Immediate action and fundamental reform are needed if the unemployment insurance system is to work as intended. One step that could be taken is for Congress and President Bush to enact the Unemployment Insurance Modernization Act—the House of Representatives has already passed the bill—but if this is not accomplished this year, then the new Congress and the incoming Obama administration should do so as soon as possible. The reason: Under current law only an average of 37 percent of unemployed workers actually collect benefits at all, with low-wage, part-time, and female workers particularly harmed by outdated state eligibility rules. Passage of the Unemployment Insurance Modernization Act would provide $7 billion in incentive funding for states to cover more than 500,000 workers who now fall through the cracks of the unemployment program and to support those states already doing a better job with coverage. Also, significantly, the measure provides all states with $500 million to address the administrative demands of properly serving the growing number of workers applying for and collecting unemployment benefits.
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