Unemployment Insurance
Receipt of Benefits Has Declined, with Continued Disparities for Low-Wage and Part-Time Workers
Gao ID: GAO-07-1243T September 19, 2007
The Unemployment Insurance (UI) program has been a key component in ensuring the financial security of America's workforce. In the 72 years since the UI program began, the nature of work has changed in fundamental ways. In recent decades the number of low-wage jobs, the average duration of unemployment, and the number of women in the workforce have all increased. This testimony addresses: (1) the overall trend in the usage of UI; (2) the likelihood that low-wage workers will be unemployed and receive UI benefits, especially when compared to higher-wage workers; and (3) the likelihood that part-time workers receive UI benefits. This testimony is based primarily on GAO's September 2007 report (GAO-07-1147) on the same topic as well additional analyses. In that report, GAO made no recommendations and the Department of Labor generally agreed with the findings. For that report, GAO analyzed data on UI regular program recipiency rates provided by Labor, and GAO examined data from the Survey of Income and Program Participation (SIPP), a national database maintained by the Bureau of the Census. For GAO's purposes, SIPP data were available for the periods 1992 through 1995, 1998 and 2003.
The overall rate of UI receipt has increased modestly from the mid-1980s to 2005, but still remains below the near-50 percent rate of the 1950s. A comparison of UI receipt by earning levels shows that low-wage workers were less likely to receive UI benefits than higher-wage workers. Moreover, the gap between the two groups has not narrowed over time. Between 1992 and 1995--the period covered in GAO's previous analysis--low-wage workers were about half as likely to receive UI benefits as higher-wage workers. For the years 1998 and 2003--the years added for this analysis--they were about one-third as likely. Low levels of UI receipt among low-wage workers may be explained by the circumstances of low-wage workers in relation to UI eligibility rules, particularly rules in many states that do not count workers' most recent earnings toward their minimum earnings required for eligibility. Low levels of receipt may also be explained by low-wage workers' reasons for separating from work, because eligibility rules in many states do not recognize illness or disability of a family member as good cause for leaving employment. Another group facing low rates of UI receipt is part-time workers. Unemployed part-time workers were significantly less likely to collect UI than those who were full-time. This was true regardless of whether the part-time workers were low-wage or higher-wage. About two-thirds of states do not consider workers eligible for UI if they are only available for part-time work. In addition, like low-wage workers, some part-time workers may have difficulty meeting the minimum earnings requirement in states that do not count workers' most recent earnings.
GAO-07-1243T, Unemployment Insurance: Receipt of Benefits Has Declined, with Continued Disparities for Low-Wage and Part-Time Workers
This is the accessible text file for GAO report number GAO-07-1243T
entitled 'Unemployment Insurance: Receipt of Benefits Has Declined,
with Continued Disparities for Low-Wage and Part-Time Workers' which
was released on September 19, 2007.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO Highlights:
Highlights of GAO-07-1243T, a testimony before the Subcommittee on
Income Security and Family Support, Committee on Ways and Means, House
of Representatives.
Why GAO Did This Study:
The Unemployment Insurance (UI) program has been a key component in
ensuring the financial security of America‘s workforce. In the 72 years
since the UI program began, the nature of work has changed in
fundamental ways. In recent decades the number of low-wage jobs, the
average duration of unemployment, and the number of women in the
workforce have all increased. This testimony addresses: (1) the overall
trend in the usage of UI; (2) the likelihood that low-wage workers will
be unemployed and receive UI benefits, especially when compared to
higher-wage workers; and (3) the likelihood that part-time workers
receive UI benefits.
This testimony is based primarily on GAO‘s September 2007 report (GAO-
07-1147) on the same topic as well additional analyses. In that report,
GAO made no recommendations and the Department of Labor generally
agreed with the findings. For that report, GAO analyzed data on UI
regular program recipiency rates provided by Labor, and GAO examined
data from the Survey of Income and Program Participation (SIPP), a
national database maintained by the Bureau of the Census. For GAO‘s
purposes, SIPP data were available for the periods 1992 through 1995,
1998 and 2003.
