[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                            NEW RESEARCH ON
                    UNEMPLOYMENT BENEFIT RECIPIENTS

=======================================================================

                                HEARING

                               before the

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 15, 2006

                               __________

                           Serial No. 109-67

                               __________

         Printed for the use of the Committee on Ways and Means




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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

E. CLAY SHAW, JR., Florida           CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut        FORTNEY PETE STARK, California
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania           WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona               JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois               XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri           LLOYD DOGGETT, Texas
RON LEWIS, Kentucky                  EARL POMEROY, North Dakota
MARK FOLEY, Florida                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas                   MIKE THOMPSON, California
THOMAS M. REYNOLDS, New York         JOHN B. LARSON, Connecticut
PAUL RYAN, Wisconsin                 RAHM EMANUEL, Illinois
ERIC CANTOR, Virginia
JOHN LINDER, Georgia
BOB BEAUPREZ, Colorado
MELISSA A. HART, Pennsylvania
CHRIS CHOCOLA, Indiana
DEVIN NUNES, California

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                    SUBCOMMITTEE ON HUMAN RESOURCES

                   WALLY HERGER, California, Chairman

NANCY L. JOHNSON, Connecticut        JIM MCDERMOTT, Washington
BOB BEAUPREZ, Colorado               BENJAMIN L. CARDIN, Maryland
MELISSA A. HART, Pennsylvania        FORTNEY PETE STARK, California
JIM MCCRERY, Louisiana               XAVIER BECERRA, California
DAVE CAMP, Michigan                  RAHM EMANUEL, Illinois
PHIL ENGLISH, Pennsylvania
DEVIN NUNES, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of March 8, 2006, and revised advisory of March 13, 2006 
  announcing the hearing.........................................     2

                                WITNESS

U.S. Government Accountability Office, Sigurd Nilsen, Ph.D., 
  Director, Education, Workforce, and Income Security Issues.....     7


                            NEW RESEARCH ON
                    UNEMPLOYMENT BENEFIT RECIPIENTS

                              ----------                              


                       WEDNESDAY, MARCH 15, 2006

             U.S. House of Representatives,
                       Committee on Ways and Means,
                           Subcommittee on Human Resources,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:34 a.m., in 
room B-318, Rayburn House Office Building, Hon. Wally Herger 
(Chairman of the Subcommittee) presiding.
    [The advisory and revised advisory announcing the hearing 
follow:]

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
March 15, 2006
No. HR-6

                        Herger Announces Hearing

                       Regarding New Research on

                    Unemployment Benefit Recipients

    Congressman Wally Herger (R-CA), Chairman, Subcommittee on Human 
Resources of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing regarding new research on unemployment 
benefit recipients. The hearing will take place on Wednesday, March 15, 
2006, in room B-318 Rayburn House Office Building, beginning at 2:00 
p.m.
      
    Oral testimony at this hearing will be from the U.S. Government 
Accountability Office (GAO). However, any individual or organization 
not scheduled for an oral appearance may submit a written statement for 
consideration by the Subcommittee and for inclusion in the printed 
record of the hearing.
      

BACKGROUND:

      
    Unemployment Compensation (UC, sometimes also referred to as 
Unemployment Insurance or UI) is a State-Federal program under which 
benefits are paid to eligible laid-off workers who have a history of 
attachment to the workforce and have become unemployed through no fault 
of their own. Unemployment benefits are meant to provide partial, 
temporary wage replacement while the laid-off worker looks for a new 
job or awaits recall to his or her former position. United States 
Department of Labor (DOL) information indicates over $33 billion in 
unemployment benefits was paid to nearly 8 million eligible workers in 
2005.
      
    Employment-related information collected by the DOL and the Bureau 
of Labor Statistics (BLS) include data on national and State 
unemployment rates, initial claims for unemployment benefits, average 
benefit amounts, and unemployment trust fund balances, among other 
program data. Despite the operation of UC dating back to the 1930s, 
however, far less information is available regarding the 
characteristics of individuals who receive UC benefits. A March 2005 
GAO report, Unemployment Insurance: Information on Benefit Receipt, 
provided some information about individuals who receive unemployment 
benefits. Subsequently, the GAO completed additional analysis of data 
from the BLS National Longitudinal Survey of Youth, concentrating on 
factors associated with unemployment benefit receipt. The Subcommittee 
will review the GAO's latest findings about unemployment benefit 
recipients, which will be released at the hearing.
      
    In announcing the hearing, Chairman Herger stated, ``Although 
unemployment benefits have been paid since the Great Depression, 
surprisingly little is known about who collects benefits, how often, 
and for how long. This hearing will provide important data that will 
inform efforts to better serve all workers--especially those who have 
been laid off--as well as protect taxpayers and strengthen the economy 
for the long run.''
      

FOCUS OF THE HEARING:

      
    The hearing will focus on factors associated with unemployment 
benefit receipt, and specifically data provided in a new GAO report on 
this topic.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
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FORMATTING REQUIREMENTS:

      
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noted above.

                                 

                       * * * CHANGE IN TIME * * *

ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS

                    SUBCOMMITTEE ON HUMAN RESOURCES

                                                CONTACT: (202) 225-1025
FOR IMMEDIATE RELEASE
March 13, 2006
No. HR-6 Revised

                       Change in Time for Hearing

                       Regarding New Research on

                    Unemployment Benefit Recipients

    Congressman Wally Herger (R-CA), Chairman, Subcommittee on Human 
Resources of the Committee on Ways and Means, today announced that the 
Subcommittee hearing regarding new research on unemployment benefit 
recipients, previously scheduled for 2:00 p.m. on Wednesday, March 15, 
2006, in room B-318 Rayburn House Office Building, will now be held at 
10:30 a.m.
      
    All other details for the hearing remain the same. (See Human 
Resources Advisory No. HR-6, dated March 8, 2006).

