May Jobs Report: Workers Facing Economic Uncertainty Need a Well-Funded Unemployment Insurance System

Nationwide— New data from the Bureau of Labor Statistics reveals that the unemployment rate remained steady at 4.2% in May, while 7.2 million workers were unemployed. The unemployment rate was 6.0% for Black workers, 5.1% for Latinx workers, and 3.6% for Asian workers, compared to 3.8% for white workers. Continuing disparities in unemployment rates are a result of structural racism in the U.S. labor market, including persistent occupational segregation.

“At a moment of growing economic uncertainty, it’s more important than ever to have an unemployment insurance system that workers can count on if they lose their jobs,” said Rebecca Dixon, president and CEO of the National Employment Law Project (NELP). “But instead of acting to strengthen unemployment insurance, the Trump administration eliminated hundreds of millions of dollars in funding that states were using to fight fraud, improve access, and ensure that workers get the benefits they are due on time. Now these efforts are at risk of being curtailed, and jobseekers will pay the price.”

The Trump administration is requiring states to return any unspent UI funds intended to support efforts to improve customer assistance, reduce wait times, make state websites more functional, improve services for rural workers, simplify unemployment applications, and effectively detect and prevent fraudulent claims.

The massive job losses during the COVID-19 pandemic exacerbated long-standing deficiencies in UI access and administration. As unemployment skyrocketed, UI agencies struggled to handle the influx of claims, and newly laid-off workers confronted jammed phone lines, crashing websites, and long delays to access benefits, contributing to financial hardship for millions of unemployed workers and their families. Workers demanded better treatment, and in 2021 Congress and President Biden provided $2 billion to the U.S. Department of Labor to work with states on improving the nation’s UI system. This amount was later reduced to $1 billion.

States directed the federal UI funds to a range of initiatives to improve customer assistance, reduce wait times, make state websites more functional, improve services for rural workers, simplify unemployment applications, and effectively detect and prevent fraudulent claims. Now, the Trump administration is requiring that any unspent funds supporting these efforts must be returned. NELP and partners called on the administration to reverse course on the rescission and enable states to complete vital modernization projects already underway.

A strong UI system may be particularly important to workers who lost their jobs in May, including 22,000 workers formerly employed by the federal government, 21,900 workers formerly in administrative and support services, and 8,000 workers who had been employed in manufacturing.

In addition to funding the UI system, Congress must address rising economic uncertainty by passing The Unemployment Insurance Modernization and Recession Readiness Act, introduced in the previous congress by Senators Ron Wyden (D-OR) and Michael Bennet (D-CO) and Representative Don Beyer (D-VA). The bill sets nationwide standards for UI, mandating that states offer at least 26 weeks of unemployment benefits, raising benefit amounts to replace a greater share of workers’ prior earnings, and increasing coverage for part-time workers, temp workers, and workers whose earnings fluctuate over time. The bill also establishes a new, federally funded Jobseekers Allowance to support jobless workers who would not otherwise be covered by unemployment insurance, and modernizes the Extended Benefits program that makes additional weeks of unemployment benefits available in times of high unemployment. State policymakers across the country should also act to improve their state unemployment insurance systems to better support workers and the economy.

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