What GAO Found:
The overall rate of UI receipt has increased modestly from the mid-
1980s to 2005, but still remains below the near-50 percent rate of the
1950s.
A comparison of UI receipt by earning levels shows that low-wage
workers were less likely to receive UI benefits than higher-wage
workers. Moreover, the gap between the two groups has not narrowed over
time. Between 1992 and 1995”the period covered in GAO‘s previous
analysis”low-wage workers were about half as likely to receive UI
benefits as higher-wage workers. For the years 1998 and 2003”the years
added for this analysis”they were about one-third as likely.
Low levels of UI receipt among low-wage workers may be explained by the
circumstances of low-wage workers in relation to UI eligibility rules,
particularly rules in many states that do not count workers‘ most
recent earnings toward their minimum earnings required for eligibility.
Low levels of receipt may also be explained by low-wage workers‘
reasons for separating from work, because eligibility rules in many
states do not recognize illness or disability of a family member as
good cause for leaving employment.
Another group facing low rates of UI receipt is part-time workers.
Unemployed part-time workers were significantly less likely to collect
UI than those who were full-time. This was true regardless of whether
the part-time workers were low-wage or higher-wage. About two-thirds of
states do not consider workers eligible for UI if they are only
available for part-time work. In addition, like low-wage workers, some
part-time workers may have difficulty meeting the minimum earnings
requirement in states that do not count workers‘ most recent earnings.
Figure: UI Rate of Receipt among the Unemployed:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: Data for 1996, 1997, and 1999 to 2002 were not available.
Differences between low- and higher-wage workers in every year were
significant at the 99 percent confidence level. We calculated the UI
rate of receipt by dividing the number of unemployed workers who
reported UI as a source of income by the number of workers who were
unemployed.
[End of figure]
To view the full product, including the scope and methodology, click on
GAO-07-1243T. For more information, contact Cindy Fagnoni at (202) 512-
7215 or fagnonic@gao.gov.
[End of section]
Testimony:
Before the Subcommittee on Income Security and Family Support,
Committee on Ways and Means, House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery Expected at 1:00 p.m. EDT:
Wednesday, September 19, 2007:
Unemployment Insurance:
Receipt of Benefits Has Declined, with Continued Disparities for Low-
Wage and Part-Time Workers:
Statement of Cynthia M. Fagnoni, Managing Director Education,
Workforce, and Income Security Issues:
GAO-07-1243T:
Mr. Chairman and Members of the Committee:
I am pleased to be here to discuss the extent to which low-wage and
part-time workers receive Unemployment Insurance (UI) benefits. The UI
program--a federal-state partnership designed to partially replace lost
earnings of individuals who become unemployed through no fault of their
own, and to stabilize the economy during economic downturns--has been a
key component in ensuring the financial security of America's workforce
for more than 70 years. In fiscal year 2006, the UI program covered
about 130 million workers and paid about $30 billion in benefits to
about 7 million workers who lost their jobs.
When the UI program was established in 1935, most of the labor force
consisted of men who were employed full-time in the manufacturing or
trade sectors. Since then, the nature of both work and unemployment has
changed in fundamental ways. In recent decades the share of low-wage
jobs, the incidence of temporary and contingent work, the number of
women in the workforce and the number of two-earner families, and the
average duration of unemployment have all increased. Given these
changes in the labor force, questions have been raised about the types
of workers who are most likely to receive benefits.
My remarks today will focus on (1) the overall trend in the usage of
UI; (2) the likelihood that low-wage workers will be unemployed and
receive UI benefits, especially when compared to higher-wage workers;
and (3) the likelihood that unemployed part-time workers will receive
UI benefits. My testimony today is based on our September 2007 report
on UI and low-wage workers.[Footnote 1] For that report, we analyzed
data on UI regular program recipiency rates provided by Labor, and we
examined data from the Survey of Income and Program Participation
(SIPP), a national database maintained by the Bureau of the
Census.[Footnote 2] For this testimony we conducted one additional test
of the difference between low-and higher-wage workers with regard to
receipt of UI.[Footnote 3] We conducted this work between June and
September 2007 in accordance with generally accepted government
auditing standards.
