Good morning, Chairman Clyburn, Ranking Member Scalise, and members of the Committee. I am grateful for the opportunity to testify today. I am Michele Evermore, a senior researcher and policy analyst with the National Employment Law Project (NELP).
NELP is a nonprofit research, policy, and capacity building organization that for more than 50 years has sought to strengthen protections and build power for workers in the U.S., including people who are unemployed. For decades, NELP has researched and advocated for policies that create good jobs, expand access to work, and strengthen protections and support for underpaid and jobless workers both in the workplace and when they are displaced from work. Our primary goals are to build worker power, dismantle structural racism, and ensure economic security for all.
A record number of workers have lost their jobs as a result of the pandemic. May’s jobs report showed a surprising 13.3% unemployment rate, lower than feared, but still an alarmingly high rate which would be much higher if it included workers misclassified as temporarily out of work or not actively seeking work due to relaxed work search requirements. Moving forward, we must continue to work together to fill the gaps in unemployment insurance (UI) coverage, increase equity, and maintain benefits for those who are already eligible, until the economy sufficiently improves. NELP applauds the bold action Congress has taken, but more can and must be done.
In this moment in history, it is easy to focus solely on the ways in which our lives, the world, and the economy feel out of control. As gaps in benefits for unemployed workers have taken center stage, it is important to remember that the CARES Act you enacted is having a dramatic and positive impact on tens of millions of people who are out of work and must stay home to care for their families. Particularly for workers who are paid low wages, these benefits are the difference between not making ends meet and being able to afford to stock up and remain home safely. These benefits are saving lives.
Compounding centuries of structural racism, the unemployment crisis is affecting communities of color most dramatically. A recent Washington Post-Ipsos poll from May showed that 16 percent of Black workers reported being laid off, as well as 20 percent of Latinx workers. At the same time, 11 percent of white workers and 12 percent of workers from other racial groups reported being laid off.[i] Because of the massive racial wealth gap in the United States, workers of color have less savings to tide them over until they find their next job. The Brookings Institution reports that Black families have one-tenth the wealth of white families.[ii] For all who are out of work, but particularly for Black, Latinx, and Indigenous workers and other workers of color, unemployment benefits are a vital lifeline in this time of crisis.
Take, for example, Alicia, a worker from the District of Columbia who was laid off in March. Alicia needed to be home to handle distance learning for her two teenage children. When her older daughter was deemed an essential worker, Alicia provided care for her granddaughter. She applied for unemployment insurance and received UI and the $600 Pandemic Unemployment Compensation (PUC) benefit. “I don’t know how I would be able to do anything without the $600,” she said. “I reached out to my mortgage lender and they allowed just one month of deferment. If it was just UI, it would have been much harder to pay my bills.” And when her employer made it possible to work from home, she returned to work, ending her UI and PUC benefits.
In addition to the benefits provided by state unemployment insurance (UI) programs, Pandemic Unemployment Assistance (PUA) is helping both middle-class self-employed workers and lower-paid workers in the gig economy (many of whom are misclassified as independent contractors) to weather an economic storm that has left them stranded in a largely shut down economy, with social insurance systems otherwise ill-equipped to provide them help in an emergency.
It is crucial to this discussion that we understand that we are not dealing with a cyclical or even structural recession like ones we’ve seen in the past few decades. We are dealing with an international pandemic that has forced us to shut down our economy for the sake of saving lives. Our state, local, and federal government have taken extraordinary but necessary measures to protect public health. Although we are slowly starting to reopen our economy, we cannot pretend that everything will go back to normal in the next few weeks, months, or even years.
A robust program of continued unemployment insurance will help ease this economic turmoil by keeping workers in place and ready to resume employment once it is safe to do so. But it will also provide a lifeline to workers who will not be able to return to work for whatever reason, including because their employers have gone out of business, because they must reopen slowly for safety’s sake, or because the demand is not there yet for the goods or services they offer. We cannot pretend that the coronavirus and the economic disaster it has wrought will simply disappear in a few months. The federal government has a responsibility to make sure that people do not suffer exacerbated economic pain or face undue risks to their health and safety.
