Weekly releases of unemployment insurance (UI) claims data by the US Department of Labor (DOL) have indicated a very high utilization of state and federal UI programs during the pandemic. If these UI claims reports are accurate, UI benefit recipients comprised more than 150% of unemployed workers and 16% of the labor force between late March and the beginning of October. The unprecedented high ratio of UI benefit recipients to unemployed workers raises questions about the accuracy of the UI claims data.1
The high ratio of UI recipients to unemployed workers may be because:
(i) UI recipients in the DOL data may be poorly measured and potentially double counted,
(ii) the official measure of unemployed workers may substantially understate the number of jobless or underemployed workers eligible for UI benefits, or
(iii) there may be considerable fraud in the UI system.
Our analysis also finds that reliance on state and federal UI programs varies widely across states. For example, since late March UI recipients in Pennsylvania have comprised about 250% of the state’s unemployed workers and about 30% of the state’s labor force. In contrast, since late March UI recipients in South Dakota have comprised less than 58% of the state’s unemployed workers and about 4% of the state’s labor force.
Three Unemployment Insurance Programs Account for Most of the Benefit Recipients
- Regular State Unemployment Insurance: This is the standard unemployment program in the United States administered by each state, where eligible workers who become unemployed through a job loss can collect unemployment benefits.2
- Pandemic Unemployment Assistance (PUA): This new emergency unemployment program was enacted to mitigate the impact of widespread unemployment caused by COVID-19 lockdowns. This program has expanded the types of individuals eligible for unemployment benefits to include business owners, self-employed workers, and independent contractors.3
- Pandemic Emergency Unemployment Compensation (PEUC): This new emergency unemployment program has extended the time period for eligibility for unemployment benefits. Typically, state UI benefits are limited to no more than 26 weeks of benefits, but this program provides the opportunity for eligible individuals to collect an additional 13 weeks of benefits.4
Weekly Unemployment Insurance Continued Claims in a Given Week Likely Include Benefits Paid in Prior Weeks
Between the weeks of March 28th and October 10th there has been substantial variation in the use of each of these UI programs across weeks and between states. Each week the DOL reports the number of new claims and continued claims for each UI program. In principle, UI continued claims in a week should equal the number of UI recipients during the week. However, because of the unprecedented surge in claims for the new PUA and PEUC programs, weekly continued claims figures in some states likely include backlogs of weekly recipients for these programs. In other words, continued claims may include the number of benefit weeks paid to jobless workers in prior weeks as well as the current week.
Figure 2 presents utilization rates of the UI program relative to the size of the labor force. Nationally the three primary UI programs have paid out the person-weeks of benefits equivalent to 16% of the person-weeks of labor force participation since late March. Figure 2 also shows substantial variation across states and indicates that states such as Michigan and Pennsylvania have paid benefit weeks equivalent to over 28% of each state’s person-weeks of labor force participation. In contrast states such as Idaho, South Dakota, Utah and Wyoming have paid UI benefits equivalent to only about 5% of the person-weeks of each state’s person-weeks labor force participation since late March.
Unemployment insurance backlogs depend on how long it takes for states to process claims. While some states were easily able to process claims and payout benefits immediately, other states have taken more time to pay out claims. A state that processes claims efficiently and pays out all benefits for the current week will report continued claims that accurately reflect the actual number of people requesting benefits each week. In contrast, a state that slowly processes claims will report continued increases in claims for several weeks in a row. This is because continued claims include claims for the current week as well as for the weeks those benefits remained unpaid on backlog.
– Kentucky: “Kentucky has made little progress on unemployment backlog, figures show”8
– Nevada: “Scope of Nevada’s jobless claims backlog still unclear”9
- In a recent Brookings Institution publication Gary Burtless noted that while the share of unemployed workers collecting UI benefits rises during a recession, even during the Great Recession the share rarely exceeded 70% and in earlier recessions rarely exceeded 60%. In contrast, during the pandemic we see implausibly high shares of unemployed workers collecting UI benefits. (See https://www.brookings.edu/wp-content/uploads/2020/03/Burtless_UI_updated_20200402.pdf).
- https://www.dol.gov/ui/data.pdf. See also, https://www.edd.ca.gov/About_EDD/pdf/news-20-49.pdf.
- Backlogs have been reported in other states including Pennsylvania, Oregon, Wisconsin, and Nevada. https://www.inquirer.com/business/pennsylvania-coronavirus-unemployment-claims-backlog-90000-20200723.html; https://www.koin.com/news/health/coronavirus/oregon-employment-department-completes-pua-backlog/.