Report: Today’s Unemployment Insurance Crisis and How We Got Here

States Choosing to Reduce Access and Cut Benefits Led to Current Dysfunction

Washington, DC—As millions of unemployed workers across the country struggle to access the unemployment benefits they desperately need, a new report from the National Employment Law Project examines the poorest-performing states and their policy choices following the Great Recession that led to the current crisis. By cutting the number of weeks of benefits, slashing benefit amounts, or imposing barriers to obtaining and keeping UI benefits, states such as Florida, North Carolina, and others have badly eroded one of the most important tools for countering recessions. Jobless workers are now bearing the brunt of those poor policy decisions.

“This perfect storm of unemployment benefit cuts and access restrictions so destabilized the foundation of the unemployment insurance program that we are now witnessing its dysfunction in real time,” said Michele Evermore, a senior policy analyst and researcher with NELP, and author of the report.

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Broken unemployment insurance infrastructures—particularly in states like Florida, which created an application process designed to discourage workers from accessing their earned benefits—are now wreaking havoc for jobless workers who need those benefits but are unable to access them. As of April 18, the state had only processed 5 percent of the claims submitted since the beginning of the pandemic, with no count of how many workers were unable to file at all.

“Policymakers must learn the lessons from past and present mistakes and ensure that state governments can provide unemployment insurance that meets the needs of all workers—both in terms of delivering adequate emergency support and by making sure that all workers have access,” said Evermore. “We know that benefit duration cuts have a disparate impact on communities of color, as Black and Latinx workers face unemployment rates at unwaveringly higher levels.”

NELP analyzed the value of states’ weekly benefits versus the average weekly benefit nationally (not taking into account workers who are unable to access benefits) and found the following:

  • In Florida, the average weekly benefit of $252.87 replaces only 38 percent of pre-unemployment average wages. If the state’s 339,150 insured unemployed workers had been paid just the national average benefit of $370.82, that would have meant $40,002,742 in additional benefits paid to claimants in Florida just for the week ending April 4, 2020.
  • In North Carolina, the average weekly benefit was $264.70 in the third quarter of 2019. If the 359,151 insured unemployed workers in the state for the week ending April 4 were paid the national average of $370.82, then $38,113,104 more in benefits would have been paid to workers in the state.
  • If Indiana paid the national average in weekly benefits, the 152,609 insured unemployed workers for the week ending April 4 would have been paid $10,807,769 more in benefits in that week alone.
  • In Arizona, if the 116,782 insured unemployed workers in the state in the week ending April 4 had received just the national average benefit, that would have put an additional $16,003,805 in the pockets of Arizonans that week alone.
  • In South Carolina, if the $273.74 weekly benefit were just raised to the national average weekly benefit, the 125,376 insured unemployed workers in the state in the week ending April 4 would have received an additional $12,171,502 in benefits that week alone.
  • In Louisiana, if the 213,338 insured unemployed workers in Louisiana in the week ending March 28 had been paid the national average benefit, they collectively would have received an additional $33,031,122 in benefits that week alone.
  • If Tennessee’s 206,622 insured unemployed workers had received the national average benefit in the week ending April 4, workers in Tennessee would have received an additional $27,003,429 in benefits that week alone.

“We’ve reached the point where it’s too late to prepare states in advance for the massive tsunami of unemployment that is rocking the economy and state unemployment systems,” said Evermore. “But we’re encouraged to see that some states that had previously implemented harmful cuts and restrictions are now, at least temporarily, restoring benefit durations and are working diligently to get payments to unemployed workers.”

As the report highlights, now is the time for states to strengthen their UI programs and ensure that workers can access meaningful benefits.

READ THE REPORT:
Long Lines for Unemployment: How Did We Get Here and What Do We Do Now?

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