Unemployment insurance is the only ongoing program we have that was built to distribute funds during an economic crisis. It was created in 1935 with the hope of stabilizing the economy by giving workers buying power when they find themselves involuntarily unemployed. UI succeeds in achieving several key goals:
For all its potential to help workers and to stabilize the economy, the UI system also faces serious challenges. Shamefully, the UI program historically excluded domestic and agricultural workers, which had a disproportionate impact on Black and Latinx workers, and some of those exclusions remain in effect today—an area that obviously demands reform.
Moreover, state UI does not reach nearly enough unemployed workers, necessitating the enactment of the PUA program. UI also fails to provide adequate wage replacement, especially in a period of government-mandated mass unemployment, so Congress enacted the Pandemic Unemployment Compensation (PUC) program. Finally, all states struggled mightily to get these new programs up and running. Now, we must ask ourselves, how did a program that could do so much good in precisely a crisis like this one struggle so much?
First, we must acknowledge the massive decline in UI administrative funding, and lack of designated funding for the states to invest in and maintain a 21st century information technology (IT) infrastructure. In 2020, national administrative funding for UI was $2.14 billion. Back in 2001, that funding was $2.21 billion. Given increases in the cost of living and the growth in the working population, that marks a dramatic reduction over time.
Using a simple inflation calculator on the Bureau of Labor Statistics website, the 2001 funding level is roughly $3.2 billion in today’s dollars. At the same time, the highest number of new claims for any single week in history before this crisis was 695,000 in October of 1982. That is in contrast to new claims of 3.3 million for the week ending March 21 of this year, which were followed by 6.6 million in the two following weeks, 5.2 million the week ending April 11, and continuing initial claims in the millions every week since.
This dramatic and instant decline in employment is unlike anything we have ever seen. Historically, recessions have a much slower onset and much lower new claims every week. The fact that UI systems did not collapse entirely under the weight of the demand, particularly given the low funding levels they had to work with, is a testament to the enormous dedication of UI administrators and staff across the United States.
It is also important to understand that our unemployment system is a patchwork of various state systems, some of which have been modified in recent years to intentionally make it more difficult to access benefits. Indeed, just last summer, NELP published “Are Unemployment Systems Still Able to Counter Recessions?” detailing how many state systems were not recession-ready precisely because of the steps they had taken to make their UI systems impenetrable to so many unemployed workers.[iii] Figures 1-5 at the end of this document detail that benefit duration and adequacy are worst in states that have the greatest numbers of workers of color, as well.
As states have moved to largely online processing, many have created systems that are inaccessible to workers on the other side of the digital divide, workers with limited English proficiency, and people with disabilities. For instance, as NELP outlined in its prescient 2015 report on the Florida unemployment system, titled “Ain’t No Sunshine,” the U.S. Department of Labor’s Civil Rights Division ruled that Florida’s system was discriminatory and inaccessible.[iv] An example of this unequal access is Florida’s procedure for directing calls needing translation services: the procedure was to ask claimants in English what language they needed services in, but to speak slowly. The system also had no TTY or other assistive services for callers with disabilities.
State legislatures, pressured by business interests and looking to reduce the number of people eligible for unemployment insurance, have turned to a variety of benefit restrictions, including: (a) dramatically reducing duration of benefits; (b) narrowing the definitions of qualifying separation events; (c) increasing the amount of wages workers need to earn to qualify for UI; and (d) imposing stricter, yet no more effective, work search requirements. In addition, many states have narrowed workers’ access to UI benefits by implementing technologies that may limit accessibility of the application processes.[v]
As a result, the nationwide percentage of jobless workers receiving UI last year was only 27 percent, and as low as 9 percent in North Carolina, as compared to 36 percent across the country before the onset of the Great Recession. In states like Florida, Georgia, and North Carolina, where state legislatures slashed the duration of available benefits far below the standard 26 weeks, the rates of unemployed workers receiving UI were below 15 percent, or nearly half the national average.
