Unemployment Insurance: Supporting the Workforce in a Rapidly Shifting Economy

The report quantifies the extent to which previously unemployed workers have been transitioning to jobs in new industries, and how recall and re-employment rates vary by demographic groups.

Key Finding: Older workers had lower rates of industry transitions possibly reflecting specialization in industry-specific skills that make it difficult to change industries. Similarly, less educated workers have lower transition rates across industries, possibly reflecting the importance of education in adapting to new fields.

This report found just 62% of Californians who began collecting unemployment insurance (UI) benefits in the second quarter of 2020 (April 1st – June 30th) had received any wages from working in the third or fourth quarter of 2020. Of those who had found employment, the majority (73%) had been called back to their previous employers

Key Finding: The number of Californians receiving regular UI benefits fell substantially this spring, from 2.3 million in early March 2021 to just 1.47 million in May. While some claimants are presumably exiting the UI system as they find new employment, a substantial share of individuals have stopped receiving benefits because their benefit year has ended— at which point claimants must file “transitional claims” in order to continue receiving benefits. We estimate that during the 11 weeks between March 13th 2021 and May 22nd, 2021 (roughly corresponding to the one-year anniversary of the labor market crisis), 51% of the 850,000-person decline in the total number of claimants was due to claimants reaching the end of their benefit year.

This report found that as of February 2021, About half of all UI recipients in California had claimed more than half of a year’s worth of benefits, raising concerns about the well-documented financial, career, and poverty consequences associated with periods of long-term unemployment.

Key Finding: Since the start of the crisis, over 45% of workers who were in the labor force in February 2020 have claimed UI benefits. 9.2 million unique California claimants have filed for some type of UI benefits in the last year. Over 52% of the pre-pandemic labor force with no more than a high-school degree has filed a regular UI claim, including  70%  of Generation Z workers, and 50% of female workers (with no more than a high school degree).

This data point found that nearly 90% of unemployed or under-employed workers in California were receiving unemployment benefits in December 2020, a dramatic increase from earlier in the crisis when between 50-60% were receiving benefits.

Key Finding: Recipiency rates were lower in poorer counties, counties with a higher share of Hispanic residents, and in counties with higher shares of workers in agricultural industries.

This report found that unemployed people living in communities of color and in areas with high concentrations of poverty were less likely to claim unemployment benefits as compared to unemployed Californians in wealthier neighborhoods.

Key Finding: Residents of already-disadvantaged neighborhoods were least insured against the job losses of the pandemic. Unemployed people in communities of concentrated poverty and with higher shares of racial and ethnic minorities have been less likely to receive regular UI benefits.

This report projected that nearly 750,000 Californians would stop receiving their unemployment insurance (UI) benefits by the end of December when key provisions of the CARES Act were set to expire. Most of these people (583,000) were projected to lose benefits because of the so-called “PUA cliff” on December 26th, 2020, when a federal program (Pandemic Unemployment Assistance) was set to expire. President Donald Trump eventually signed a bill on December 27, 2020, that extended the Pandemic Unemployment Assistance (PUA) program and added an extra $300 federal supplement per week to weekly unemployment benefits.

Key Finding: An estimated 750,000 Californians would abruptly run out of UI benefits at the end of December unless additional legislation was passed to extend emergency programs past December 25, 2020. Pandemic Unemployment Insurance (PUA) was set to expire on December 26th, which CPL projected would result in a sudden stop of benefits to more than a half-million PUA claimants still likely to be unemployed if current conditions persisted. Also at the end of 2020, nearly 170,000 regular UI claimants were projected to abruptly lose benefits as the federal emergency extension for regular (Pandemic Emergency Unemployment Compensation, PEUC) UI expired. The expiration of these two programs would have resulted in $173 million fewer federal dollars coming into California every week ($692 million a month) starting in January 2021.

This report found that a dramatic and recent increase in the number of payments processed each week (often called “Continuing Claims”) had been driven by a rise in claimants certifying retroactively for multiple weeks of benefits.

Key Finding:  The number of continued claims in recent weeks is considerably greater than the number of people actually receiving payments for unemployment experienced in those same weeks.

This report found that over half (57%) of regular initial unemployment claims filed during the week ending July 25th, 2020, were from California workers who were re-opening older claims – the large majority of which were filed earlier in the crisis.

Key Finding: More than Half of Recent Unemployment Claims are from Californians who are Re-Opening their Claims. The steady rise in initial claims since May 17th is driven by an increasing number of additional claims—claims which are “reopened” after a claimant’s temporary return to work. In the week ending July 25th, 57% of regular initial claims were additional claims, compared to just over 40% before the crisis, and approximately 5% at the peak of the crisis.

Note: Our June 30th, 2021 report sheds more light on how to interpret trends in initial (and additional) claims, and provides a more easily interpretable measure of entries (and re-entries) into paid unemployment.

This report provides a novel measure of the labor market, counting the number of individuals participating in UI for a given week of unemployment, as opposed to analyzing claims by the week a payment is certified, a less-precise measure often used in other reports. Using this measure, the research team found that the number of unemployed individuals on UI peaked for unemployment experienced during the week ending May 2nd (just under four million individuals), and has trended downwards since then, with three million individuals receiving payment for unemployment experienced during the week ending June 6th.

Key finding: Initial UI Claims had been double the Great Recession peak in 5 of the last 6 weeks, and were rising again.

This report found that an increasing share of UI claimants were returning to work and seeing their UI benefits either reduced or denied as a result.

Key finding: The cumulative impact of the crisis is still substantially greater for less advantaged workers – over 1 in 4 women (as opposed to 1 in 5 men), more than 1 in 3 members of Generation Z, and more than 1 in 2 workers with a high school degree have filed for benefits.

This report found that the added $600 per week from the Federal Pandemic Unemployment Compensation (FPUC) program has played a substantial role in preventing near-poverty income levels among UI claimants. Without FPUC, the estimated median weekly benefit amounts for regular UI benefits during the crisis was $334, and as low as $230 for Accommodation and Food Services workers.

Key Finding: The added $600 per week from the Federal Pandemic Unemployment Compensation (FPUC) program has played a substantial role in preventing near-poverty income levels among UI claimants.

This report found that nearly half (45%) of all workers in California with a high school degree or less had filed for unemployment insurance benefits since the crisis began, which exceeds levels seen during the Great Depression.

Key finding: While there are important similarities in the effect of the crisis across counties in California, industries in certain counties were more affected than others.

This is the first report CPL produced in this series. Almost 90% of Californians who filed initial UI claims in the first two weeks of April reported that they expected to be recalled to their prior jobs, a substantial increase from the 40% of claimants who reported this before the crisis.

Key finding: The industry composition of UI claims early in the pandemic was markedly different from the composition seen prior to the crisis, with pandemic claimants much more likely to come from firms in the accommodation and food services industry, retail trade, or health care/social assistance industries. Lower-educated workers made up a disproportionately large share of claims. Since March 15th, a staggering 36.7% of individuals in the labor force with just a high school degree filed initial UI claims (compared to 11.9% for workers with some college or an Associate’s degree, and 5.7% for those with a Bachelor’s degree).