New Research Finds Dramatic Increase in the Share of Unemployed Workers Who Receive UI Benefits in California

Sacramento, Feb 25, 2021 — A new analysis of California unemployment insurance (UI) claims by the nonpartisan California Policy Lab finds 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. The share of unemployed and under-employed workers receiving UI benefits is typically referred to as the “recipiency rate.” The analysis also includes an update to CPL’s “Recovery Index” which finds wide variation in how well counties are recovering across the state, as measured by the number of people claiming UI benefits.

“The share of unemployed workers receiving UI benefits tends to rise during economic downturns, but even during the Great Recession, we didn’t approach the high rates that we’re seeing now,” explains Till von Wachter, a co-author of the analysis, UCLA economics professor and faculty director at the California Policy Lab. “About 60% of impacted workers were receiving benefits in April and May, which was already substantially larger before the pandemic. But as this crisis dragged on, that share increased substantially, with about 90% of unemployed or under-employed workers receiving UI benefits in December 2020.”

Based on past CPL UI reports, the analysis uses a more accurate measure of UI recipiency that factors in when individuals were unemployed, increased UI eligibility during the crisis, and presence of partial UI benefits. The analysis found that over 2.5 million unemployed Californians were not receiving regular UI benefits in April and May 2020, and while some of these workers likely received benefits under the Pandemic Unemployment Assistance (PUA) program, at least 500,000 workers did not. As the share of workers receiving regular UI benefits increased, the number of workers not receiving regular UI benefits decreased, hovering at around 250,000 in the last four months of 2020. There are several reasons why unemployed workers may not receive regular UI benefits, including not being eligible, not knowing about the program, and technology and administrative challenges in applying for and obtaining benefits.

The research team also examined how geographic disparities in the rates of UI benefit collection correlate with income, race and ethnicity, access to technology, and other social and economic factors. In counties with higher median household incomes, a larger share of their unemployed workers tended to receive UI benefits, while a smaller share of unemployed workers received benefits in counties with higher poverty rates.

The research team also analyzed regional differences in economic recovery. Of the 15 largest counties in California, Santa Clara (36.6) and Ventura (35.4) received the highest score on the Recovery Index, while Los Angeles (24.3), Kern (21.4), and San Bernardino (19.9) had the lowest scores. A score of 100 would indicate a full recovery, and that a county had the same number of people claiming UI benefits in December 2020 as it did in January 2020, before the crisis began. In contrast, a score of 0 would reflect that the number of individuals receiving UI benefits in December 2020 was still as high as during the peak of the crisis in early May 2020.

Key Research Findings
• 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.
• San Bernardino County had the lowest Recovery Index score (19.9%), while San Benito County had the highest score at 49.1%.
• Counties with a higher share of Black and Hispanic residents have seen slower recoveries than counties with more White residents.

The Data Point page includes an interactive map and table with the Recovery Index for every county in California

The California Policy Lab creates data-driven insights for the public good. Our mission is to partner with California’s state and local governments to generate scientific evidence that solves California’s most urgent problems, including homelessness, poverty, crime, and education inequality. We facilitate close working partnerships between policymakers and researchers at the University of California to help evaluate and improve public programs through empirical research and technical assistance.

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