In summary, we found that the overall rate of UI receipt amongst
workers has shown modest increase from the mid-1980s to 2005, but still
remains below the near-50 percent rate of the 1950s. A comparison of UI
receipt by earnings levels shows that low-wage workers were less likely
to receive UI benefits than higher-wage workers. Moreover, the gap
between the two groups has not narrowed over time. Between 1992 and
1995--the period covered in our previous analysis--low-wage workers
were about half as likely to receive UI benefits as higher-wage
workers. For the years 1998 and 2003--the years added for this
analysis--they were about one-third as likely. Low levels of UI receipt
among low-wage workers may be explained by the circumstances of low-
wage workers in relation to UI eligibility rules, particularly the time
frame during which workers earnings are counted toward UI eligibility,
which excludes workers' most recent earnings in many states. The low
levels of receipt may also be explained by low-wage workers' reasons
for separating from work in relation to eligibility rules, which in
many states do not recognize illness or disability of a family member
as "good cause" for leaving employment. Another group facing low rates
of UI receipt is part-time workers. Unemployed part-time workers were
significantly less likely to collect UI than those who were full-time.
This is true regardless of whether they were low-wage or higher-wage.
About two-thirds of states do not consider workers eligible for UI if
they are only available for part-time work. In addition, like low-wage
workers, some part-time workers may have difficulty meeting the minimum
earnings requirement in states that do not count workers' most recent
earnings.
Background:
Established by Title III of the Social Security Act in 1935, UI is a
key component in ensuring the financial security of America's
workforce. The UI program's primary objective is to temporarily replace
a portion of earnings for workers who become unemployed through no
fault of their own. Another key function is to stabilize the economy
during economic downturns.
To receive UI benefits, an unemployed worker generally must meet the
state minimum earnings requirements (a minimum amount of earnings and/
or employment) over a defined base period. In addition, workers must
have become unemployed for good cause as determined under state law and
be able and available to work. Federal law provides minimum guidelines
for state programs and authorizes grants to states for program
administration. States design their own programs, within the guidelines
of federal law, and determine key elements of these programs, including
who is eligible to receive state UI benefits, how much they receive,
and the amount of taxes that employers must pay to help provide these
benefits.[Footnote 4] State unemployment tax revenues are held in trust
by the Secretary of the Treasury and are used by the states to pay for
regular weekly UI benefits. Benefits typically can be received for up
to 26 weeks, although in most states some workers qualify for less than
the full 26 weeks due to uneven earnings or brief work histories.
During the years we examined between 1992 and 2003,[Footnote 5] low-
wage workers made up about 50 percent of the unemployed former workers
in our sample of the experienced labor force, even though they were
only about 30 percent of the total experienced labor force.[Footnote 6]
Previous GAO work has shown that the likelihood of receiving UI
benefits among UI-eligible workers is lower for those with lower annual
earnings, controlling for a range of economic and demographic
factors.[Footnote 7]
Since the Mid-1980s, the Recipiency Rate Has Shown Modest Increase, But
Still Remains below the Near-50 Percent Rate of the 1950s:
From 1950 through the mid-1980s, the UI regular program recipiency rate
gradually declined, dropping to its lowest point in the early 1980s.
Since the mid-1980s, the UI recipiency rate has shown modest increase.
Figure 1: Average UI Recipiency Rate Since 1950:
[See PDF for image]
Source: GAO analysis of Department of Labor data for state UI programs.
Note: Recession years are shaded. Any year with at least one quarter in
a business cycle contraction (as defined by the National Bureau of
Economic Research) is defined as a recession year.
[End of figure]
As we noted in our 2000 report, two factors are considered significant
to the decline of UI receipt: the decrease in the number of workers
employed in manufacturing jobs and the decline of union membership in
the workforce. In the past, manufacturing layoffs produced large
numbers of employees who were unemployed through no fault of their own,
and thus were eligible for benefits. For their part, unions played a
role in making workers aware of benefits. Others have suggested that
the migration of manufacturing to the South, Midwest, and West may have
also played a role in the decline, given that in some of these states
workers are less likely to be unionized and benefits are less generous.