The decline in UI recipiency also reflects a dramatic increase in workers facing erroneous denials of their benefits by state UI agencies. According to U.S. Department of Labor, Employment and Training Administration (ETA) data on erroneous denials, the denial error rate for separation reasons in 2017 was 17.44 percent, while that error rate in 2007 was only 8 percent.[vi] Similarly, in 2017, 17.54 percent of benefits were erroneously denied for nonseparation reasons, while in 2007, the improper nonseparation denial rate was only 9.9 percent.[vii]
Part of this increase in erroneous denial has to do with the fact that systems have been over-calibrated to prevent overpayments at the expense of paying appropriate benefits. States have programmed their computer systems to pause applications at every decision point, which can generate multiple eligibility determinations and denials. As we have seen, that is going to slow down benefits getting to the public when there is a crisis.
Overconcentration on suspicion of fraud, especially when not coupled with a corresponding focus on employer fraud, worker misclassification, and UI system errors and failures, can wreak havoc on UI programs. For example, as part of the 2011 unemployment insurance provisions passed in Michigan, the state dramatically increased fraud detection efforts and penalties. When the state upgraded its information technology system, it added algorithms that over-flagged claims for fraud. That system, MiDAS, flagged at least 37,000 workers for fraud, with a staggering 93 percent inaccuracy rate. Workers impacted had to pay back four times the benefits they received plus 12 percent interest, and many were driven into personal bankruptcy.[viii]
The Department of Labor must examine why there is such a stark increase in erroneous denials of benefits over the past decade and should impose checks on states that are routinely mischaracterizing processing errors as claimant fraud.
Any steps that states take to reopen their economies must be done with the utmost care for worker health and safety. No worker should be expected to return to a workplace where the employer does not implement sufficient measures to safeguard employees against exposure to COVID-19.
This is both a workers’ rights and a public health issue. If workers are forced to go back to unsafe conditions, employers’ negligence could result both in workers getting sick and in COVID-19 spreading further throughout the community, prolonging the duration of the pandemic and the number of people being infected, while also exacerbating economic problems in the future. Rushing to reopen and forcing workers back to unsafe environments will only lengthen the duration of the crisis and worsen long-term economic conditions—particularly for underpaid workers of color and women of color who are suffering higher rates of infection and mortality in this pandemic due to systemic racism related to healthcare and employment.
Workers receiving unemployment insurance are not permitted to refuse “suitable work” and continue to get benefits. However, workers are allowed to refuse unsuitable work. As requested by more than 20 members of the Senate,[ix] the Employment and Training Administration (ETA) must make it clear that suitable work does not include unsafe work, referring to situations where the employer has not taken the minimum precautions set forth by the Centers for Disease Control and Prevention’s COVID-19 workplace guidelines, particularly if the individual is an older worker, immunocompromised, or more vulnerable to infection in some other way (e.g., because of a disability, or if the worker is caring for a vulnerable household member). ETA has thus far failed to issue clear guidance on the issue, which contrasts with helpful COVID-19 suitable work policies recently issued by California, Connecticut, Colorado, North Carolina, Texas, and other states.
Virtually every state UI law is clear that an offer of work that exposes a worker to an unreasonable degree of risk to their health or safety is, by law, unsuitable. For workers collecting regular UI, the federal “prevailing conditions of work” provision applies (26 U.S.C. Section 3305(a)(5)(B)), which all states must incorporate into their UI laws. This provision, which dates back to the Social Security Act of 1935, prohibits a state from denying UI to a worker who refuses work if “the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality.” Here, the issue is whether the health and safety “conditions of work” are sufficiently serious to pose an unreasonable threat to the worker which, in turn, suppresses the working conditions of other workers in the labor market.
For workers collecting Pandemic Unemployment Assistance (PUA) under the CARES Act, the federal “suitable work” regulations governing the Disaster Unemployment Assistance (DUA) program apply to protect workers against returning to work that is unsafe to themselves, their families, or to the public. The regulation (20 C.F.R. 625.13((b)(2)), which corresponds to the state “suitable work” laws, provides that “a position shall not be deemed to be suitable for an individual if the circumstances present any unusual risk to the health, safety, or morals of the individual, if it is impracticable for the individual to accept the position. . . .” The federal “prevailing conditions of work” requirement also applies to the PUA program as does “any comparable” provision of state law.
