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
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
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
($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 http://workforcesecurity.doleta.gov/unemploy/laws.asp (accessed 04/30/2012).
4
• 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
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
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 2008. 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 2004. 3 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
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
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
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
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
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 2010.
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 2010. 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 1996.
12
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
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
References
Kaye, Kelleen, “Re-examining Unemployment Insurance as a Potential Safety Net for
Workers at Risk of Public Assistance Receipt,” 2001. 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. 2327–2392.
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,” 2002. Report.
O’Leary, Christopher J., “Benefit Payment Costs of Unemployment Insurance
Modernization: Estimates Based on Kentucky Administrative Data,” January 2011.
Upjohn Institute Working Paper No. 11-172.
Shaefer, Luke H., “Identifying Key Barriers to Unemployment Insurance for
Disadvantaged Workers in the United States,” Journal of Social Policy, 2010, 39 (3),
439–460.
Stettner, Andrew, Heather Boushey, and Jeffrey Wenger, “Clearing the Path to
Unemploymeny Insurance for Low-Wage Workers,” August 2005. National
Employment Law Project and Center for Economic and Policy Research.
Vroman, Wayne, “The Alternative Base Period in Unemployment Insurance: Final
Report,” 1995. Unemployment Insurance Occasional Paper 93-3, U.S. Department of
Labor.
———, “Low Benefit Recipiency in State Unemployment Insurance Programs,” June
2001. The Urban Institute.
———, “Unemployment Insurance Recipients and Nonrecipients in the CPS,” Monthly
Labor Review, 2009, 132, 39–48.
15
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 http://workforcesecurity.doleta.gov/unemploy/laws.asp (accessed 4/30/2012).
16
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
Figure 1: UI eligibility determination
Source: U.S. Department of Labor, http://workforcesecurity.doleta.gov/unemploy/laws.asp
(accessed 4/30/2012).
18
Figure 2: Number of states that adopted an Unemployment Insurance modernization policy
Source: U.S. Department of Labor, http://workforcesecurity.doleta.gov/unemploy/laws.asp
(accessed 4/30/2012).
ABP = alternative base period
19
Figure 3: Implementation of Unemployment Insurance modernization laws and U nemployment Insurance eligibility rates, 1997–2007
Source: U.S. Department of Labor, http://workforcesecurity.doleta.gov/unemploy/laws.asp (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 2004.
20
Table 1: Workers’ characteristics by eligibility for Unemployment Insurance
Common
UI law
Percent eligible
Age
Male (%)
White (%)
Married (%)
Household size
Number of children < 18
Completed high school (%)
Completed some college (%)
In school last year (%)
In school coming year (%)
Number of months worked last year
Earnings last quarter ($)
Earnings second to last quarter ($)
Earnings third to last quarter ($)
Earnings fourth to last quarter ($)
Earnings fifth to last quarter ($)
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) (%)
53.6
37.4
52.6
82.9
47.9
3.0
0.8
88.9
57.3
22.0
15.3
10.4
6,306.7
6,096.5
6,010.5
6,045.9
5,978.0
19.0
47.3
36.7
19.7
10.5
1.9
1420
ABP
eligible
2.1
28.7
48.9
79.1
29.3
3.5
1.0
80.6
48.8
50.4
32.4
5.6
3,769.4
1,919.8
480.2
430.3
714.4
35.3
41.7
30.1
3.2
13.6
4.5
56
Source: U.S. Census Bureau,Survey of Income and Program Participation, 1997–2007.
ABP = alternative base period
Notes: All percentages and means use person weights. Values are expressed in January 2000 dollars.
21
Part-time
eligible
12.8
31.5
35.8
83.4
33.1
3.4
0.9
83.7
50.8
52.0
36.7
9.9
2,607.4
2,379.3
2,242.0
2,253.7
2,202.1
23.7
37.3
31.3
7.4
12.3
2.8
341
Alternative
good causes
3.2
36.6
22.4
82.9
97.5
3.7
1.5
90.5
62.8
9.6
7.3
11.0
6,360.5
6,293.7
6,163.6
6,211.0
6,000.9
12.1
16.4
25.6
7.9
5.9
0.7
83
Table 2: Increase in insured workers by Unemployment Insurance modernization provision (percent)
Family income < 150%
of poverty level
Full sample
Base period, full-time, common good cause
and only ABP
and only part-time
and only alternative good causes
and all provisions
53.6
55.6
66.4
56.8
75.8
No college
46.0
49.3
59.8
47.8
69.9
47.5
49.7
60.6
49.9
70.0
Source: U.S. Census Bureau,Survey of Income and Program Participation, 1997–2007.
