By Jeffrey B. Wenger, Heather Boushey | February 22, 2010
Download this report (pdf)
Download the executive summary (pdf)
Download Unemployment Insurance Trigger 101 (pdf)
WASHINGTON—Today the Center for American Progress released a new report, Triggers that Work: Redesigning an Effective Unemployment Insurance Extended Benefits Program, by co-authors Heather Boushey and Jeffrey. B. Wenger, that argues for a trigger system for extended unemployment benefits that is more sensitive to state labor markets, turning on when unemployment rises and off when it returns to normal, that would be far more effective at allocating scarce government resources to the places that continue to need extended benefits.
During the Great Recession, Congress was able to act fairly quickly, but as the authors demonstrate in this paper, a well-functioning trigger system would have done more to help the states that entered their own recessions early on.
This report outlines three simple steps that would fix the trigger system for the long term— steps that require an act of Congress to change the thresholds of the automatic triggers and the way we finance the EB program. Specifically, the authors recommend:
- Turning the trigger for EB benefits on when a state’s unemployment rate rises to an average of 6.5 percent or more over a three-month period or when the number of people claiming unemployment insurance rises by 20 percent or more. When a trigger is on, states are to provide unemployed workers with an additional 20 weeks of unemployment benefits, on top of the 26 weeks typically allowed—fully funded by the federal government. The trigger should turn off when a state’s unemployment rate falls below an average of 6.5 percent over a three-month period and when the number of people claiming UI falls back to it prerecession level.
- Establishing a second tier of triggers to address extremely high unemployment. This new trigger will turn on an additional 13 weeks of unemployment benefits—on top of the typical 26 weeks and the additional 20 weeks from the first tier—in states with an unemployment rate above an average of 8.5 percent or more over a three-month period. This will turn off when unemployment falls below an average of 8.5 percent over a three-month period.
- Returning to the states the EUC account holdings to pay for the expenses of administering the UI system. Currently, the states must pay half of the EB program benefits, but with most states’ trust funds for this program in deficit, this system of financing is broken.