Equity in Unemployment

Bringing Benefits into the 21st Century

September 14, 2007

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Bleak economic forecasts are lending new urgency to bills in the House and the Senate that would modernize unemployment insurance. The legislation mirrors many of the recommendations of the Center for American Progress’ Poverty Task Force report, “From Poverty to Prosperity: A National Strategy to Cut Poverty in Half.”

The bills would give states federal funding to adopt a series of unemployment insurance practices, including accounting for workers’ most recent earnings, providing eligibility for workers who lose their jobs due to compelling family reasons, broadening eligibility for part-time workers, continuing unemployment insurance for certain workers in extended training programs, and granting incentives for states to build in dependents' allowances.

The bills would also provide up to $7 billion over five years for unemployment insurance incentive funding to states that enact key reforms. The incentives for this funding target low-income and part-time workers, who have traditionally had the most difficulty collecting unemployment benefits.

The new incentives would also cover workers who must leave their jobs for family circumstances. The current denial of benefits for this last provision helps to explain why women are 32 percent less likely than men to receive unemployment insurance benefits. All states would also receive a share of $500 million to fill in critical gaps left by reduced funding from Congress in recent years.

Unemployment insurance plays a significant role in reducing rates of poverty for those who receive benefits, as the Poverty Task Force reported earlier this year. The poverty rate for families of long-term unemployment insurance recipients was 23 percent but would have been 50 percent if the families had not received the benefits.

Now that the economy is slowing and job growth has dropped, modernizing unemployment insurance to meet the demands of today’s labor market is even more urgent.

More details on the legislation can be found at the National Employment Law Project’s website.

For more on this topic, please see:

• From Poverty to Prosperity: A National Strategy to Cut Poverty in Half.