Workers asked to return to work, particularly in the early phases of reopening, are especially at risk. Jobs such as meatpacking, hairdressing, retail, home care, and food service are poorly paid and are filled disproportionately by workers of color. Underpaid workers are far less likely to have access to counsel to advise them of their right to refuse unsuitable work. What will likely happen is that employers will flag these workers as refusing suitable work, and those workers will then bear the burden of proving that the work they refused was unsafe, which is a huge burden and will keep them from getting benefits while the dispute is litigated. Either Congress or the DOL must make clear that unsafe work is not suitable work and establish a safety standard that states and employers must follow.
The Pandemic Unemployment Compensation (PUC) program, which temporarily provides an additional $600 weekly to qualified unemployed workers, is an essential benefit in this moment, as it attempts to make up for the fact that UI benefits only replace approximately 40 percent of wages.
Efforts to undo PUC fail to acknowledge the reality that working people and communities are facing and what is really going on in our economy. PUC is also critically important to many self-employed workers who were struggling to make ends meet but can now comfortably work on plans to re-open their businesses when the health crisis passes.
At the same time, we should be asking why underpaid workers—who will hopefully be making closer to or perhaps even above their regular wages, allowing for greater economic stability in these uncertain times—are being expected to work for so little compensation in the first place. Wages and unemployment benefits have stagnated for decades. Many workers cannot live on the wages they are making, much less on an unemployment benefit that is a small fraction of their regular wages. This is particularly true for women of color. While the overall gender wage gap means that for every dollar a white man makes, a woman makes 82 cents,[x] when disaggregated by race, Black women earn 63 cents, Latinx women earn 54 cents, Native Hawaiian and Pacific Islander women earn 65 cents, and American Indian and Alaskan Native women earn 59 cents.[xi] Black men earn 73 cents and Latinx men earn 69 cents to the dollar of white men.[xii]
Right now, the federal government should be focused on ensuring that workers can survive this crisis and that the economy gets the maximum boost possible with the consumer buying power generated from the PUC benefits. Congress must ensure that workers are able to maintain an adequate income while they have no jobs because of public-health-necessitated shutdowns, and the unavoidably slow return to a normal economy. We must also recognize that there are certain industries, such as those involving large crowds like sporting events and live performing arts, that are not going to be able to safely “reopen” anytime soon.
Indeed, in May, the official unemployment rate surpassed 13 percent, which is higher than the peak unemployment rate reached during the Great Recession. This number represents job loss up to the middle of last month, and we have seen millions of new initial claims flow in since that time. By pulling the plug on the PUC program, which will impact an estimated 10 million workers and self-employed business owners, the economy will suffer a massive economic hit of over $17.9 billion dollars per week if insured claims hold at mid-May levels. The chart at the end of this testimony details the dollar impact by state based on continued claims reported for the week ending May 23.
The PUC benefit boost is also necessary, in large part, because so many states have lowered their unemployment insurance benefit levels to the point where they cannot effectively aid workers and provide countercyclical stabilization during a recession or other crisis. For example, the average weekly unemployment benefit in the U.S. is just $370 a week, which replaces only 44 percent of the average worker’s weekly wage. As NELP has reported repeatedly, the real problem is that too many workers who qualify for benefits cannot access them.[xiii] As we have seen across the country, filing for unemployment insurance can be arduous.
As workers in low-wage jobs are facing mounting bills as a result of the COVID crisis, including back rent and other major expenses, the increased income provided by PUC is often all that separates workers and their families from homelessness.[xiv] When workers are standing in line for paper applications for unemployment insurance,[xv] spending hours on hold while trying to apply over the phone,[xvi] or when computer systems continue to crash,[xvii] it’s crucial that Congress and state governments focus on making sure everyone who lost work can get their benefits, rather than anti-worker fallacies about people “refusing to work.”
PUC is a lifeline and does not create a disincentive to work. As discussed above, under every state unemployment insurance law in the country, a person who refuses suitable work will be found ineligible for benefits. There are some situations that can be regarded as good cause to leave a job for personal reasons, such as escaping domestic violence, or for work-related reasons, such as preserving worker health and safety—but the prospect of a higher unemployment benefit is not one of those good causes.
