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WORKERS IN MINNESOTA, MASSACHUSETTS, NEW YORK, CALIFORNIA, AND VERMONT HAD HIGHER RATES OF ACCESS TO UI BENEFITS
Los Angeles, February 10th — Unemployment benefits are meant to be a lifeline for unemployed workers, but a new report from the nonpartisan California Policy Lab (CPL) found large differences in how many unemployed workers in each state were able to access unemployment benefits in the first year of the pandemic. CPL conducted the research after being selected as one of five research teams to compete in the U.S. Department of Labor’s first ever Summer Data Challenge on Equity and Underserved Communities.
The research team measured access to UI benefits during the pandemic in three ways. They first measured UI access the traditional way, which counts the share of unemployed or underemployed workers at a point in time who are receiving UI benefits (typically called the “recipiency rate”). To better understand the widespread differences in access across states, the team then analyzed two key determinants of the recipiency rate directly linked to state policies. One is the first payment rate, which is the share of people who filed a UI claim and subsequently received a UI payment; the other is the exhaustion rate, which is the share of people who have “used up” all of the regular and extended UI benefits for which they were eligible.
The authors found higher rates of access to UI benefits in states that had more generous UI and labor policies (such as longer benefit durations, higher benefit amounts, or paid sick leave programs) and in wealthier states. In contrast, there were lower rates of access in states with less generous UI and labor policies, with fewer affluent residents, and with higher shares of Black and Hispanic residents. While the authors did not link these relationships causally, the correlations they identified will provide state and federal policymakers with insights about state-level policies that may be limiting access, and can also inform legislative proposals to reform the national unemployment insurance system.
“The pandemic demonstrated how important the unemployment insurance system is for individuals and for our society during times of major economic crises, but we also found that access to benefits varied dramatically depending on what state you happen to live in,” explains Alex Bell, a co-author of the report and postdoctoral scholar at the California Policy Lab. “If all states had the same high recipiency rates we saw in California, then we estimate that six million more people would have received UI benefits in December, 2020.”
“By measuring access to UI benefits in these three different stages, we were able to better pinpoint where the UI system is falling short, and that can help inform policymakers about how to change policies or programs to address those problems,” adds Till von Wachter, a co-author of the report, UCLA economics professor, and faculty director at the California Policy Lab. “The fact that we could benchmark our new national measures of access against individual UI claims data from California helped to make substantial progress on a difficult but important issue.”
Key research findings
Recipiency rates:
• While only 60% of unemployed Americans collected UI benefits in Dec. 2020, this figure is much higher than the pre-pandemic recipiency rate of 16%. The recipiency rate varied dramatically across the U.S., though rates were generally lower in the South and Midwest. In Florida, it was only 16%, meaning that more than three quarters of unemployed workers were not collecting benefits.
• California had the 4th highest recipiency rate in the nation. Minnesota had the highest rate, followed by Massachusetts, New York, California, and Vermont.
• Recipiency rates were higher in states with more generous UI programs (as measured by the maximum number of weeks a claimant can receive benefits for and maximum benefit levels), as well as more liberal-leaning states as measured by Democratic vote share in the 2020 election.
• Recipiency rates were lower in states with more Black residents and in states with lower average incomes.
• California focus: the recipiency rate did not vary as much across counties in California, reflecting the importance of state-level policies highlighted in the report, though Los Angeles County had the lowest rate among large counties. Of variation that did exit, it was systematically related to county-level demographic characteristics.
First Payment Rates
• Nationally, about 70% of new initial claims filed near the start of the pandemic were paid, but there were significant differences, ranging from about 40% in Montana to about 100% in Virginia.
• Payment rates were higher in more affluent states, and in states with more flexible eligibility requirements. In contrast, states with higher numbers of Black workers paid a lower share of claims.
• California focus: more claims were paid near the start of the pandemic in California counties that were more affluent, had a lower share of Hispanic workers, and more access to high-speed broadband internet.
Exhaustion Rates
• At the national level, about 6% of jobless workers who were claiming UI had exhausted their benefits by the first week of December 2020 (when federal extension programs were still in effect). This share was 24% in Florida.
• States that provide UI benefits for longer durations, or that provide mandatory sick leave or paid family leave, saw lower exhaustion rates. States with more Black residents saw a higher share of claimants who had exhausted their benefits.
• California focus: California counties with more limited-English speaker residents and with higher rates of COVID-19 cases saw higher exhaustion rates, as did counties with higher shares of Black and Hispanic residents.
• To build a more accurate measure of exhaustion rates (that accounts for all the benefit extension programs available during the pandemic), the researchers incorporated claim-level data from California. This new measure shows that despite the existence of federal extensions and programs, about 10% of Californians who had lost their jobs near the start of the pandemic had completely used up all weeks of UI benefits available to them before these federal programs and extensions expired in September 2021.
Additional background
The research team used publicly available national data and anonymized administrative data on individual claims in California for the time period of March 2020 through December 2020.
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.