Low-Wage Unemployed Workers Were Less Likely to Receive UI Benefits
Than Were Their Higher-Wage Counterparts:
Low-wage workers were more likely to be unemployed but less likely to
receive UI benefits than higher-wage workers.[Footnote 8],[Footnote 9]
Compared with higher-wage workers, low-wage workers were at least twice
as likely to be unemployed between 1992 and 2003.
Figure 2: Unemployment Rate, 1992 to 2003:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: Data for 1996, 1997, and 1999 to 2002 were not available.
Differences between low-and higher-wage workers in every year were
significant at the 99 percent confidence level.
The overall unemployment rates we calculated differ from the standard
unemployment rates provided by the Bureau of Labor Statistics. For the
6 years presented, standard rates were 7.5 percent for 1992, 6.9
percent for 1993, 6.1 percent for 1994, 5.6 percent for 1995, 4.5
percent for 1998, and 6.0 percent for 2003. These rates differ because
our calculations excluded workers who were new entrants to the labor
force, those who had a history of self-employment, and those who were
younger than 18 or older than 64 in March of the survey year, and
because there were technical differences between the database we used
for our calculations (SIPP) and that used for the standard unemployment
rates (Current Population Survey).
[End of figure]
At the same time, unemployed low-wage workers received UI benefits at
less than half the rate of higher-wage workers in almost every year.
Figure 3: UI Rate of Receipt among the Unemployed:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: Data for 1996, 1997, and 1999 to 2002 were not available.
Differences between low-and higher-wage workers in every year were
significant at the 99 percent confidence level.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Even with similar work tenures, unemployed low-wage workers were still
less likely to receive UI benefits than unemployed higher-wage workers.
Some fifty-five percent of unemployed higher-wage workers who had
worked at least 35 weeks during the year collected UI. In comparison,
only some 30 percent of unemployed low-wage workers with similar work
tenures collected UI.
Table 1: UI Rate of Receipt for Low-Wage and Higher-Wage Workers, by
Number of Weeks Worked, Combining SIPP Data for Years 1992 to 2003:
Weeks worked prior to unemployment[B]: 35 weeks or more;
UI rate of receipt[A]: Low-wage workers (percent): 29.6;
UI rate of receipt[A]: Higher-wage workers (percent): 55.0;
UI rate of receipt[A]: All (percent): 45.1;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers)[C]: .538.
Weeks worked prior to unemployment[B]: 20-34 weeks;
UI rate of receipt[A]: Low-wage workers (percent): 24.4;
UI rate of receipt[A]: Higher-wage workers (percent): 46.1;
UI rate of receipt[A]: All (percent): 33.8;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers)[C]: .529.
Weeks worked prior to unemployment[B]: Less than 20 weeks;
UI rate of receipt[A]: Low-wage workers (percent): 12.0;
UI rate of receipt[A]: Higher-wage workers (percent): 25.4;
UI rate of receipt[A]: All (percent): 16.5;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers)[C]: .470.
Weeks worked prior to unemployment[B]: All;
UI rate of receipt[A]: Low- wage workers (percent): 21.8;
UI rate of receipt[A]: Higher-wage workers (percent): 47.9;
UI rate of receipt[A]: All (percent): 34.9;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers)[C]: .455.
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998 and 2003. Data for 1996, 1997,
and 1999 to 2002 were not available.
Differences between low-and higher-wage workers in each work tenure
group were significant at the 99 percent confidence level.
[A] We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[B] Weeks worked prior to unemployment is the sum of the number of
weeks that the person worked in the 12-month period immediately before
his or her unemployment. Data are restricted to a subsample of
unemployed persons who had a job during the 15 months prior to
unemployment.
[C] For example, among those who had worked 35 weeks or more in the
year prior to their unemployment, low-wage workers were 54 percent as
likely to receive UI as higher-wage workers.
[End of table]
The relative likelihood of receiving UI for low-wage workers compared
to higher-wage workers declined significantly from the earlier period
(1992 to 1995) to the later period (1998 and 2003). Specifically, low-
wage workers were about half as likely to receive UI as higher-wage
workers in the earlier period, and about one-third as likely to receive
UI as higher-wage workers in the later period.[Footnote 10] While this
ratio declined, the absolute difference between the two groups did not
change. In the earlier period, the difference between the two groups
averaged 27 percentage points; in the later period, it averaged 23
percentage points--a difference that is not statistically significant.