Additionally, several guidance letters issued by ETA have made it clear that refusing work to receive unemployment benefits can be fraud. Workers are informed before applying that they cannot claim benefits for which they do not qualify and if they do, they will need to pay them back, and may even face steep financial penalties.
Moreover, we should not overlook how critical it is for workers to maintain their connection to a job right now. For so many people, there is more to a job than the paycheck. In these uncertain times, workers are seeking stability, and the reassurance of continued work is something that more and more workers can no longer count on. Their jobs may be the source of health care benefits, retirement security, and possibly equity in the company. Workers are also well aware of how resume gaps can harm long-term job prospects, even in this era.
Finally, we need to note that re-employment bonuses are not the answer. They are based on the premise that workers are not looking hard enough for work. The reality is that there is a positive correlation between duration of unemployment and finding a suitable replacement job that workers remain at longer.[xviii] Workers and employers benefit from having an unemployment system that is designed to get workers back to the right job, and not just any job.
While some policymakers expect that most workers will be asked to return to the same job that they had before, the longer this pandemic and the recession continue, the less likely it is that workers’ previous jobs will exist. Moreover, vast swaths of industries may never return to normal, like travel, gyms, restaurants, sporting events, and music.[xix] That will also impact all the industries that feed them. We may be looking at a massive economic restructuring, the answer for which should be access to better job training to ensure good job matching, rather than bonuses to encourage workers to take a less suitable replacement job.
Policymakers need to learn the lesson of the Great Recession, from which many individuals, families, and communities never recovered. The response to the last recession did not inject enough money and was not sustained enough to ensure that individuals and communities could fully recover from the economic devastation.
This reality also underscores the ways systemic racism impacts which communities federal and state governments invest in—during times of crisis and always. Cities like Detroit and Flint were unable to recover from the last recession and still have astronomical unemployment rates, and the Black unemployment rates in those cities is 17.4 percent and 25 percent, respectively.[xx] When unemployment reached 14.7 percent for the broader population in April, it was rightly viewed as a national emergency, but there are communities for whom that number is a persistent reality.
The families and communities that were most harmed in the last recession, unsurprisingly, were disproportionately people of color and women—who already were dealing with generational racial wealth gaps and gender wage gaps. Today, we are in an economic crisis, with workers in a worse place economically than before. No community, least of all Black communities and other communities of color, can afford for policymakers to aim low in terms of emergency aid.
Any argument being made that is not focused on ensuring all workers have the income needed to survive in this moment is ignoring a very important truth: Ensuring people have economic security is the answer to economic stability in good times, and to recovery after times of crisis. After all, the economy is not an entity unto itself, but rather, is the direct result of the economic strength and security of the people who comprise it.
Amidst the tensions playing out between calls to reopen the economy and the need to ensure workers are safe and healthy, we believe a program known as work-sharing holds tremendous promise as a solution that will benefit both workers and employers. With over 40 million workers already laid off and the underlying cause of our economic disruption likely not remedied for the foreseeable future, we need to reject all-or-nothing approaches to the question of economic recovery or individual worker health.
Work-sharing programs (also known as short-time compensation) saved half a million jobs in the Great Recession, and in 2012, Congress enacted federal legislation (the Layoff Prevention Act, sponsored by Senator Jack Reed) that provided incentives to states to enact work-sharing as an alternative to layoffs. While work-sharing was originally envisioned—and is still primarily used—as a voluntary layoff alternative when employers first face a temporary financial downturn, the program can also be a vital tool for businesses that have already laid off their workers but need to ramp back up slowly.
Through work-sharing, employers who need to rebuild their operations gradually can spread the impact across the workforce by substituting the number of layoffs they would otherwise be imposing with an equivalent number of reduced work hours spread over a larger number of employees. So, for example, an employer that has already laid off all 20 employees but has only enough work to call back 10 could, instead of keeping 10 workers on layoff, bring back all 20 employees half-time. Under a work-sharing plan, all employees would receive half pay and a work-sharing benefit that is equivalent to half a weekly UI payment (as well as any employer-provided fringe benefits). As business continues to pick up, hours could be increased across the workforce with corresponding increases in wages and decreases in work-sharing payments.[xxi]
This kind of rebuilding approach brings tremendous advantages for workers and the economy. First, the sooner that workers and their employers reconnect, the greater the likelihood that workers will not suffer the economic harm that comes with long-term unemployment or having to start over with new employment. Second, businesses benefit by retaining trained employees, and if they can provide those employees enough financial security between wages and work-sharing benefits to keep them on board through tough times, they will come out stronger on the other side, when customers and demand for products and services fully return.[xxii]
Third, we are looking at an economy that will not be able to sustain the levels of employment that it did pre-COVID for a long time. Sharing the available work over the workforce in the short-term is a common-sense solution that will benefit all of us in the long run. Companies that have used work-sharing through down times routinely talk of its positive impact on employee morale.
