By Sarah Chaney
Fewer jobless Americans are relying on unemployment insurance
amid tighter state rules on obtaining the benefits and a strong job
market.
The share of jobless people receiving unemployment benefits fell
after the 2007-09 recession and has stagnated at a historically low
level since. Last year, 28% of jobless people received benefits,
down from 37% in 2000 -- a period of similarly low
unemployment.
Among the main reasons, experts say: After the last recession
ended, state legislatures passed policies reducing unemployment
benefits and tightening eligibility requirements.
Ten states cut the duration of benefits, five adopted stricter
work-search requirements and several trimmed the average
weekly-benefit amount, according to the National Employment Law
Project, or NELP, which advocates for low-wage workers.
A strong labor market also means many jobless people today quit
their jobs voluntarily and so are ineligible for benefits in most
cases.
The quitting rate was 2.3% for much of last year, well above
1.3% in the month after the recession ended in mid-2009, according
to Labor Department data.
Some economists like Michael Farren, a research fellow at the
right-leaning Mercatus Center at George Mason University, say the
state unemployment-insurance cutbacks and policy changes have
motivated jobless Americans to undertake faster searches for new
work.
Absent the state changes, he said, "you end up with policies
created in the crisis that may help smooth the passage through the
crisis, but...actually help stall the recovery."
Other economists say state unemployment systems aren't providing
unemployed people the support they need to find the best jobs
possible while the labor market is humming.
"There are people who are having to make transitions in the
economy at all times," said Martha Gimbel, an economist at Schmidt
Futures, a philanthropic initiative of longtime Google CEO Eric
Schmidt. "If we aren't helping them make the transition now in a
strong economy, then they may be still left on the sidelines when a
serious recession hits."
Patrick Brown, a 55-year-old attorney in Charlotte, N.C., works
on a contract basis and says he frequently is unemployed between
jobs.
Though a project ended in late October, rendering him jobless,
Mr. Brown said he didn't plan on applying for unemployment
insurance and wasn't certain he would be eligible for benefits even
if he wanted to apply.
"I can find another position within two or three weeks pretty
consistently," Mr. Brown said, adding, "That could change. The
economy could turn."
States administer unemployment insurance programs and make
determinations on eligibility for benefits, as well as the amount
and duration of benefits, based on federal guidelines.
In the majority of states the benefits are funded by taxes on
employers. A few states require employees to contribute.
Americans generally are eligible for jobless benefits if they
are laid off while working in a position covered by unemployment
insurance. Once they begin collecting benefits they must meet
certain requirements, which vary by state, such as applying for a
certain number of jobs a week.
Benefits typically expire in 26 weeks or less, depending on
state laws.
In the wake of the 2008 crisis, several states turned to the
federal government as a backstop for funding when they depleted
their unemployment-trust funds.
As the economy improved, states that owed money to the federal
government had to rebuild their trust funds. To do so, they could
raise employer taxes or cut benefits -- or some combination of the
two. Many states opted to reduce benefits.
North Carolina is one such state. It cut the duration of
benefits in 2013 to help its trust fund recover. The reductions
aligned with a decline in the share of jobless North Carolinians
receiving benefits.
In 2018, about 10% of unemployed people in the state collected
unemployment checks. That figure was down from 25% in the year
before the legislative changes and also the lowest in the nation,
according to U.S. Labor Department data.
Many states have continued to reduce benefits. Alabama passed a
law this year effective in 2020 to reduce the maximum duration of
unemployment compensation by up to 12 weeks from its current level
of 26 weeks. Jobless people can receive additional weeks of
compensation beyond the new cap of 14 weeks if they pursue job
training or if the unemployment rate rises, according to the
law.
Alabama State Sen. Arthur Orr, a Republican, said the changes
were designed to reduce taxes on employers and incentivize job
searches in a robust labor market.
"I see 'help wanted' signs, and I hear employers complaining
about a lack of...job applicants," he said. "Presumably it's much
easier to find a job, and we need to encourage people to get a
job."
States also ramped up enforcement of eligibility requirements,
resulting in more benefits denials, according to a 2017 study from
the NELP.
For instance, in recent years some states began requiring
benefits recipients to provide proof of their job search on a
weekly or biweekly basis. In the past, most state unemployment
programs conducted random audits of recipients, according to the
NELP report.
About 43% of Americans who were unemployed in 2018 applied for
unemployment benefits, down from a recent peak of 61% in 2002,
Labor Department data show.
Factors beyond state policies may have crimped Americans'
likelihood to tap the benefits. Research suggests a decrease in
receiving unemployment benefits lines up with a decadeslong decline
in union membership. Unions often help their members apply for the
benefits.
Write to Sarah Chaney at sarah.chaney@wsj.com
(END) Dow Jones Newswires
November 14, 2019 08:14 ET (13:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.