Unemployment Insurance Benefit Adequacy: How many? How much? How Long? Joel Sacks, Deputy Commissioner Washington State Employment Security Department March 1, 2012 1
Outline How many get unemployment insurance? How much do they get per week? How long do they get it? What do they need to do to maintain it? How is it paid for? 2
How many get in? What determines eligibility? Monetary eligibility - minimum wages earned or hours worked during an established period of time, referred to as a "base period (typically, the first four out of the last five completed calendar quarters). Nonmonetary eligibility reason for job loss. In all states, workers who leave their work voluntarily must have good cause (such as to care for a sick family member, or to escape domestic violence) or they are disqualified. 3
How many get in? $7,000 Minimum Wages to Qualify for Benefits by State - 2011 $6,000 $5,000 $4,000 $3,000 U.S. Average = $2,343 $2,000 $1,000 $0 HI PR CT NV DE MD OR CA GA LA MS MN SD PA OK TN IL NM WI IA DC AR WV TX AZ MO MT AL ID NY AK CO VA ND NH NE NJ KY RI VT UT WY KS FL MA ME IN OH MI SC NC WA 4 Source: USDOL, Employment and Training Administration, 2011 Comparison of State UI Laws
How many get in? 100% Insured Unemployed (regular programs) as a % of Total Unemployed, US Average 90% 80% 70% 60% 50% 40% 46% 30% 27% 20% 10% 0% 5 Source: USDOL, Employment and Training Administration, UI Chartbook Grey Bars = Recession
How many get in? 70% Insured Unemployed as a % of Total Unemployed (recipiency rate), US Average Recipiency (all programs) Recipiency (regular programs) 60% 50% All Programs = 44% Regular = 43% All Programs = 66% Regular = 40% 40% 30% 20% 10% 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 6 Source: USDOL, Employment and Training Administration, Quarterly UI Data Summary Grey Bars = Recession
How many get in? 100% Recipiency Rates by State - 3rd Quarter 2011 Recipiency Rate - Regular Programs Recipiency Rate - All Programs 90% 80% 70% 60% 50% U.S. Average (all programs) = 51% 40% 30% U.S. Average (regular programs) = 25% 20% 10% 0% SD VA UT DC ND TX OK FL NH LA TN MS AR AL WY MI OH KY AZ MT MO PR SC ID VT MD WV ME IN IA KS CO NV RI WA MN CA IL NC DE HI GA NE OR NM NY WI MA CT AK PA NJ 7 Source: USDOL, Employment and Training Administration, Quarterly UI Data Summary (3 rd Qtr 2011)
How much do they get per week? The stated goal of the UI weekly benefit amount is to cover the basic necessities of claimants and their families, without substantially lowering their standard of living, and to promote economic stability by maintaining consumer purchasing power during times of economic downturn. The benefit should not be so high, however, as to undermine the incentive to return to work. Recommendation is to replace at least 50 percent of eligible workers lost weekly earnings. 8 Source: Advisory Council on Unemployment Compensation, Collected Findings and Recommendations: 1994-1996.