Through the CARES Act, Congress has already acted to renew incentives and provide funding to states to improve and promote work-sharing, but more needs to be done. Only 27 states have active work-sharing laws today, and it is time to ensure that that this voluntary program is offered as an option to employers in every state.
In the wake of an economic tsunami that has left one in four workers in the U.S. unemployed virtually overnight, we need to update work-sharing law to streamline its usage by employers struggling to find their footing as they come back online. Businesses should be able to access the program quickly, and program rules should provide employers with maximum flexibility in deploying hours reductions in lieu of layoffs. Continuing federal reimbursement of work-sharing benefits beyond the end of this calendar year will be vital to bringing new businesses to the program.
Finally, more needs to be done to promote work-sharing usage by state and local governments and nonprofits. As the next wave of financial battering comes in the form of state and local budget cuts, government and nonprofit jobs can be preserved through strategic hours reductions using work-sharing.
Though we have heard so much in the news about the administrative struggles to get PUA and PUC up and running, it’s important to highlight that these programs have already provided an essential lifeline for millions of workers and their families across the country. These benefits have prevented families from making untenable choices such as going without healthy and adequate food and necessary medications, or not paying utility bills, mortgages, rent, and health insurance premiums. In a time of such anxiety and uncertainty, these benefits have given people a measure of economic security, allaying at least some of their fears.
Additionally, these benefits have allowed people to keep spending money in their local grocery stores, to perhaps support local restaurants with take-out orders, and to keep contributing to the economies of their communities. As demonstrated in the table below, should Congress fail to reauthorize PUC, an estimated $17 billion per week will disappear from families, which means it disappears from our economy as well. Even as we slowly reopen businesses, the withdrawal of this important source of income support will dramatically hinder recovery for individuals, communities, and the economy overall, making the scaling up of businesses slower under the best of circumstances, and likely impossible for far too many.
Below is a sampling of stories from people throughout the country who are surviving because of the combination of UI or PUA and the PUC benefit. NELP thanks MomsRising, UNITE HERE Local 355, the United Steelworkers, Actor’s Equity, SAG-AFTRA, the American Guild of Musical Artists, Business for a Fair Minimum Wage, International Alliance of Theatrical Stage Employees, the Department of Professional Employees, UNITE HERE Local 355, Make the Road New York, Make the Road Nevada, Ohio Organizing Collaborative, Step Up Louisiana, and One Pennsylvania for sharing these first-hand accounts with us, and we thank these workers for allowing their stories to become part of the official record in today’s hearing. Though the implementation of PUA and PUC was troubled, to say the least, now that all the states have the programs up and running, this is truly the best way to make sure we get money into the hands of people and families who desperately need it.
This crisis has laid bare the shortcomings and opportunities for action to improve our nation’s unemployment insurance system in so many ways.
Workers who have very little waited in line for weeks for needed benefits. The inequality of access and benefit levels is obvious. That is why we must act now to change the system—we will never have a more important moment to get lasting and long-needed change. Crises expose our greatest weaknesses; if we ignore the moments when systemic flaws are laid bare, that is nothing short of political and policy failure. We must take advantage of the clear lessons we have learned about our UI system to establish a meaningful federal floor, including adequate funding for states to upgrade their IT systems and handle the current flow of applications for unemployment benefits. If we fail to do so, states will face real pressure from employers to cut benefits when state trust funds run out, and our UI system will only be further decimated before the next crisis hits.
