemployed within 4 months (%) UI participation (spell) (%) SNAP participation (household, spell) (%) TANF participation (family, spell) (%) Sample size (number of spells) (%) Source: U.S. Census Bureau,Survey of Income and Program Participation, ABP = alternative base period Notes: All percentages and means use person weights. Values are expressed in January 2000 dollars. 21

22 Table 2: Increase in insured workers by Unemployment Insurance modernization provision (percent) Family income < 150% Full sample of poverty level No college Base period, full-time, common good cause and only ABP and only part-time and only alternative good causes and all provisions Source: U.S. Census Bureau,Survey of Income and Program Participation, ABP = alternative base period Notes: All percentages use person weights. The first row shows the percentage of workers eligible for UI benefits based on their base period earnings, full-time work status, and common good cause reason of job separation. The following three rows show percentages if one alternative provision is included. The last row shows percentages if all alternative provisions are included. 22

23 Appendix Table A1: Implementation of Unemployment Insurance modernization provisions ABP Part-time Alternative good causes Alabama Alaska 2010/01/ /01/01 Arizona Arkansas 2009/07/ /01/01 a 2003/01/01 California 2012/04/ /01/01 a 2000/01/01 a Colorado 2009/07/ /01/01 a 2000/01/01 a Connecticut 2003/01/ /01/01 a DC 2005/01/01 Delaware 2010/01/ /01/01 a 2000/01/01 a Florida Georgia 2003/01/ /04/21 Hawaii 2004/01/ /01/ /07/02 Idaho 2009/10/ /01/01 Illinois 2008/01/ /01/01 Indiana Iowa 2009/07/ /01/01 a Kansas 2010/01/ /01/01 Kentucky Louisiana Maine 2000/01/01 a 2004/01/ /01/01 Maryland 2011/03/ /03/01 Massachusetts 2000/01/01 a Michigan 2000/10/01 Minnesota 2008/01/ /01/01 a 2003/01/01 Mississippi Missouri Montana 2009/05/ /01/01 Nebraska 2011/07/ /01/01 a Nevada 2009/04/ /04/ /01/01 New Hampshire 2001/04/ /08/ /01/01 New Jersey 1995/07/ /01/01 New Mexico 2005/01/ /01/01 New York 1999/04/ /01/01 a 2000/01/01 a North Carolina 1997/09/ /01/ /01/01 North Dakota Ohio 1995/01/01 Oklahoma 2005/01/ /01/ /01/01 Oregon 2009/07/ /01/01 Pennsylvania Rhode Island 1992/10/ /01/01 a 23

24 Appendix Table A1: Implementation of Unemployment Insurance modernization provisions, continued ABP Part-time Alternative good causes South Carolina 2011/01/ /01/ /05/05 South Dakota 2009/07/ /01/01 a Tennessee 2009/06/ /06/25 Texas Utah 2011/01/02 Vermont 1988/01/ /01/01 Virginia 2003/07/06 Washington 1994/04/ /01/01 West Virginia 2009/04/11 Wisconsin 2000/01/01 a 1990/01/01 Wyoming Source: U.S. Department of Labor, (accessed 4/30/2012). ABP = alternative base period a. The provision is in place but no information about implementation prior to 2000 is available. The state has not implemented the provision as of December

25 Appendix Table A2: Unemployment Insurance eligibility for nonemployed workers (percent) Common provisions Common provisions Common provisions and implemented and potential alternative provisions alternative provisions

26 Appendix Table A2: Unemployment Insurance eligibility for nonemployed workers (percent), continued Common provisions Common provisions Common provisions and implemented and potential alternative provisions alternative provisions Source: U.S. Census Bureau,Survey of Income and Program Participation, Note: All percentages use person weights. 26

27 Appendix Table A3: Unemployment Insurance participation by reasons for being out of work (percent) Common good causes (having stopped working) UI take-up On layoff Own illness 6.73 Own injury 9.87 School/training 0.51 Discharged/fired Employer bankrupt Employer sold business Job was temporary and ended Quit to take another job 5.32 Slack work or business conditions Unsatisfactory work arrangements 7.54 Quit for some other reason 7.29 Childcare problems 4.78 Retirement or old age 2.61 Common good causes (not working) On layoff Temporarily unable to work Permanently unable to work 8.20 Going to school 3.97 Unable to find work Not interested in working at a job 8.68 Pregnancy/childbirth Retired 6.22 Other Alternative good causes (stopped working/not working) Other family/personal obligations 3.94 Taking care of children/other 8.59 Source: U.S. Census Bureau,Survey of Income and Program Participation, Note: All percentages use person weights. 27