How much do they get per week? Four factors determine the benefit amount 1. Time Period (number of quarters) Each state sets its own weekly benefit amount based in part on workers past earnings. 2. Percent of weekly wage the state intends to replace States determine the overall percentage of the weekly wage to be replaced. 3. Minimum and Maximum Benefit Amounts Floors and ceilings set on the benefit amount. 4. Dependents Allowance Some states laws provide additional benefits for a dependent above and beyond the base benefit amount. 9
How much do they get per week? $160 Minimum Benefit Amount by State - 2011 $140 $120 $100 $80 $60 U.S. Average = $43 $40 $20 $0 HI PR LA CT OK NV DE WV UT MD CO SD MS TN NE WY FL NH MA MO PA MN KY CA SC ND NC GA AL DC IN IL WI VA AK IA AZ TX ME NY VT RI ID NM AR NJ KS OH OR MI MT WA 10 Source: USDOL, Employment and Training Administration, 2011 Comparison of State UI Laws
How much do they get per week? $700 Maximum Benefit Amount by State - 2011 $600 $500 U.S. Average = $425 $400 $300 $200 $100 $0 PR MS AZ LA AL FL SD MO TN SC DE GA ID NE OK DC MI WI VA IN NV NY KY TX MT WV VT MD WY KS NH ND AK CA AR UT IA NM CO OR NC OH IL ME HI RI WA MN PA NJ MA CT 11 Source: USDOL, Employment and Training Administration, 2011 Comparison of State UI Laws
How much do they get per week? 100% Benefit Replacement Rates, US Average 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 12 Source: USDOL, Employment and Training Administration, UI Chartbook Grey Bars = Recession
How much do they get per week? 100% Replacement Rates by State - 2010 90% 80% 70% 60% 50% U.S. Average = 46% 40% 30% 20% 10% 0% AK PR IL AZ WV AL DC FL MO TN LA NY NH MS DE CT OH NE CA VA OR GA MA NV SC WI MT MN MD SD ND ID MI KY ME UT VT CO TX OK AR WA NJ WY NC IN KS IA PA NM RI HI 13 Source: USDOL, Employment and Training Administration, UI Chartbook
How long do they get it? Generally accepted goal is to provide a limited number of weeks of benefits, payable only long enough to tide an unemployed worker and household over a temporary spell of unemployment. 14 Source: Stephen A. Woodbury and Murray Rubin, The Duration of Benefits, Upjohn Institute, 1997
How long do they get it? Summary of States - Maximum Duration of Regular UI Benefits (in weeks) 12-15 weeks 16-20 weeks 21-25 weeks 26 weeks 27-39 weeks 1940 13 35 2 1 0 1950 1 28 9 13 0 1960 0 2 8 32 9 1970 1 0 0 42 9 1980 0 1 0 43 9 1990 0 1 0 50 2 2000 0 0 0 51 2 2010 0 0 0 51 2 2012 0 3 3 45 2 15 Source: USDOL, Employment and Training Administration, Comparison of State UI Laws
What does an individual need to do 16 to stay eligible? For every week they claim benefits, claimants must: Be able to work; Be available for work; Be available to immediately accept suitable work; Be actively seeking work*; and Report any wages and certain other income earned while receiving UI. *Newly enacted federal requirement
Manage both personal and client How do you pay for it? $90,000,000 Historical SUTA Collections, Regular Benefit Payments and Trust Fund Balance (in 2010 dollars) Benefits Collections Trust Fund Balance $80,000,000-20b $70,000,000-25b - 23b in thousands $60,000,000 $50,000,000 $40,000,000-26b - 20B - 40b $30,000,000 $20,000,000-30b $10,000,000 $- - 38b 1940 1950 1960 1970 1980 1990 2000 2010 17 Source: USDOL, Employment and Training Administration, ET Financial Handbook 394 Grey bars = Recession
Manage both personal and client How do you pay for it? $90,000,000 SUTA Collections, Regular Benefit Payments and Trust Fund Balance during the last 10 years (in 2010 dollars) Collections Benefits Trust Fund Balance $80,000,000 $70,000,000 $60,000,000 in thousands $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 18 Source: USDOL, Employment and Training Administration, ET Financial Handbook 394 Grey bars = Recession
How do you pay for it? Total $38.1b Outstanding Loans from the Federal Unemployment Account (rounded in millions) (As of February 8, 2012) This map shows the contiguous United States and insets of Hawaii, Virgin Islands and Puerto Rico. States with $0 balance previously had outstanding balances.. 19 Source: US Department of Labor Unemployment Insurance Trust Fund
Takeaways How many get unemployment insurance? Historically low rates on regular benefits; need to see what happens when additional federal benefits end How much do they get per week? National average is 46 percent of the average weekly wage, and has remained constant over time How long do they get it? Majority of states have a maximum duration of 26 weeks, but seeing reductions What question do we start with? What s the right benefit level? (leads to one answer) How do we restore solvency? (leads to another answer) 20
21 Questions?