[Footnote 11]
One of the reasons low-wage workers may be less likely to receive UI
benefits is that they are more likely to have worked in industries that
had low rates of UI receipt overall.[Footnote 12] In 2003, 63 percent
of the low-wage unemployed workers had been employed in jobs from
retail trade and services, as opposed to about one-half (48 percent) of
higher-wage workers.
Figure 4: Industry Sector of Last Job for Unemployed Low-Wage and
Higher-Wage Workers:
[See PDF for image]
Source: GAO analysis of SIPP data, March 2003.
Note: "Services" includes private household services, business
services, personal services, entertainment/recreational services,
hospitals, medical services, educational services, social services, and
other professional services.
Compared with all other industry sectors, the retail trade and services
industries had the lowest UI rates of receipt.
[End of figure]
Figure 5: Average UI Rate of Receipt by Industry, March 2003.
[See PDF for image]
Source: GAO analysis of 2003 SIPP data.
Note: "Services" includes private household services, business
services, personal services, entertainment/recreational services,
hospitals, medical services, educational services, social services, and
other professional services.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Furthermore, within many industry sectors low-wage workers had lower
rates of UI receipt than higher-wage workers.
Table 2: UI Rate of Receipt by Industry of Last Job and Low-Wage/
Higher-Wage Status, March 2003:
Industry: Construction and mining[B];
UI rate of receipt[A]: Low-wage workers (percent): 16.5;
UI rate of receipt[A]: Higher-wage workers (percent): 52.3;
UI rate of receipt[A]: Total (percent): 43.8;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .316.
Industry: Manufacturing[B];
UI rate of receipt[A]: Low-wage workers (percent): 26.6;
UI rate of receipt[A]: Higher-wage workers (percent): 52.6;
UI rate of receipt[A]: Total (percent): 42.5;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .506.
Industry: Services[B];
UI rate of receipt[A]: Low-wage workers (percent): 10.5;
UI rate of receipt[A]: Higher-wage workers (percent): 31.8;
UI rate of receipt[A]: Total (percent): 23.6;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .329.
Industry: Retail trade[B];
UI rate of receipt[A]: Low-wage workers (percent): 8.4;
UI rate of receipt[A]: Higher-wage workers (percent): 32.6;
UI rate of receipt[A]: Total (percent): 16.8;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .257.
Industry: Transportation and utilities[B];
UI rate of receipt[A]: Low- wage workers (percent): 7.9;
UI rate of receipt[A]: Higher-wage workers (percent): 41.4;
UI rate of receipt[A]: Total (percent): 32.0;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .191.
Industry: Public administration[C];
UI rate of receipt[A]: Low-wage workers (percent): 13.2;
UI rate of receipt[A]: Higher-wage workers (percent): 48.7;
UI rate of receipt[A]: Total (percent): 39.6;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .272.
Industry: Wholesale trade[C];
UI rate of receipt[A]: Low-wage workers (percent): 24.1;
UI rate of receipt[A]: Higher-wage workers (percent): 51.9;
UI rate of receipt[A]: Total (percent): 44.2;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .465.
Industry: Agriculture[C];
UI rate of receipt[A]: Low-wage workers (percent): 38.2;
UI rate of receipt[A]: Higher-wage workers (percent): 27.1;
UI rate of receipt[A]: Total (percent): 34.0;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): 1.41.
Industry: Finance[C];
UI rate of receipt[A]: Low-wage workers (percent): 28.5;
UI rate of receipt[A]: Higher-wage workers (percent): 43.0;
UI rate of receipt[A]: Total (percent): 37.8;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .664.
Industry: Total;
UI rate of receipt[A]: Low-wage workers (percent): 14.8;
UI rate of receipt[A]: Higher-wage workers (percent): 40.5;
UI rate of receipt[A]: Total (percent): 29.7;
Relative likelihood of receiving UI low-wage/higher-wage (ratio of
percents): .365.
Source: GAO analysis of SIPP data, March 2003.