First, in the short term, we need to establish a way to scale up and scale down benefits automatically as the economy calls for it, rather than rely on ad-hoc extensions that could come erratically, force states to continually reprogram their systems, and end too soon and too abruptly, thereby stranding families without necessary income support and damaging our country’s economic recovery. Representative Beyer has proposed a thoughtful approach to increase duration as economic conditions call for it, as well as to scale back the $600 bonus as the unemployment rate declines and workers have jobs to return to. At a minimum, we must reauthorize the full PUC, PUA, and Pandemic Emergency Unemployment Compensation (PEUC) until the public health crisis ends and unemployment is back into the single digits, and authorize additional weeks of PUA and PEUC sufficient to meet the needs of unemployed workers and their families during what will likely be a drawn-out recovery from this pandemic and recession.
As we look beyond just the temporary benefits we need, it is important to consider where the program does not provide equal and fair access to benefits. The Urban Institute found that during the last Great Recession, Black workers were on average 13 percent less likely than white workers to receive benefits, and Latinx workers were 4 percent less likely.[xxiii] Obviously, structural racism inherent in the occupational segregation in the U.S. plays a role in access to those benefits, but it is also clear that there were hurdles to benefit access disproportionately affecting workers of color back then that persist to this day.
The most obvious hurdle was the move by many states to reduce the maximum duration of benefits below 26 weeks in the aftermath of the Great Recession. Ten states cut duration of benefits. The most recent is Alabama—last June, it cut maximum duration to just 14 weeks. Three states cut maximums from 26 to 20 weeks—Michigan, Missouri, and South Carolina. Arkansas cut maximum benefit duration to 16 weeks. Florida, Georgia, North Carolina, Kansas, and Idaho have adopted sliding scales tied to state unemployment rates. Fortunately, four states—Idaho, Kansas, Georgia, and Michigan—have reversed course and restored benefits to 26 weeks of recipiency. Reducing duration is necessarily going to have a disparate impact on communities of color until other structural reforms are implemented to get people in affected communities back to work faster. As of the third quarter of 2019, during a period of record low unemployment, the average duration of an unemployment spell was 21 weeks. For white workers, a 20-week cutoff would not affect the average worker who remained unemployed for 19 weeks. However, Black workers averaged 25.9 weeks in their unemployment period.[xxiv] A 26-week benefit period would completely cover average duration for Black workers; any duration reduction therefore statistically harms Black workers more.
We also need to enact an important reform to the UI/PUA method of delivering benefits to unemployed workers. PUA is available only to workers who are not eligible for UI, whether by virtue of not earning enough income to qualify, being self-employed, or facing some other exclusion. Many workers, however, have sources of income both as an employee and as a self-employed worker. Far too many workers, including some featured above, earn most of their income through self-employment but earn just enough income as an employee that they receive a minimum or near-minimum state UI benefit. As a result, they are ineligible for PUA, and over the course of the 39 weeks of authorized benefits, they may stand to lose literally tens of thousands of dollars in benefits they desperately need, not just for their own financial support, but perhaps for the financial support of their businesses as well. This clearly unintended consequence is having a devastating effect on workers throughout the country. We are ready to work with Congress to enact a solution that provides workers with the relief to which they should be entitled, but also gives state UI agencies adequate time and resources to reprogram their IT systems to implement this fix.
Because there is so much disparity across states and populations within those states, we are at a point where Congress should consider federalizing UI to operate similarly to Social Security. Short of that, NELP endorses Senator Bennet’s plan for long-term reform.
As we saw in the aftermath of the Great Recession, if states emerge from this recession with empty trust funds and having had to borrow money to pay benefits, there will likely be widespread efforts to cut benefit access and amounts going forward. Key components of effective long-term reform include the following:
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[i] Tracy Jan and Scott Clement, “Hispanics are almost twice as likely as whites to have lost their jobs amid pandemic, poll finds,” Washington Post, May 5, 2020 . https://www.washingtonpost.com/business/2020/05/06/layoffs-race-poll-coronavirus/
[ii] Kriston McIntosh, Emily Moss, Ryan Nunn, and Jay Shambaugh, “Examining the Black-white Wealth Gap,” The Brookings Institution. February 27, 2020.
