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A main goal of the U.S. Unemployment Insurance (UI) program is to provide temporary income support to workers who lose their jobs through no fault of their own. Benefits supply only partial wage replacement and are time-limited, so as to balance providing income support during unemployment and preserving incentives for benefit recipients to return to work. Most UI claimants who begin receiving benefits during non-recessionary periods can collect them for up to 26 weeks. Claimants must collect all benefits to which they are entitled within one year from starting or they lose their entitlement.

To minimize the negative impacts of job loss, unemployed workers must make a variety of changes in their activities both shortly after job loss and in the ensuing months. In the first few weeks or months after job loss, they must develop a strategy for finding a new job, including defining what kinds of jobs to seek as well as methods of job search to use; adopt methods for maintaining or minimizing decreases in consumption levels for themselves and their families, such as withdrawing money from savings; and possibly take steps to participate in public programs that provide income support, such as the UI program or the Supplemental Nutrition Assistance Program (SNAP). Those who have not found satisfactory reemployment in the short term might adapt their job search, take on added debt, rely on others in their household to increase their work activity (by taking on new jobs or expanding hours), and further avail themselves of income supports offered by other public programs. The extent to which they make these changes can be influenced by the collection of UI benefits and the associated administrative rules (such as the requirement that recipients be available for work and engage in active job search).

The U.S. Department of Labor (DOL) commissioned a study of UI recipients to gain an understanding of short- and medium-term adjustments after their job losses. The study uses data from a two-wave longitudinal survey and UI administrative records to focus on such issues as how recipients’ job search strategies change over time, the role of UI benefits and other strategies unemployed workers use to cope with financial hardships, and UI recipients’ satisfaction with the program. The study provides insights that are useful to policymakers who are interested in evaluating the extent to which the UI program is meeting its goal of providing temporary income support to unemployed workers who lose their jobs through no fault of their own, while also encouraging them to return to work quickly. It also provides insights about how the UI system might be improved to better meet this goal in a nonrecessionary context, specifically in the period following the Great Recession.

Research Questions

• UI program experiences. What are UI recipients’ benefit entitlements for the current benefit year? What portion of their UI benefit entitlements did recipients collect? How many recipients exhausted their benefit entitlements, and what were some of the important correlates of exhaustion? How satisfied were recipients with the process of filing claims for benefits, the helpfulness of UI staff, the clarity of information provided, and the timeliness of benefit receipt? More generally, how do recipients view the UI program and the income support it provides overall?
• Work search. How soon after job separation did UI recipients begin looking for jobs? How many hours did UI recipients spend on job search each week, and did this amount change over time? What methods did UI recipients use to look for jobs, and did these methods change over time? What reemployment services did they use? Did they change their use of such services over time, and did they think these reemployment services were helpful? Did UI recipients’ criteria for acceptable job offers (including the minimum weekly wage sought) or expectations about their reemployment change over time? Were UI recipients willing to relocate to gain reemployment?
• Reemployment. How quickly did recipients become reemployed? How many returned to their previous jobs? What were the hours and earnings of their new jobs? What fringe benefits did those jobs provide? How did the jobs found by recipients compare to those they held prior to layoff?
• Financial experiences. How much savings and debt did UI recipients have before the pre- UI job separation, and how did these amounts change over time? What financial adjustments did UI recipients make, such as withdrawing money from savings accounts or accessing cash from credit card accounts? How did the labor supply decisions of spouses and partners change over time? Was there evidence of financial hardship, such as being 60 or more days late on bill payments? Did recipients’ households begin participating in public assistance programs that provide income or in-kind support after the pre-UI job separation, such as SNAP, Supplemental Security Income, and Medicaid?

Key Takeaways

• UI recipients in Los Angeles had larger average UI entitlements than UI recipients in the Central Valley ($8,379 versus $6,244).
• Most UI recipients were satisfied with the process of filing their UI initial claims.
• Recipients in both sites also had high satisfaction levels with their overall experience with the UI program at the time of the second wave of the survey.
• While three-quarters of recipients did not have a job at the Wave 1 interview date, half of those in Los Angeles and 65 percent in the Central Valley had a job at the Wave 2 interview date.
• Recipients who were not employed at both waves were most likely to look for work by contacting friends, relatives, or professional associates (91 percent in Los Angeles and 86 to 89 percent in the Central Valley).
• By Wave 2, 43 percent of Los Angeles recipients and 33 percent of Central Valley recipients received information from an American Job Center (AJC) on education or job training programs.
• Los Angeles and Central Valley recipients who were seeking employment at both waves of the survey did not materially change the characteristics of the employment they sought over time.
• Controlling for individual, household, and claim characteristics, recipients who had higher base period earnings, were union members, or had higher weekly benefit amounts sought lower weekly earnings at Wave 2 relative to their separating job, compared to other recipients.
• About two-thirds of recipients in Los Angeles (63 percent) and three-quarters of recipients in the Central Valley (77 percent) were reemployed by the second wave.
• About a third of reemployed Los Angeles recipients and about 60 percent of reemployed Central Valley recipients returned to the same employer they had for their pre-UI job.
• Central Valley recipients who were reemployed by a different employer were more likely to be offered paid sick days, a retirement savings or pension plan, and health insurance through their first post-UI job than they were through their pre-UI job.
• Reemployed Los Angeles recipients who switched employers were not significantly more likely to have paid sick days, health insurance benefits, or retirement savings available to them through their new jobs.
• In both areas, recipients’ average debt and loan amounts increased over time, while average savings did not significantly decrease.
• Shortly after recipients lost their jobs, their households used a variety of financial management strategies, most commonly withdrawing money from savings, but this became less common over time as more recipients found reemployment.
• Over time, spouses and unmarried partners of UI recipients increased their average hours worked.
• Household rates of receipt of any of five types of public benefits also increased by Wave 2.
• Ninety-seven percent of recipients reported in Wave 1 that UI payments were very important or somewhat important in helping them to meet their financial obligations and avoid financial losses.

Citation

Lee, J., Needels, K., Nicholson, W. (2017). Mathematica. A Longitudinal Survey of Unemployment Insurance Recipients in Two Regions in California. 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.