Supporting Work in a Changing Economy discusses reforms that can address shortcomings in Indiana’s UI program, with an emphasis on better protecting low-wage unemployed individuals.In particular, the report focuses on changes in the program that could expand eligibility for UI benefits to part-time workers and those with recent earnings. The new report was written by NELP Midwest Coordinator Rick McHugh and Jill Nielsen and Charles Warren, researchers with the Indiana Institute for Working Families, a research program of the Indiana Coalition on Housing and Homeless Issues (ICHHI).

Despite the significant assistance to jobless workers and the economy provided by UI benefits, ill-considered limitations upon UI eligibility undermines the program’s ability to achieve its goals. Indiana’s unemployment insurance program has significant shortcomings, especially with respect to its treatment of low-wage workers. For example, Indiana uses a traditionally-defined "base period" that uses wages as much as 18 months prior to a claim to determine eligibility, excluding from consideration wages earned from three to six months prior to the claim. In contrast, 20 states, including Michigan, Ohio, Wisconsin, and, most recently, Illinois, have adopted the "alternative base period," that allows workers who are ineligible under the traditional base period to use their recent wages to gain eligibility for UI benefits.

Indiana also limits eligibility for part-time workers, many of which are low-wage earners and female. This is despite the fact that employers are required to pay UI taxes on part-time employees and some of these workers may meet the monetary eligibility requirements. As will be discussed in this paper, restrictions on part-time eligibility reflect out-of-date stereotypes about part-time workers and do not acknowledge the way the labor market has changed over the past several decades. In recent years, a number of states have revised their part-time eligibility guidelines to modernize their UI programs and 24 states currently follow rules that permit part-time jobless workers to draw UI benefits under more favorable rules.

In order to increase the effectiveness of Indiana’s UI safety net, there are four policy shortcomings that should be fixed through the adoption of policies more consistent with today’s labor market and the realities facing Indiana’s working families. Indiana should:

• Adopt an Alternative Base Period,
• Extend UI benefits to part-time workers,
• Eliminate the one-week waiting period,
• Finally, to increase the solvency of the UI trust fund, Indiana should raise and index the UI taxable wage base.

The approximate cost of making these improvements to the UI system is modest – $82 million. This figure can be compared to the $700 million in total benefits paid out of the system in 2003. These changes would help jobless workers, their families, their communities, and the state’s economy without significantly raising UI taxes.