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
Appendix Table A1: Implementation of Unemployment Insurance modernization
provisions
ABP
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
DC
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
—
2010/01/01
—
2009/07/01
2012/04/01
2009/07/01
2003/01/01
2005/01/01
2010/01/03
—
2003/01/01
2004/01/01
2009/10/01
2008/01/01
—
2009/07/05
2010/01/01
—
—
2000/01/01a
2011/03/01
2000/01/01a
2000/10/01
2008/01/01
—
—
2009/05/17
2011/07/01
2009/04/16
2001/04/01
1995/07/01
2005/01/01
1999/04/01
1997/09/01
—
1995/01/01
2005/01/01
2009/07/01
—
1992/10/04
Part-time
—
—
—
2000/01/01a
2000/01/01a
2000/01/01a
—
—
2000/01/01a
—
2009/04/21
2004/01/01
2010/01/01
—
—
2000/01/01a
2004/01/01
—
—
2004/01/01
2011/03/01
—
—
2000/01/01a
—
—
2004/01/01
2000/01/01a
1997/04/08
2008/08/26
2004/01/01
2004/01/01
2000/01/01a
2004/01/01
—
—
2004/01/01
—
—
—
23
Alternative good causes
—
2002/01/01
—
2003/01/01
2000/01/01a
2000/01/01a
2000/01/01a
—
2000/01/01a
—
—
2009/07/02
—
1990/01/01
—
—
—
—
—
1991/01/01
—
—
—
2003/01/01
—
—
—
—
2002/01/01
1998/01/01
—
—
2000/01/01a
2003/01/01
—
—
2004/01/01
2004/01/01
—
2000/01/01a
Appendix Table A1: Implementation of Unemployment Insurance modernization
provisions, continued
ABP
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
2011/01/01
2009/07/01
2009/06/25
—
2011/01/02
1988/01/03
2003/07/06
1994/04/03
2009/04/11
2000/01/01a
—
Part-time
2011/01/01
2000/01/01a
2009/06/25
—
—
1976/01/01
—
—
—
—
—
Alternative good causes
2005/05/05
—
—
—
—
—
—
2003/01/01
—
1990/01/01
—
Source: U.S. Department of Labor, http://workforcesecurity.doleta.gov/unemploy/laws.asp
(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 2010.
24
Appendix Table A2: Unemployment Insurance eligibility for nonemployed workers
(percent)
Common provisions
1997-05-01
1997-06-01
1997-07-01
1997-08-01
1997-09-01
1997-10-01
1997-11-01
1997-12-01
1998-01-01
1998-02-01
1998-03-01
1998-04-01
1998-05-01
1998-06-01
1998-07-01
1998-08-01
1998-09-01
1998-10-01
1998-11-01
1998-12-01
1999-01-01
1999-02-01
1999-03-01
1999-04-01
1999-05-01
1999-06-01
1999-07-01
1999-08-01
1999-09-01
1999-10-01
1999-11-01
1999-12-01
2000-01-01
2000-02-01
2002-03-01
2002-04-01
2002-05-01
2002-06-01
2002-07-01
2002-08-01
2002-09-01
2002-10-01
2002-11-01
2002-12-01
Common provisions
and implemented
alternative provisions
61.8
57.6
61.6
42.9
45.9
54.0
53.1
49.7
52.1
55.7
57.4
51.5
57.6
47.8
56.6
41.4
44.3
47.6
56.1
47.9
51.5
62.2
56.1
64.6
54.1
51.8
58.3
44.3
51.6
58.8
55.8
57.9
56.3
66.3
50.2
63.8
71.0
61.1
60.7
48.0
52.7
61.3
62.7
55.8
Common provisions
and potential
alternative provisions
64.0
60.5
65.4
46.7
51.0
58.8
59.7
55.9
57.6
60.4
62.9
58.2
64.3
53.6
61.5
45.6
50.8
51.8
62.4
55.9
56.0
66.3
61.7
68.0
57.9
57.1
65.9
49.3
56.6
64.4
61.5
61.7
62.3
66.3