[iii] Michele Evermore, “Are State Unemployment Systems Still Able to Counter Recessions?” National Employment Law Project, June 6, 2019
[iv] George Wentworh and Claire McKenna, “Ain’t no Sunshine: Fewer than One in Eight Unemployed Workers In Florida Is Receiving Unemployment Insurance,” National Employment Law Project, September 15, 2015
[v] George Wentworth, “Closing Doors on the Unemployed: Why Most Jobless Workers Are Not Receiving Unemployment Insurance and What States Can Do About It” National Employment Law Project. December 2017 and Michele Evermore, “Are State Unemployment Systems Still Able to Counter Recessions?” National Employment Law Project, June 6, 2019
[vii] Calendar Year 2007 Benefit Accuracy Measurement Data Summary, https://oui.doleta.gov/unemploy/bam/2007/bam-cy2007.pdf
[viii] Michele Gilman, “Did a Flawed Algorithm Drive Welfare Recipients to Suicide?” The National Interest, February 18, 2020
[ix] U.S. Senate Committee on Finance, May 19, 2020 https://www.finance.senate.gov/ranking-members-news/wyden-democratic-colleagues-press-trump-administration-to-protect-workers-from-choosing-between-health-financial-security
[x] National Women’s Law Project, “Quantifying America’s Gender Wage Gap by Race/Ethnicity” March 2020
[xi] Dominique Derbigny, “On the Margins: Economic Security for Women of Color Through the Coronavirus Crisis and Beyond,” Closing the Women’s Wealth Gap, April 2020. https://womenswealthgap.org/wp-content/uploads/2020/04/OnTheMargins_April2020_CWWG.pdf
[xii] Pew Research Center, “Racial, gender wage gaps persist in U.S. despite some progress,” July 1, 2016. https://www.pewresearch.org/fact-tank/2016/07/01/racial-gender-wage-gaps-persist-in-u-s-despite-some-progress/
[xiii] Claire McKenna and Irene Tung, “OCCUPATIONAL WAGE DECLINES SINCE THE GREAT RECESSION: LOW-WAGE OCCUPATIONS SEE LARGEST REAL WAGE DECLINES,” National Employment Law Project, September 2, 2015
[xiv] Dima Williams, “The End of the Extra $600 Weekly Unemployment Benefits Threatens Rent Payments,” Forbes, June 1, 2020
[xv] Tami Luhby, “Floridians line up to get paper unemployment benefits forms,” CNN, April 8, 2020 https://www.cnn.com/2020/04/07/politics/florida-unemployment-benefits-covid/index.html
[xvi] Tamara Chuang, “Only 6% of calls to Colorado’s unemployment line are getting answered. But changes are on the horizon,” Colorado Sun, May 28, 2020. https://coloradosun.com/2020/05/28/colorado-unemployment-calls-holds-wait-callbacks/
[xvii] Jim Zarroli, “Unemployment Websites Are Crashing Across the Country,” National Public Radio, March 18, 2020 https://www.npr.org/2020/03/18/817950024/unemployment-websites-are-crashing-across-the-country
[xviii] Marco Caliendo, Konstantinos Tatsiramos, and Arne Uhlendorff, “Benefit Duration, Unemployment Duration and Job Match Quality: A Regression-Discontinuity Approach,” Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor, December 2009
[xix] Jack Kelly, “The Coronavirus Effect: Here Are The Jobs That Will Be Added And Lost,” Forbes, March 19, 2020 https://www.forbes.com/sites/jackkelly/2020/03/19/the-coronavirus-effect-here-are-the-jobs-that-will-be-added-and-lost/#267016782a1c
[xx] Andre M. Perry, “Black Workers are Being Left Behind by Full Employment,” The Brookings Institution, June 16, 2019
[xxi] Catherine G. Abraham and Susan N. Houseman, “Since Work is Rare, It’s Time to Share,” Wall Street Journal, May 11, 2020
[xxii] George Wentworth, Claire McKenna, and Lynn Minick, “Lessons Learned: Maximizing the Potential of Work Sharing in the United States,” National Employment Law Project, October 2014
[xxiii] Austin Nichols and Margaret Simms, Racial and Ethnic Differences in Receipt of Unemployment Insurance Benefits During the Great Recession. Urban Institute. June 2012