[A] We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[B] Differences between low-and higher-wage workers are significant at
the 99 percent confidence level.
[C] Differences between low-and higher-wage workers are not
statistically significant.
[End of table]
In addition to the industries in which they work, low levels of UI
receipt among low-wage workers may be explained by the circumstances of
low-wage workers coupled with state UI eligibility rules, particularly
the base period for meeting the minimum earnings requirement. To
determine eligibility for UI, 31 states[Footnote 13] only consider
wages earned and/or time worked in the first 4 of the prior 5 completed
calendar quarters preceding the claim, according to the National
Employment Law Project (NELP).[Footnote 14] Because the base period in
many states excludes the latest calendar quarter, a worker's most
recent work history is not used in making the eligibility
determination. For low-wage workers with sporadic work histories this
exclusion of recent earnings may make it more difficult to achieve the
minimum earning level necessary for eligibility.
Low-wage workers' reasons for separating from work in relation to UI
eligibility rules may be another factor relevant to their lower levels
of UI receipt. A person who voluntarily leaves work must have good
cause, as determined under state law, in order to be eligible for UI.
For low-wage workers, particularly those without paid sick leave,
however, issues such as caring for children or sick family members may
make keeping a job more challenging or result in their needing or
wanting certain types of work. According to the National Employment Law
Project, 35 states[Footnote 15] do not recognize serious illness or
disability of a family member as good cause for leaving employment.14:
There are other factors that contribute to the higher rates of receipt
among higher-wage workers. In general, UI receipt is associated with
higher earnings before unemployment, longer job tenure, and more
education. First, workers with a history of higher earnings and longer
job tenure generally face longer job searches and this may encourage
them to utilize UI benefits during that search. Also, greater levels of
education may be associated with greater awareness of UI and success in
navigating the system.
Prior receipt of UI may also play a role. Receipt of UI benefits in one
period of unemployment increases the likelihood of using UI again.
Because higher-wage workers are more likely to receive UI in any given
unemployment spell, it is possible that they better understand the
safety net it affords them and may be more likely to utilize it in
future spells. In contrast, the extent to which low-wage workers have
been unsuccessful in establishing eligibility for UI during any given
unemployment spell may discourage future efforts to do so.
Unemployed Part-Time Workers Were Significantly Less Likely to Collect
UI than Unemployed Full-Time Workers, Regardless of Whether They Were
Low-Wage or Higher-Wage:
Unemployed workers who were part-time at their last job were
significantly less likely to collect UI than unemployed workers who
were full-time at their last job. According to the National Employment
Law Project, 32 states[Footnote 16] do not consider workers eligible
for UI if they are only available for part-time work.14 In addition,
like low-wage workers, some part-time workers may have difficulty
meeting the minimum earnings requirement in states that do not count
workers' most recent earnings. Even when workers had similar job
tenures, full-time workers were more likely to receive UI than part-
time workers.
Figure 6: UI Rate of Receipt by Part/Full-Time Status, Unemployed
Workers with at Least 35 Weeks of Employment in Past Year:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and 1999 to 2002 were not available.
The difference between full-time and part-time workers was significant
at the 99 percent confidence level.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Part-time, low-wage unemployed workers were the least likely to receive
UI.
Figure 7: UI Rate of Receipt by Wage and Part/Full-Time Status,
Unemployed Workers with at Least 35 Weeks of Employment in Past Year:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and 1999 to 2002 were not available.
Differences between full-time and part-time workers and differences
between low-wage and higher-wage workers were all significant at the 99
percent confidence level.
Full-time employment is defined as 35 hours per week or more. Data are
restricted to a subsample of unemployed persons who had a job during
the 15 months prior to unemployment.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Mr. Chairman, this concludes my remarks. I would be happy to answer any
questions that you or other members of the subcommittee may have.
Contact and Acknowledgments:
For further information regarding this testimony please contact Cindy
Fagnoni at (202) 512-7215. Also contributing to this statement were
Patrick di Battista, Rhiannon Patterson, Gretta Goodwin, and Charlie
Willson.
