On Release of GAO Study Detailing State Cuts in Unemployment Insurance

Washington, DC—Following is a statement from Christine Owens, executive director of the National Employment Law Project, in response to the U.S. Government Accountability Office (GAO) report, Unemployment Insurance: States’ Reductions in Maximum Benefit Durations Have Implications for Federal Cost. The report, released Thursday, details harmful cuts to unemployment insurance programs enacted by a number of states since 2011.

“The trend of state legislatures and governors shrinking the safety net for unemployed workers is troubling. Since the 1950s, there has been an understanding that state unemployment insurance programs should insure the first 26 weeks of unemployment, and that the federal government should play a larger role in recessions to help those who are long-term unemployed (jobless for 27 weeks or more) with additional benefits. But states such as Michigan, Missouri, South Carolina, Florida, Georgia, North Carolina, and Kansas are abandoning their responsibility under the federal-state unemployment insurance program, a key piece of the safety net established under the Social Security Act of 1935.

“When the nation entered the Great Recession in 2008, every state unemployment insurance law in the country provided up to 26 weeks of benefits to help jobless workers and their families maintain some level of economic security until they found their next job. And as it has done eight times in the last 50 years, Congress authorized additional federal unemployment insurance as the nation’s unemployment rate skyrocketed and jobs became harder to find.

“But, beginning in 2011, when unemployment was still extremely high, some states pulled back on their part of the federal-state compact. Most states entered the recession with underfinanced trust funds, and when they were forced to borrow from the federal government, most states relied more heavily on cutting benefits for workers than on improving financing.

“When these states cut the available weeks in their state unemployment insurance programs, they triggered a corresponding reduction in weeks of federal benefits while also forcing the federal government to pick up the tab for insuring earlier stages of unemployment. In doing so, states shrunk the federal safety net for their unemployed workers while using federal dollars to camouflage the shrinking of the state safety net.

“After federal benefits stopped, these states had programs that came nowhere close to providing the level of partial income replacement needed by the average unemployed worker. By October 2014, the gap between average length of unemployment and the maximum benefit duration was enormous. For example, in Florida the average length of unemployment was 43.7 weeks, but the duration of benefits was only 16 weeks. In Georgia, the average length of a job search was 38.6 weeks, but unemployment only lasted for 15 weeks.

“Research shows the importance of providing unemployed workers with enough time to conduct a meaningful work search so they can find a good-paying job that capitalizes on their skills and maximizes their productivity. During that job search, unemployment insurance helps cover the cost of essentials like food and housing. Unemployment insurance has a multiplier effect on local economic activity and reduces the incidence of poverty.

“When things got tough, most of the states examined in the GAO study hid behind federal programs and pushed through harmful legislation that severely cut the state safety net, in some instances by half. Unemployment insurance recipiency is at a record low; in states like Florida, Georgia, and North Carolina, fewer than one in five unemployed workers are receiving unemployment insurance. It is time for federal action to ensure that all states meet their obligations to help the nation’s unemployed.”

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The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org.

Contact: Emma Stieglitz, emmaS@berlinrosen.com, (646) 200-5307