54.5
71.9
73.2
66.5
68.3
51.8
56.1
68.4
69.8
59.4
25
76.3
81.1
83.2
62.2
65.6
76.9
77.1
78.5
78.7
80.2
82.5
75.9
79.1
75.1
81.6
66.7
67.3
71.6
78.6
75.0
73.2
80.6
79.3
79.7
75.9
76.7
79.0
66.7
70.4
80.7
74.2
80.4
82.5
83.1
82.2
86.5
83.0
81.1
82.7
68.0
72.9
83.2
83.2
75.9
Appendix Table A2: Unemployment Insurance eligibility for nonemployed workers
(percent), continued
Common provisions
2003-01-01
2003-02-01
2003-03-01
2003-04-01
2003-05-01
2003-06-01
2003-07-01
2003-08-01
2003-09-01
2003-10-01
2003-11-01
2003-12-01
2005-03-01
2005-04-01
2005-05-01
2005-06-01
2005-07-01
2005-08-01
2005-09-01
2005-10-01
2005-11-01
2005-12-01
2006-01-01
2006-02-01
2006-03-01
2006-04-01
2006-05-01
2006-06-01
2006-07-01
2006-08-01
2006-09-01
2006-10-01
2006-11-01
2006-12-01
2007-01-01
2007-02-01
2007-03-01
2007-04-01
2007-05-01
2007-06-01
2007-07-01
2007-08-01
2007-09-01
2007-10-01
Common provisions
and implemented
alternative provisions
58.4
57.5
57.7
62.0
50.3
54.0
57.3
49.1
47.5
59.5
59.9
47.9
49.7
58.7
58.4
49.4
57.6
44.7
49.0
57.6
61.0
52.8
55.0
57.5
59.5
58.3
51.8
53.9
48.1
46.4
43.5
62.5
54.5
55.3
53.3
59.8
42.1
61.5
54.1
58.5
58.1
42.8
46.6
65.8
Common provisions
and potential
alternative provisions
64.7
62.0
64.9
67.6
56.0
62.1
61.1
53.2
55.8
64.8
61.4
60.9
52.8
64.8
62.8
57.7
67.1
52.5
55.3
66.5
67.2
62.8
62.4
65.9
67.2
64.5
61.2
61.7
55.5
55.4
52.6
70.5
60.7
61.5
60.4
64.5
50.2
67.0
62.7
62.4
69.9
56.5
57.0
73.1
Source: U.S. Census Bureau,Survey of Income and Program Participation, 1997–2007.
Note: All percentages use person weights.
26
80.7
77.7
80.9
85.0
72.5
81.4
79.0
71.5
74.0
80.8
78.2
75.9
64.1
78.4
76.5
75.1
80.3
66.8
66.0
79.2
79.4
78.2
76.4
78.8
82.0
78.7
78.3
71.6
72.5
69.1
65.2
79.7
77.7
77.1
74.9
78.8
72.0
77.9
79.3
79.9
86.8
67.8
64.6
83.8
Appendix Table A3: Unemployment Insurance participation by reasons for being out of
work (percent)
UI take-up
Common good causes (having stopped working)
On layoff
Own illness
Own injury
School/training
Discharged/fired
Employer bankrupt
Employer sold business
Job was temporary and ended
Quit to take another job
Slack work or business conditions
Unsatisfactory work arrangements
Quit for some other reason
Childcare problems
Retirement or old age
49.82
6.73
9.87
0.51
27.76
44.18
39.72
11.88
5.32
22.72
7.54
7.29
4.78
2.61
Common good causes (not working)
On layoff
Temporarily unable to work
Permanently unable to work
Going to school
Unable to find work
Not interested in working at a job
Pregnancy/childbirth
Retired
Other
65.85
12.45
8.20
3.97
31.58
8.68
10.33
6.22
16.82
Alternative good causes (stopped working/not working)
Other family/personal obligations
Taking care of children/other
3.94
8.59
Source: U.S. Census Bureau,Survey of Income and Program Participation, 1997–2007.
Note: All percentages use person weights.
27