[End of section]
Related GAO Products:
Unemployment Insurance: Low-Wage and Part-Time Workers Continue to
Experience Low Rates of Receipt. GAO-07-1147. Washington, D.C.:
September 7, 2007.
Unemployment Insurance: Factors Associated with Benefit Receipt and
Linkages with Reemployment Services for Claimants. GAO-06-484T.
Washington, D.C.: March 15, 2006.
Unemployment Insurance: Factors Associated with Benefit Receipt. GAO-
06-341. Washington, D.C.: March 7, 2006.
Unemployment Insurance: Information on Benefit Receipt. GAO-05-291.
Washington, D.C.: March 17, 2005.
Highlights of a GAO Forum: Workforce Challenges and Opportunities for
the 21st Century: Changing Labor Force Dynamics and the Role of
Government Policies. GAO-04-845SP. Washington, D.C.: June 2004.
Unemployment Insurance: Role as Safety Net for Low-Wage Workers is
Limited. GAO-01-181. Washington, D.C.: December 29, 2000.
[End of section]
Footnotes:
[1] GAO, Unemployment Insurance: Low-Wage and Part-Time Workers
Continue to Experience Low Rates of Receipt, GAO-07-1147 (Washington,
D.C.: Sept. 7, 2007).
[2] We defined low-wage as an hourly wage which is less than that
required for a full-time worker (40 hours per week/52 weeks per year)
to earn the Census poverty threshold for a family of four (less than
$8.97 per hour in 2003.)
[3] We tested whether the relative likelihood of receiving UI for low-
wage workers compared to higher-wage workers - that is, the ratio of UI
rates of receipt --changed over time.
[4] UI benefits are funded through payroll taxes levied on employers.
All state UI systems are experience-rated so that employers'
contributions vary according to how much or how little their workers
received unemployment benefits.
[5] Analysis based on SIPP data from 1992 to 1995, 1998, and 2003. Data
for 1996, 1997, and 1999 to 2002 were not available. New SIPP panels
were initiated each year from 1990 to 1993, in 1996, and in 2001. These
panels provided us with 27-month employment histories for sample
members in 1992 through 1995, 1998, and 2003. Sufficient data for 1996,
1997, and 1999 to 2002 were not available because no new SIPP panels
were initiated in the years 1994, 1995, 1997, 1998, or 1999. A 3-year
panel was started in 2000 but cancelled after 8 months for budgetary
reasons, and thus could not be used for our analysis.
[6] Our calculations of unemployed former workers excluded people who
did not have a job in the 27-month period before the month that they
were unemployed. Thus, all new entrants and some reentrants into the
labor force were excluded.
[7] GAO, Unemployment Insurance: Factors Associated with Benefit
Receipt, GAO-06-342 (Washington, D.C.: Mar. 7, 2006).
[8] Data for 1996, 1997, and 1999 to 2002 were not available.
[9] In addition to the results presented here, we also ran all analyses
using the SIPP for a sample of "prime-age workers" (age 22 to 54), for
comparison purposes. Results were similar, although the difference in
UI receipt rates between low-wage and other workers was somewhat
smaller than among workers aged 16 to 64, as was the difference between
part-time and full-time workers.
[10] We divided the percentage of low-wage workers who received UI by
the percentage of higher-wage workers who received UI in 1992 to 1995
and compared this to a similarly derived quotient for 1998 and 2003.
[11] We subtracted the percentage of low-wage workers who received UI
from the percentage of higher-wage workers who received UI in 1992 to
1995 and compared the result to the similarly derived difference for
1998 and 2003.
[12] This analysis does not control for average wages within
industries.
[13] Out of 51, the remainder, including the District of Columbia, have
an alternative base period.
[14] National Employment Law Project, Testimony of Maurice Emsellem
before the U.S. House of Representatives, Ways and Means Committee,
Subcommittee on Income Security and Family Support, March 15, 2007.
NELP provided GAO with a summary updating the information provided at
the March 2007 testimony.
[15] Including the District of Columbia.
[16] Out of 51, the remainder, including the District of Columbia, have
some coverage for workers seeking part-time employment.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office:
441 G Street NW, Room LM:
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Susan Becker, Acting Manager, Beckers@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548: