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The report examines expansions to the unemployment compensation system that followed the onset of the Great Recession. Before the recession, eligible workers losing a job could collect up to 26 weeks of unemployment insurance (UI) benefits in most states. Near the end of 2009, up to 99 weeks were available in high-unemployment states through the UI program, the Emergency Unemployment Compensation Act of 2008 (EUC08) program, and the Extended Benefits (EB) program. The researchers' main analysis used administrative and survey data on 2,122 recipients in 12 states. EUC08/EB benefits were collected by 45 percent of the UI recipients studied, particularly those from groups that historically faced employment barriers. Each additional week of available benefits was associated with an increase of 0.08 to 0.17 weeks in the length of initial joblessness and larger reductions in the total time employed over the three years following the quarter of recipients’ initial UI claims.

Research Questions

• Who collected EUC08/EB benefits and how did they fare?
• How was the availability of additional UC benefits—both additional weeks of benefits and additional dollars per week—related to recipients’ outcomes?

Key Takeaways

• Almost 46 percent of UC recipients responding to the survey collected recessionary benefits through the EUC08 or EB programs (in addition to UI benefits).
• On average, they collected a total of 36 weeks through the UI, EUC08, and EB programs combined, although there was substantial variation across recipients in the duration of UC benefit collection.
• The majority of all UC recipients (55 percent) studied regained employment in the first calendar quarter after the quarter of their initial UI claims, and the percentage who became reemployed rose steadily over the first three post-claim years.
• About 86 percent became reemployed at some point during the three post-claim years.
• In comparison to those who received UI only, EUC08/EB recipients: were more likely to come from groups with historically worse labor market outcomes, less likely to have experienced layoffs in the past, more likely to have been displaced from their last job because it was permanently eliminated or there was insufficient work for them, less likely to find reemployment during the three years after their UI claims and more likely to have experienced financial hardships since their initial UI claim dates, and less likely to be employed four to six years after their initial UI claim dates and were more likely to have exited the labor force by that point.
• Among those employed at the time of the survey, EUC08/EB recipients were more likely than UI-only recipients to have experienced reductions in earnings, hours, and other measures of job quality in comparison to their pre-claim job.
• The rollout of EUC08 and the triggering on/off of the EUC08 and EB programs resulted in a potential benefit duration that changed over time and differed across states.
• Based on analytic measures that capture some of the key aspects of how benefit availability varied across recipients, each extra week of potential duration was associated with 0.39 to 0.46 more weeks of benefits collected, a similar reduction in the time spent employed over a three-year period following the initial UI claim, and a roughly 0.10 to 0.15 week increase in the length of the initial post-claim joblessness spell.
• Benefit availability did not have any significant association with labor force participation or employment at the time of the survey, receipt of income support at that point, or financial hardships since the initial UI claim date.
• Most survey respondents received enhancements from these programs for some but not all of the weeks they collected UC benefits.
• The Federal Additional Compensation (FAC) program increased the total value of benefits by almost 6 percent, with recipients with the lowest base period wages realizing the greatest proportionate increases.
• The tax exemption led to a smaller and more uniform increase of about 1 percent in the value of benefits received.
• Based on past estimates of the relationship between weekly benefit amount (WBA) and the duration of unemployment spells, both policies likely resulted in only minor increases in spell length.
• Monthly balances on Title XII loans averaged less than $1 billion during the last quarter of 2008 and rose to more than $40 billion during the last quarter of 2010.
• Absent the American Recovery and Reinvestment Act (ARRA) waiver of interest, states would have had to pay up to $2.2 billion more in interest on their trust fund debt during 2009 and 2010.
• This estimate is double the projection of saved interest made by the Congressional Budget Office in 2009 before the severity of the recession and its aftermath were fully understood.
• Without the ARRA interest waiver, states likely would have paid Title XII loans back more quickly; thus, the estimate is likely higher than the true interest savings realized by states.

Citation

Hock, H., Nicholson, W., Needels, K., Lee, J., Anand, P. (2016). Mathematica. Additional Unemployment Compensation Benefits During the Great Recession: Recipients and Their Post-Claim Outcomes. Chief Evaluation Office, U.S. Department of Labor.

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The Department of Labor’s (DOL) Chief Evaluation Office (CEO) sponsors independent evaluations and research, primarily conducted by external, third-party contractors in accordance with the Department of Labor Evaluation Policy and CEO’s research development process.