                                 

    Chairman HERGER. Good morning and welcome to today's 
hearing, where we will review findings in a new report by the 
U.S. Government Accountability Office, or the GAO. We welcome 
Dr. Sigurd Nilsen of the GAO, who will describe data uncovered 
about the individuals who collect unemployment benefits. As we 
all know, unemployment benefits provide assistance to workers 
laid off through no fault of their own. This is an important 
Government function, and this Committee has a long track record 
of providing needed assistance to workers, and thus, the U.S. 
economy.
    In recent years this Committee has acted to provide needed 
emergency unemployment assistance. For example, following the 
2001 recession and terrorist attacks, we created a special 
temporary extension benefits program that provided more than 
$20 billion in Federal benefits to 8 million long-term 
unemployed workers. We also provided States with an 
unprecedented 8 billion in Federal funds to assist unemployed 
workers, which prevented tax hikes in 30 States, according to 
the GAO. Last fall, in the wake of Hurricane Katrina, we 
provided the Gulf States with 500 million to assist those laid 
off following that storm. Just 2 weeks ago, Congress acted to 
extend disaster unemployment benefits for another 3 months for 
those displaced by Hurricane Katrina and Rita.
    Today's hearing takes a step back and examines unemployment 
benefits provided during the past generation to a broad swath 
of labor force. Many of the findings are surprising and will 
provide important background for future efforts to provide 
better services to unemployed workers. Perhaps the first thing 
we should find surprising is that we are learning about much of 
this data for the first time. Unemployment assistance has 
operated in every State since the thirties, and in all that 
time, too little has been known about who actually collects 
unemployment benefits. That is why I asked GAO to assemble data 
about who collects unemployment benefits, for how long and why. 
Here are some of the key findings. First, laid-off workers who 
collect unemployment benefits are unemployed more than twice as 
long as their laid-off peers who do not collect unemployment 
benefits. Second, the strongest predictor of whether a laid-off 
worker will collect unemployment benefits is whether they 
collected those benefits in the past. Third, more eligible 
unemployed workers turn down unemployment benefits than collect 
them. Finally, we know very little about the effectiveness of 
job search, training and other reemployment services available 
to assist unemployment beneficiaries get back on the job.
    Today we will explore this rich data set provided by the 
GAO, and pose a number of questions. This data is important 
because it offers a road map for designing a more pro-work and 
pro-worker reemployment system, and that is ultimately what 
unemployment benefits should be about, helping laid-off workers 
return to good jobs.
    I want to thank Dr. Nilsen and his staff for their 
excellent work on this report, and I look forward to your 
testimony.
    Without objection, each Member will have the opportunity to 
submit a written statement and have it included in the record 
at this point. Mr. McDermott, would you care to make a 
statement?
    Mr. MCDERMOTT. Thank you, Mr. Chairman. You and I have 
served together and worked together for a long time, and I have 
no doubt about your character or what is in your thoughts. 
After listening to those opening remarks, I do have to express 
some serious doubts about the content of the agenda for this 
Committee, because it is really a question about whether we are 
going to show up and work for the working people of this 
country, all of the American people, especially those who have 
fallen on hard times through no fault of their own.
    We let down every living American in the Gulf Coast with 
our response to Katrina and Rita. That is a fact. There is no 
doubt about it. We let them down the first day, the first week, 
the first month, and the first 6 months, and we are still 
letting them down. We have hotel evictions going on one hand, 
and empty FEMA trailers on another. We have Americans wondering 
if they will ever return to the place that they call home. We 
went down a couple weeks ago and saw the empty trailers lined 
up in nice, neat shiny rows, and not doing much except sitting 
there, sort of like the Congress. Despite my pleas, and the 
please of Mr. Rangel and Ms. Pelosi, the Republican leadership 
has decided months ago to watch it on television. When the 
Republicans could not deny it any longer, the response was pure 
PR, not good public policy. One political appointee was hung 
out to dry, Mr. Brown, in the middle of a flood. It seems a 
little bit ironic to hang out to dry in a flood.
    The Americans living on the Gulf Coast wonder whether the 
Federal Government will show up and not just show off. 
Americans live in vulnerable cities across the country, 
including my Earthquake prone city of Seattle, and they stopped 
wondering, and now they are really worrying about what they are 
going to get from this country. If you cannot get it right in 
New Orleans, when you have 6 or 7 or 8 days warning, what on 
Earth will the bunch do when the next Earthquake strikes in 
Seattle, or San Francisco, or when the next hurricane hits the 
Gulf Coast in about 90 days?
    Here we are today. Republicans claim they want to improve 
the unemployment insurance system. I hope that is valid. I hope 
they really mean that. We should all respect and value the work 
of the GAO, and I look forward to hearing the details of their 
report today. Let's try something new, yet old. Let's tell it 
like it is. We already have a wealth of information to guide us 
in this matter. For instance, we know from the most current 
data that only 35 percent of unemployed Americans actually 
receive unemployment benefits, only 35 percent. In other words, 
two out of three. Americans who are unemployed don't get a 
nickel or a dime or even a penny. They get nothing. Why? Well, 
the GAO has looked at this in the past, and the answer might be 
for the simple reason many Americans are shut out of getting 
unemployment benefits because the system is designed that way.
    For example, some States do not count a laid-off worker's 
most recent wages when determining eligibility. Some States 
prevent an individual from getting any benefit when they try to 
get a new part-time job to replace the one that they have lost, 
and others prohibit a person from receiving benefits if they 
voluntarily quit a job to care for a sick child. These are 
systemic problems that we really need to address. My colleagues 
and I have suggested reforms. When they come from the 
Democratic side, they address an American problem, but the 
Republicans just refuse to join in on that kind of reform of 
the system. We also know these benefits are a lifeline, nothing 
more. Anybody who asserts that this is something people get on 
and stay because they don't have anything better to do, simply 
is not paying attention. On average, unemployment benefits 
replace less than one-half of workers' prior wages. At best, 
you are doubled over financially, but you are not on your 
knees.
    In the best case, modest benefits help a family survive 
with the bare essentials while they get back on their feet, but 
in some States the benefits are too low to provide even a 
minimum level of assistance. That is true in the States most 
affected by Hurricane Katrina, Louisiana, Mississippi and 
Alabama. In these States the average unemployment benefit is 
less than $200 a week. For a family of four, that is not even 
half the poverty level. The Democrats proposed a temporary 
increase in unemployment benefits for the disaster victims who 
lost their jobs and their homes and their belongings. Again, 
this Committee was quiet. Last but not least, we know that 
Americans hit by hurricanes are being hit by Federal funding 
cuts that will curtail access to reemployment services. People 
who lost their jobs, their homes and their belongings now can 
lose their hope as well, because the President's proposed 
budget continues the downward spiral. If Congress enacts the 
President's 2007 budget request, unemployment services will be 
cut again. These cuts will total $2.2 billion since 2002.
    Mr. Chairman, as I said, I don't question you. I do 
question the majority's commitment to the American people in a 
time of crisis. Americans who saw their jobs destroyed by a 
national disaster of ferocious winds deserve more than to see 
their recovery destroyed by a manmade political disaster of 
dead calm in the Congress. We have the power to do good. It is 
our choice, Mr. Chairman. I urge you to make the Committee a 
force for good that no storm can impair, and with that, I thank 
you.
    Chairman HERGER. I thank the gentleman, and our goal here 
in this Committee is certainly to help assist that are in need 
of it. I might, just in a short comment, brief comment: on 
October 2005 we did provide, through our Committee and through 
the Congress, $500 million in Federal funds to help States pay 
regular and extended unemployment. Also, Congress has provided 
about $100 billion for Katrina relief. Certainly there are some 
major problems there that we need to work and try to crack both 
for those that have been so devastated, and also to prepare 
ourselves, God forbid, for another great catastrophe should it 
happen. With that, before we move on to our testimony today, I 
want to remind our witness to limit our oral statements to 5 
minutes. However, without objection, all the written testimony 
will be made a part of the permanent record. Our witness this 
morning is Dr. Sigurd Nilsen, Director of Education, Workforce 
and Income Security Issues at the U.S. Government 
Accountability Office. Dr. Nilsen, it is good to see you again. 
Please proceed with your testimony.

  STATEMENT OF SIGURD R. NILSEN, Ph.D., DIRECTOR, EDUCATION, 
    WORKFORCE AND INCOME SECURITY, UNITED STATES GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Dr. NILSEN. Thank you, Chairman Herger, other Members of 
the Subcommittee. Thank you for the opportunity to discuss 
GAO's recent work on the Unemployment Insurance (UI) program. 
Today, I will discuss the results of three recent reports 
conducted at the request of Chairman Herger to assess first, 
the extent to which individual workers ever receive UI 
benefits, including the extent to which they receive benefits 
multiple times; Next, the types of workers who are more likely 
to receive UI benefits; and last, what is known about the 
extent to which beneficiaries receive reemployment services and 
their reemployment outcomes.
    Much of what I will cover today is based on a unique 
analysis of 24 years worth of data on individuals' employment 
and unemployment experience. These individuals are now 37- to 
45-years-old, so you can think of these people as younger baby-
boomers, that are born between 1957 and 1964, and roughly 
speaking, we have information on the first half of their work 
lives. First, if I can point you to a pie chart we will put up 
here in a second. This shows that 85 percent, if you take the 
39 percent, the 38 percent and the 9 percent, 85 percent of 
these workers that we are talking about experienced 
unemployment at least once between 1979 and 2002. Most of them, 
about three-quarters, the 39 percent plus the 38 percent, were 
eligible for UI benefits, but only about half of them, 38 
percent, had ever received Unemployment Insurance benefits, and 
less than half of these, 17 percent, received it more than 
once. I might add that there is about 5 percent who received UI 
benefits over this 24-year period five times or more.
    Next, we wanted to know how those who received UI were 
different from those who didn't receive UI, even though they 
were all eligible. What we found was that a range of 
characteristics are associated with the likelihood of receiving 
UI benefits. Those more likely to get Unemployment Insurance 
benefits were workers with higher earnings before they became 
unemployed. They were younger workers, more educated workers, 
women, married workers, workers with longer job tenure before 
they were laid off, and those living in areas with higher 
unemployment. In contrast to these findings, we found that a 
key UI program element, the weekly benefit amount, is not 
associated with the greater likelihood of receiving UI 
benefits.
    Now for those who experienced multiple spells of 
unemployment. I have another graphic here we will put 
underneath that one that shows that prior UI receipt--I hope 
you can all see that--had a particularly strong effect on 
whether or not people were likely to receive UI benefits in 
subsequent periods of unemployment. For example, when workers 
experienced their first UI eligible period of unemployment, 
their likelihood of receiving UI is 33 percent. During a second 
UI eligible period of unemployment, the likelihood of receiving 
UI goes up to 48 percent for those who received UI the first 
time, but it drops to about 30 percent for those who did not 
receive UI in their first period of unemployment. Furthermore, 
as you can see, the likelihood that those UI eligible workers 
will receive UI benefits during successive periods of 
unemployment increases each time that they receive UI benefits 
and decreases each time they do not. Now, looking at the 
duration of unemployment, we found that unemployed workers, 
eligible for UI, but who did not receive it, were unemployed, 
as the Chairman said, for an average of 8 weeks, while an 
unemployed worker receiving UI was unemployed for an average of 
21 weeks. In addition, longer periods of unemployment are 
associated with workers who are less educated, have lower 
earnings before they became unemployed, are women, are African-
American workers, and are not union members.
    Next, in light of the strong association we found between 
UI receipt and unemployment duration, it is important that 
unemployed workers who become UI claimants have access to 
reemployment services that will help facilitate their quick 
return to work. While almost all States now take UI claims 
remotely, that is, either over the telephone or over the 
Internet, many State UI directors told us that they felt the 
linkage between UI recipients and reemployment services has 
been strengthened recently. However, we don't have any national 
data to assess the success of these links. States engage some 
claimants in reemployment services directly through programs 
that identify certain groups who are targeted for assistance 
and particular States are required to target reemployment 
services to claimants who are likely to exhaust benefits. Such 
claimants are referred to reemployment services while they were 
still early in their claim. Despite States' efforts to design 
systems that link UI claimants to reemployment services, little 
is known about the extent to which claimants receive 
reemployment services or about the outcomes they achieve. 
Having data that show the degree to which reemployment services 
are reaching UI claimants is key to good program management and 
provides a first step toward understanding the impact of these 
programs. Yet we found that only 14 States routinely track the 
extent to which claimants received services from the broad 
array of federally funded programs that are designed to assist 
them, and even fewer, only six States, track outcomes such as 
reemployment rate, average benefit duration and UI exhaustion 
rate.
    Eleven States said that it was not possible to track 
claimants outcomes, and most States, 35 of them, said that it 
would be difficult to match this data because they are 
maintained in different data systems that were incompatible or 
hard to link. Last year we recommended that U.S. Department of 
Labor (DOL) consider the feasibility of collecting more 
comprehensive information on claimant services and outcomes. 
Labor has some new initiatives that will provide valuable 
information on the reemployment services of some UI claimants, 
but these efforts don't go far enough. None will allow for a 
comprehensive understanding of claimants' use of services, and 
the efforts will not move States closer to having the data they 
need to better manage their systems. Mr. Chairman, this 
completes my prepared statement. I would be happy to respond to 
any questions that you or Members of the Subcommittee may have 
at this time.
    [The prepared statement of Mr. Nilsen follows:]

Statement of Sigurd Nilsen, Ph.D., Director, Education, Workforce, and 
     Income Security Issues, U.S. Government Accountability Office

    Mr. Chairman and Members of the Subcommittee:
    Thank you for the opportunity to discuss GAO's recent work related 
to the Department of Labor's (Labor) Unemployment Insurance (UI) 
program, which has been a key component in ensuring the financial 
security of America's workforce for over 70 years. The UI program is 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 in times of economic downturn. In fiscal year 
2004, the UI program covered about 129 million wage and salary workers 
and paid about $41 billion in benefits to nearly 9 million workers who 
lost their jobs. Despite the size and scope of this program, there has 
been only limited information about how often the program is accessed 
by individual workers over time, the types of workers who are most 
likely to receive benefits, or the extent to which claimants are 
receiving services that help them to become reemployed.
    Today, I will draw upon the results of three recent reports we have 
completed that provide new information about the extent to which 
individual workers are being served by the UI program. In particular, I 
will discuss (1) the extent to which individual workers ever receive UI 
benefits, including the extent to which they receive benefits multiple 
times, (2) the types of workers who are more likely to receive UI 
benefits, and (3) what is known about the extent to which UI 
beneficiaries receive reemployment services and their reemployment 
outcomes.\1\
---------------------------------------------------------------------------
    \1\ The three reports discussed in this testimony are Unemployment 
Insurance: Better Data Needed to Assess Reemployment Services to 
Claimants, GAO-05-413 (Washington, D.C.: June 24, 2005); Unemployment 
Insurance: Information on Benefit Receipt, GAO-05-291 (Washington, 
D.C.: Mar. 17, 2005); and Unemployment Insurance: Factors Associated 
with Benefit Receipt, GAO-06-341 (Washington, D.C.: Mar. 7, 2006).
---------------------------------------------------------------------------
    To address the first and second questions, we analyzed data from 
the Bureau of Labor Statistics' (BLS) National Longitudinal Survey of 
Youth 1979 (NLSY79). The dataset contains very detailed information 
about the work and life experiences of a nationally representative 
sample of individuals who were born between 1957 and 1964. At the time 
of our analysis, the database contained over two decades' worth of 
information gathered from interviews conducted between 1979 and 2002, 
and covered a range of experiences, such as individuals' work 
histories, incomes, family composition, and education. To address the 
third question, we conducted telephone interviews with UI and workforce 
development officials in 50 states, sent a follow-up questionnaire to 
gather information on the strategies states use to collect data on UI 
claimants who receive reemployment services, interviewed state and 
local program officials in Georgia, Maryland, Michigan, and Washington, 
and interviewed Labor officials and other experts in the area of UI and 
reemployment services.
    In summary, we estimate that while 76 percent of workers born 
between 1957 and 1964 experienced at least one period of unemployment 
during the first half of their working lives in which they would likely 
have been eligible for UI benefits, about 38 percent actually received 
UI. Of those who received UI benefits, 44 percent received them more 
than once. Among workers who are eligible to receive UI benefits, those 
who are more likely to actually receive these benefits are younger, 
have higher earnings before becoming unemployed, have completed more 
years of education, or have already received UI benefits in the past 
than otherwise similar workers. The last factor--past experience with 
the UI program--has a particularly strong effect on the likelihood of 
receiving UI benefits. In addition, we found that unemployed workers 
tend to have longer periods of unemployment if they receive UI 
benefits, have completed fewer years of education, have lower earnings 
before they become unemployed, or if they do not belong to unions than 
otherwise similar workers. UI-eligible workers from certain 
industries--such as mining and manufacturing--are more likely than 
other workers to receive UI benefits. In the area of helping UI 
claimants return to work, we found that across states, UI claimants 
have access to a variety of reemployment services, and although most 
states accept UI claims remotely by telephone or Internet, states make 
use of UI program requirements to connect claimants with available 
services at various points in their claim. However, federal reporting 
requirements for states' UI programs and for federally funded 
employment and training programs do not provide a full picture of the 
services received or the outcomes obtained by all UI claimants, and few 
states monitor the extent to which claimants are receiving these 
services or outcomes for these claimants, in part because states' 
information systems have limited capabilities. GAO recommended that 
Labor, working with the states, consider collecting more comprehensive 
information on UI claimants' services and outcomes.

Background
    The UI program was established by Title III of the Social Security 
Act in 1935 and is a key component in ensuring the financial security 
of America's workforce. The program serves two primary objectives: (1) 
to temporarily replace a portion of earnings for workers who become 
unemployed through no fault of their own and (2) to help stabilize the 
economy during recessions by providing an infusion of consumer dollars 
into the economy. UI is made up of 53 state-administered programs that 
are subject to broad federal guidelines and oversight. In fiscal year 
2004, these programs covered about 129 million wage and salary workers 
and paid benefits totaling $41.3 billion to about 8.8 million workers.
    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. State unemployment 
tax revenues are held in trust by Labor and are used by the states to 
pay for regular weekly UI benefits, which typically can be received for 
up to 26 weeks.
    To receive UI benefits, an unemployed worker must file a claim and 
satisfy the eligibility requirements of the state in which the worker's 
wages were paid. Generally, states require that workers must have a 
minimum amount of wages and employment over a defined base period, 
typically, about a year before becoming unemployed, and have not 
already exhausted the maximum amount of benefits or benefit weeks to 
which they would be entitled because of other recent unemployment. In 
addition workers must have become unemployed for reasons other than 
quitting a job or being fired for work-related misconduct, and be able 
and available to work. In order to demonstrate that they are able to 
work and available for work and are still unemployed, claimants must 
submit a certification of continuing eligibility--by mail, telephone, 
or Internet, depending on the state--throughout the benefit period. 
This practice is usually done weekly or biweekly. States may continue 
to monitor claimant eligibility through an eligibility review program, 
in which certain claimants are periodically contacted to review their 
eligibility for benefits, work search activities, and reemployment 
needs.
    Since UI was established, there have been two major changes in the 
nation's workforce development system that have directly affected 
states' UI programs. Specifically, in November 1993, Congress enacted 
legislation amending the Social Security Act to require that each state 
establish a Worker Profiling and Reemployment Services (WPRS) system 
and implement a process typically referred to as claimant profiling. 
The claimant profiling process uses a statistical model or 
characteristics screen to identify claimants who are likely to exhaust 
their UI benefits before finding work. Claimants identified through 
this process are then referred to reemployment services while they are 
still early in their claim. For profiled claimants, participation in 
designated reemployment services becomes an additional requirement for 
continuing eligibility for UI benefits. The second major change was the 
enactment of the Workforce Investment Act of 1998, which requires 
states and localities to bring together about 17 federally funded 
employment and training services into a single system--the one-stop 
system. State UI programs are mandatory partners in the one-stop 
system. Another mandatory partner is the federal Employment Service, 
established by the Wagner-Peyser Act in 1933 to link job seekers with 
job opportunities. The Employment Service has historically been 
colocated with state UI offices to facilitate UI claimants' access to 
federally funded labor exchanges, job search assistance, job referral, 
placement assistance, assessment, counseling, and testing.

Most Workers Experience Unemployment and Over a Third Receive UI at 
        Least Once
    On the basis of our analysis of data from the Bureau of Labor 
Statistics' National Longitudinal Survey of Youth 1979 (NLSY79), 
covering the 23-year period from 1979 through 2002, we found that 85 
percent of a nationally representative sample of late baby boom 
workers--workers born between 1957 and 1964--had experienced 
unemployment at least once between 1979 and 2002. Workers who 
experienced unemployment were unemployed an average of five times over 
this 23-year period. Moreover, we found that of the 76 percent who were 
eligible for UI benefits at least once, 38 percent had ever received 
UI. (See fig. 1.) Of those who received UI benefits, 44 percent 
received them more than once; this represents about 17 percent of all 
of the workers in this age group.

Figure 1: UI Benefit Receipt and Estimated UI Eligibility among Workers 
                 Born between 1957 and 1964 (1979-2002)
[GRAPHIC] [TIFF OMITTED] T0438A.001


          Note: Total does not equal 100 because of rounding.

Some UI-Eligible Workers are More Likely to Receive UI Benefits than 
        Others, or to Have Longer Periods of Unemployment
    When all other worker characteristics have been controlled for, 
unemployed workers who are eligible for UI benefits are more likely to 
receive UI if they had higher earnings before they became unemployed, 
are younger, have completed more years of education, or if they have a 
history of past UI benefit receipt. In addition, we found that 
unemployed workers tend to have longer periods of unemployment if they 
receive UI benefits, have completed fewer years of education, had lower 
earnings before they became unemployed, or if they do not belong to 
unions. We also found that UI-eligible workers from certain industries 
are more likely than other workers to receive UI benefits, and that the 
strength of the relationship between previous UI benefit receipt and 
current UI receipt also varies by industry.

Certain Characteristics of UI-Eligible Workers Are Associated with 
        Greater Likelihood of UI Receipt
    We found that UI-eligible workers with certain characteristics are 
more likely to receive UI than otherwise similar UI-eligible workers. 
In particular, the likelihood of receiving UI tends to increase as the 
amount earned in the year before a worker became unemployed increases. 
(See fig. 2.) For example, a UI-eligible worker with earnings ranging 
from $10,000 to just under $12,000 in the year before becoming 
unemployed has a 36 percent likelihood of receiving UI, whereas a 
worker who earned roughly twice as much has a 45 percent likelihood of 
receiving UI.\2\ The relationship between higher earnings and a higher 
likelihood of receiving UI benefits is also consistent with economic 
theory that predicts that workers with higher earnings prior to 
becoming unemployed will be more reluctant to accept lower reemployment 
wages and are therefore more likely to take advantage of UI benefits as 
a way to subsidize their job search efforts.\3\
---------------------------------------------------------------------------
    \2\ The average and maximum earnings for the unemployed workers in 
our sample are $15,524 and $597,950, respectively.
    \3\ For economic theory concerning the relationship between job 
search and unemployment insurance, see Dale T. Mortensen, 
``Unemployment Insurance and Job Search Decisions,'' Industrial and 
Labor Relations Review, vol. 30, no. 4 (1977).
---------------------------------------------------------------------------

Figure 2: Simulated Likelihood of Receiving UI Benefits for UI-Eligible 
                    Workers, by Prior Year Earnings

[GRAPHIC] [TIFF OMITTED] T0438A.002


Note: Simulations are for the average likelihood of receiving UI during 
 first-time unemployment at different levels of earnings. The overall 
average likelihood of receiving UI during first-time unemployment is 33 
 percent. See appendix I of GAO-06-341 for methodology and estimation 
                                results.

    We also found that the likelihood of receiving UI benefits among 
UI-eligible workers tends to be higher for younger workers, and lower 
for older workers. Specifically, simulations based on our analysis 
results show that the likelihood of receiving UI peaks at about age 25 
and decreases thereafter. In fact, a 25-year-old unemployed worker who 
is eligible for UI is more than twice as likely to receive UI as an 
otherwise similar 40-year-old. This finding is contrary to previous 
studies that reported that younger workers are less likely to receive 
UI benefits than older workers.\4\ However, these previous studies did 
not include as much information about workers' past unemployment and UI 
benefit receipt histories as our analysis. Therefore, because older 
workers have more previous unemployment and UI benefit receipt 
experience than younger workers, it is possible that our analysis 
controlled for the effect of these experiences more completely than 
previous studies, resulting in a more precise estimate of the effect of 
age. Although we are unable to explain why younger workers are more 
likely to receive UI benefits, it is possible that older workers, who 
have had more time to accumulate financial assets, may have more 
private resources available to help them cope with unemployment than 
younger workers.\5\ Or it may simply be the case that younger workers 
are less optimistic than older workers about how long it will take for 
them to become reemployed.
---------------------------------------------------------------------------
    \4\ See Rebecca M. Blank and David E. Card, ``Recent Trends in 
Insured and Uninsured Unemployment: Is There an Explanation?'' The 
Quarterly Journal of Economics, vol. 106, no. 4 (1991) and Brian P. 
McCall, ``Repeat Use of Unemployment Insurance,'' in Laurie J. Bassi 
and Stephen A. Woodbury, editors, Long-Term Unemployment and 
Reemployment Policies (Stamford, Connecticut: JAI Press, 2000).
    \5\ See Jonathan Gruber, ``The Wealth of the Unemployed,'' October 
2001, Industrial and Labor Relations Review, vol. 55, no. 1.
---------------------------------------------------------------------------
    Another characteristic associated with a greater likelihood of 
receiving UI benefits is education. We found that UI-eligible workers 
who have completed more years of education are more likely to receive 
UI benefits than otherwise similar workers with fewer years of 
education. For example, a UI-eligible worker with the equivalent of a 
college education (16 years of schooling) when he or she becomes 
unemployed is almost one-fifth more likely to receive UI than a UI-
eligible worker with a high school education (12 years of 
schooling).\6\ Although the effect of education on the likelihood of 
receiving UI benefits has been analyzed in other research, no 
significant education effect was found.\7\ Still, our result seems 
logical. That is, to the extent that workers with more education are 
also better able to obtain UI program information and to understand 
their states' requirements for filing claims and remaining eligible for 
benefits, they are also more likely to have successful benefit claims.
---------------------------------------------------------------------------
    \6\ The average number of years of schooling completed by UI-
eligible workers, at the time when they became unemployed, is 12 years.
    \7\ See Blank and Card.
---------------------------------------------------------------------------
    Other factors, including a worker's gender, marital status, job 
tenure, and the local unemployment rate, are also associated with UI 
benefit receipt. Controlling for all other characteristics among UI-
eligible workers, we found that

      a woman is 29 percent more likely to receive UI benefits 
than a man,
      a married worker is 13 percent more likely to receive UI 
than an unmarried worker,
      a longer-tenured worker is more likely to receive UI--for 
example, a worker with 4 years of tenure at his or her most recent job 
is 12 percent more likely to receive UI than a worker with 1 year of 
job tenure, and
      being in an area with high unemployment raises the 
likelihood that an unemployed worker will receive UI--for example, a 
worker living in an area with an unemployment rate of 9 percent is 10 
percent more likely to receive UI than a worker living in an area with 
an unemployment rate of 5 percent.

    Our finding that women are more likely to receive UI benefits than 
otherwise similar men differs from the results of previous research, 
which generally found no statistically significant differences in the 
likelihood of receiving UI benefits for men and women. However, our 
analysis controls for more worker characteristics than these previous 
studies, and it is likely that we have more carefully isolated the 
effect of gender from that of other characteristics that are related to 
gender, such as workers' occupations and industries. Still, it is not 
immediately clear why women are more likely to receive UI benefits than 
men who are similar with respect to other observed characteristics. We 
are also unable to explain why married workers are more likely to 
receive UI benefits than otherwise similar unmarried workers.\8\ Our 
finding that workers with longer job tenure are more likely to receive 
UI benefits is consistent with previous research. This result seems 
logical if we consider that workers with longer job tenures are more 
likely to have acquired more employer-specific skills than workers with 
shorter job tenures. Because such specialized skills are not as easy to 
transfer to a new employer as less specialized skills, workers with 
more job tenure may expect to take longer to find a job where these 
skills would be needed than a worker who has more generalized skills. 
Finally, our finding that workers living in areas with higher 
unemployment are more likely to receive UI benefits is probably due to 
the higher number of unemployed workers relative to available jobs, 
which may make workers more willing to apply for UI benefits as they 
engage in what are likely to be longer job searches.
---------------------------------------------------------------------------
    \8\ We specifically tested for the effect of spousal income on the 
likelihood of receiving UI to determine whether marital status was 
masking some underlying effect of additional family income, and found 
this not to be the case.
---------------------------------------------------------------------------
    In contrast to the findings already discussed, we found that a key 
UI program element, the weekly UI benefit amount that unemployed 
workers are entitled to, is not associated with a greater likelihood of 
receiving UI benefits. Specifically, we used our model estimates to 
simulate benefit increases of 10 percent and 25 percent, and a decrease 
of 10 percent, and found that these changes did not affect the 
likelihood of UI benefit receipt among eligible workers. This finding 
is also consistent with the work of others, who have found that 
increases in the weekly benefit amount have mixed, but generally small, 
effects on UI benefit receipt, after controlling for other factors.\9\ 
Taken together, these results suggest that UI benefit levels have 
modest effects on individuals' decisions about whether or not to 
receive UI benefits.
---------------------------------------------------------------------------
    \9\ See David E. Card and Phillip B. Levine, ``Unemployment 
Insurance Taxes and the Cyclical and Seasonal Properties of 
Unemployment,'' Journal of Public Economics, vol. 53, no. 1 (1994); 
Patricia M. Anderson and Bruce D. Meyer, ``The Effect of Unemployment 
Insurance Taxes and Benefits on Layoffs Using Firm and Individual 
Data,'' NBER Working Paper No. 4960, National Bureau of Economic 
Research, Cambridge, Massachusetts (1994); and Robert H. Topel, ``On 
Layoffs and Unemployment Insurance,'' American Economic Review, vol. 
73, no. 4 (1983).
---------------------------------------------------------------------------
Unemployed Workers Who Received UI in the Past Are More Likely to 
        Receive UI during Subsequent Unemployment
    Of all the characteristics associated with UI benefit receipt, we 
found that one--past UI receipt--had a particularly strong effect on 
the likelihood of receiving UI benefits. (See fig. 3.) For example, 
when workers experience their first UI-eligible period of unemployment, 
their likelihood of receiving UI is 33 percent. During a second UI-
eligible period of unemployment, the likelihood of receiving UI is 48 
percent for workers who received UI during the first unemployment 
period, but only 30 percent for workers who did not receive UI. 
Furthermore, the likelihood that these UI-eligible workers will receive 
UI benefits during successive periods of unemployment increases each 
time that they receive UI benefits and decreases each time that they do 
not.\10\
---------------------------------------------------------------------------
    \10\ As noted above, relatively few UI-eligible workers who receive 
UI benefits receive them multiple times. See GAO-05-291 for a more 
complete discussion of the incidence of repeat UI benefit receipt.
---------------------------------------------------------------------------

Figure 3: Simulated Likelihood of Receiving UI Benefits for UI-Eligible 
 Workers during Successive Periods of Unemployment, by Past UI Receipt 
                                 Status

[GRAPHIC] [TIFF OMITTED] T0438A.003


 Note: Simulations are the average likelihood of receiving UI during a 
  current unemployment period for two extreme cases: (1) workers who 
   always received UI benefits during previous unemployment and (2) 
workers who never received UI during previous unemployment. The average 
 likelihood of receiving UI during first-time unemployment for all UI-
   eligible workers is 33 percent. See appendix I of GAO-06-341 for 
                  methodology and estimation results.

    This finding suggests that a worker's first unemployment experience 
has a lasting and self-reinforcing effect. To the extent that all 
workers know about the UI program and whether or not they are eligible 
to receive benefits, receiving or not receiving UI may be a personal 
choice. Such a choice might be based on workers' individual 
preferences, or may be related to other characteristics that were not 
captured in the NLSY79 data. On the other hand, if workers do not all 
have good information about UI, those who receive UI benefits may 
simply know more about the program than those who do not receive UI 
benefits, and their knowledge about the program may be improving each 
time they receive UI benefits.

Receiving UI Benefits, along with Other Factors, Is Associated with 
        Unemployment Duration
    We found that, overall, unemployed workers who receive UI benefits 
have longer unemployment duration than otherwise similar workers who do 
not receive UI benefits. Several other characteristics are also 
associated with unemployment duration. In particular, UI-eligible 
workers are more likely to experience longer unemployment duration if 
they have lower earnings before becoming unemployed or if they have 
completed fewer years of education. Other characteristics associated 
with longer unemployment duration include being African-American, or 
female, or not belonging to a union.
    Our results with respect to unemployment duration are generally 
consistent with the results of other research. In particular, 
researchers have suggested that the association between higher earnings 
and shorter periods of unemployment may be due, in part, to the higher 
cost of unemployment for workers with higher earnings, when compared to 
the cost for workers with lower earnings.\11\ For example, the cost of 
unemployment can be measured in terms of lost wages. This cost is 
greater for workers with higher earnings, because they forego a higher 
amount of potential earnings in exchange for the time they can spend on 
unpaid activities, such as job search, home improvement, or recreation. 
Researchers have also suggested that the association between less 
education and longer periods of unemployment may be a result of workers 
with less education having fewer work-related skills.\12\ Two possible 
explanations for the differences in employment outcomes for African-
American workers include labor market discrimination, and limited 
access to social networks that may enable these workers to find jobs 
more quickly.\13\ Likewise, longer unemployment duration among female 
workers may be due to labor market discrimination, or to differences in 
how women value paid work versus nonemployment activities, relative to 
men.\14\
---------------------------------------------------------------------------
    \11\ See Bruce D. Meyer, ``Unemployment Insurance and Unemployment 
Spells,'' Econometrica, vol. 58, no. 4 (1990).
    \12\ See Karen E. Needels and Walter Nicholson, An Analysis of 
Unemployment Durations Since the 1990-1992 Recession, UI Occasional 
Paper 99-6, prepared for the Department of Labor, 1999.
    \13\ See Antoni Calvo-Armengol, and Matthew O. Jackson, ``The 
Effects of Social Networks on Employment and Inequality,'' The American 
Economic Review, vol. 94, no. 3, (2004) for a discussion of the effects 
of individuals' social networks on employment outcomes.
    \14\ See Needels and Nicholson, and GAO, Women's Earnings: Work 
Patterns Partially Explain Differences between Men's and Women's 
Earnings, GAO-04-35 (Washington, D.C.: Oct. 31, 2003).
---------------------------------------------------------------------------
    The associations between shorter unemployment duration and union 
membership, and to longer job tenure, may reflect the greater access 
that these workers may have to reemployment opportunities, through 
union hiring halls or through informal peer networks. It may also 
reflect a greater likelihood of being recalled to previous jobs.\15\
---------------------------------------------------------------------------
    \15\ See Needels and Nicholson.
---------------------------------------------------------------------------
UI-Eligible Workers from Certain Industries Are More Likely to Receive 
        UI and to Have Longer Periods of Unemployment
    We found that first-time unemployed workers from mining and 
manufacturing are more likely to receive UI than workers from other 
industries. (See table 1.) For example, first-time unemployed workers 
from the manufacturing industry are about two-thirds more likely to 
receive UI benefits than workers from the professional and related 
services industry. We also found that the association between past and 
current UI benefit varies across industries. This effect is strongest 
for UI-eligible workers from the public administration sector, and 
weakest for workers from agriculture and construction.\16\
---------------------------------------------------------------------------
    \16\ Although the association between past UI receipt and current 
UI receipt is statistically significant for all industries combined, 
differences in this association among industries were statistically 
significant only for public administration, agriculture, and 
construction.

 Table 1: Simulated Likelihood of Receiving UI Benefits during Different Periods of UI-Eligible Unemployment for
                                    Workers with Past UI Receipt, by Industry
----------------------------------------------------------------------------------------------------------------
                                                           Simulated likelihood of receiving UI benefits during
                                                          current UI-eligible unemployment period, given past UI
                                                                            receipt (percent)
                        Industry                        --------------------------------------------------------
                                                               First              Second             Third
                                                            unemployment       unemployment       unemployment
                                                               period             period             period
----------------------------------------------------------------------------------------------------------------
Mining                                                                 46                 57                 69
----------------------------------------------------------------------------------------------------------------
Manufacturing                                                          40                 52                 65
----------------------------------------------------------------------------------------------------------------
Public administration                                                  37                 68                 91
----------------------------------------------------------------------------------------------------------------
Wholesale and retail trade                                             35                 52                 70
----------------------------------------------------------------------------------------------------------------
Agriculture, forestry, and fishing                                     34                 42                 50
----------------------------------------------------------------------------------------------------------------
Business services                                                      31                 48                 66
----------------------------------------------------------------------------------------------------------------
Construction                                                           31                 40                 51
----------------------------------------------------------------------------------------------------------------
Finance, insurance, real estate                                        31                 64                 91
----------------------------------------------------------------------------------------------------------------
Transportation and public utilities                                    29                 46                 66
----------------------------------------------------------------------------------------------------------------
Entertainment and recreation services                                  26                 45                 67
----------------------------------------------------------------------------------------------------------------
Professional and related services                                      24                 39                 58
----------------------------------------------------------------------------------------------------------------
Personal services                                                      23                 38                 56
----------------------------------------------------------------------------------------------------------------
All industries                                                         33                 48                 64
----------------------------------------------------------------------------------------------------------------
Source: Simulations based upon GAO analysis of NLSY79 data.
Note: Simulations are the average likelihood of receiving UI during a first unemployment period, a second
  unemployment period with UI receipt during the prior unemployment period, and a third unemployment period with
  UI receipt during both prior unemployment periods. The positive effect that each prior UI receipt period has
  on the likelihood of current UI receipt is statistically significantly larger for the public administration
  industry relative to the professional and related services industry at the 95 percent confidence level, and
  smaller for the agriculture and construction industries. The simulations also incorporate the industry effects
  and the industry interactions with the number of prior periods of unemployment. See appendix I of GAO-06-341
  for methodology and estimation results.


    Workers experiencing their first period of unemployment did not 
have past UI receipt.
    These results show that although UI-eligible workers in some 
industries are more likely to receive UI benefits when they experience 
unemployment for the first time, their likelihood of receiving UI 
benefits again when they become unemployed a second or third time is 
not necessarily higher than it is for workers from other industries. 
(See fig. 4.) For example, the likelihood of receiving UI benefits for 
workers from the manufacturing industry who are unemployed for the 
first time is relatively high--about 40 percent. This likelihood 
increases to 52 percent during a second period of unemployment for 
workers who have already received UI benefits, and 65 percent during a 
third period of unemployment for workers who received UI each previous 
time they were unemployed. By comparison, the increase in the 
likelihood of receiving UI between the first and third periods of 
unemployment is higher for most other industries, especially public 
administration. Specifically, the likelihood of receiving UI benefits 
for public administration workers who are unemployed for the first time 
is 37 percent. This likelihood increases to 69 percent during a second 
period of unemployment for workers who received have already received 
UI, and to 91 percent during a third period of unemployment for workers 
who received UI each previous time they were unemployed.

Figure 4: Simulated Effect of Past UI Benefit Receipt on the Likelihood 
  of Receiving UI in Subsequent Periods of Unemployment, for Selected 
                               Industries

[GRAPHIC] [TIFF OMITTED] T0438A.004


 Note: Simulations are the average likelihood of receiving UI during a 
 first unemployment period, second unemployment period with UI receipt 
 during the prior unemployment period, and a third unemployment period 
 with UI receipt during both prior unemployment periods. The positive 
   effect that each prior UI receipt period has on the likelihood of 
current UI receipt is statistically significantly larger for the public 
   administration industry relative to the professional and related 
 services industry at the 95 percent confidence level, and smaller for 
   the agriculture and construction industries. The simulations also 
incorporate the industry effects and the industry interactions with the 
 number of prior periods of unemployment. See appendix I of GAO-06-341 
                for methodology and estimation results.

    Administrative unemployment insurance data have shown that repeat 
UI recipients tend to be from industries that are seasonal, such as 
manufacturing and construction. Our results, however, suggest that this 
is not because workers with past UI receipt from these industries are 
more likely to receive UI benefits when they are unemployed than 
otherwise similar workers from other industries. Rather, it may be that 
workers from such seasonal industries are unemployed more often on 
average than workers from other industries, or that a larger proportion 
of unemployed workers from such industries have collected UI 
previously.
    In light of the strong association we found between UI receipt and 
unemployment duration, it is important that unemployed workers who 
become UI claimants have access to reemployment services that will help 
facilitate their quick return to work. However, the shift towards 
states' accepting UI claims remotely has raised concerns that some UI 
claimants may not be receiving enough information on reemployment 
services or timely assistance to help them find a job, and little is 
known about whether states have policies in place to help unemployed 
workers quickly become reemployed.

A Variety of Reemployment Services Are Available to Help UI Claimants 
        Get Jobs, but Little Information Exists to Determine the Extent 
        to Which Workers Use Them
    In our review of states' efforts to facilitate reemployment of UI 
claimants, we found that across states, UI claimants have access to a 
variety of reemployment services, and although most states accept UI 
claims remotely by telephone or Internet, states make use of UI program 
requirements to connect claimants with available services at various 
points in their claims. However, despite states' efforts to design 
systems that link UI claimants to reemployment services, little data 
are available to gauge the extent to which claimants are receiving 
these services or the outcomes they achieve. Federal reporting 
requirements for states' UI programs and for federally funded 
employment and training programs do not provide a full picture of 
services or outcomes, and few states monitor the extent to which 
claimants are receiving these services or outcomes for these claimants, 
in part because of limited information systems capabilities.

Although Some federally Funded Reemployment Services Are Universally 
        Accessible, Most Serve Targeted Groups of Workers
    UI claimants in all states have access to the range of Wagner-
Peyser funded employment services and to Workforce Investment Act (WIA) 
funded core services that are available to all job seekers through the 
one-stop system. Such services include labor exchange services in all 
states, whereby claimants can access job listings and information on 
their state's labor market trends using the Internet. Officials in many 
states said that claimants also have access to online labor exchange, 
or job matching services as well as other self-assessment services. 
One-stop centers in all states make computers available on-site, and 
most states provide access to self-help software, such as aptitude 
tests, computer tutorials, or job search guidance, at the centers. 
Claimants also have access to a variety of staff-assisted reemployment 
services through the one-stop system. Officials most often mentioned 
that claimants were likely to be offered

      job search assistance;
      resume assistance;
      job matching, referral, and placement services;
      orientation to services;
      referral to WIA or other partners;
      initial or general needs assessment;
      counseling; and
      interview assistance.

    In addition to states' Employment Service and WIA core services, 
the WIA Adult and Dislocated Worker programs provide for additional 
levels of services to qualified workers. Intensive services include 
activities that require greater staff involvement than core services, 
and may include services such as comprehensive assessment and case 
management. Intensive services are available to adults and dislocated 
workers who have received at least one core service and are unable to 
find a job or have a job that does not lead to self-sufficiency. 
Training services, such as occupational skills or on-the-job training, 
are available on a more limited basis, typically to claimants who have 
received at least one intensive service but who are still unable to 
obtain or retain employment. Additional training assistance for workers 
who are laid off as a result of international trade is available 
through the Trade Adjustment Assistance (TAA) program, although the 
amount of funds available for training is limited by statute.

States Use Program Requirements to Connect Claimants with Available 
        Services
    Although all UI claimants can access the range of reemployment 
services through the one-stop system at any time, UI requirements often 
provide the context for states' efforts to link claimants to 
reemployment services. Specifically, all federally approved state UI 
programs require that claimants be able and available to work. To meet 
these conditions, 44 states require that UI claimants register with the 
state's Employment Service in order to be eligible for UI benefits. In 
addition, 49 states impose a work search requirement as a condition for 
continuing UI eligibility, and claimants must document that they are 
meeting their state's work search requirement in a number of ways. Most 
commonly, claimants are required to keep a log of work search 
activities that may be subject to review, or they must certify that 
they are able and available to work through the process of filing for a 
continuing claim.
    These work registration and work search requirements often serve to 
link claimants to reemployment services. The process of registering for 
work with the state's labor exchange, for example, may bring claimants 
into an Employment Service office or one-stop center where reemployment 
services are delivered. Officials in nearly two-thirds of the 44 states 
where claimants are required to register for work told us that coming 
into an Employment Service office or one-stop center is either a 
required part of the process or one of the options claimants have for 
completing their registration. Officials in close to a third of the 
states with this requirement told us claimants are registered with the 
labor exchange when they file their initial UI claim.
    Some states also use their processes for monitoring compliance with 
the work search requirement to direct claimants to reemployment 
services. Officials in 39 of the 49 states that require claimants to 
actively seek employment told us that telephone or in-person interviews 
with claimants may be used to monitor compliance with this requirement. 
In over two-thirds of these states, officials told us that some 
information on job search strategies or reemployment services is 
provided during the interview.
    States also engage some claimants in reemployment services directly 
through programs that identify certain groups for more targeted 
assistance. In particular, states target reemployment services to 
claimants who are identified through federally required claimant 
profiling systems--a process that uses a statistical model or 
characteristics screen to identify claimants who are likely to exhaust 
their UI benefits before finding work. Claimants identified through 
this process are then referred to reemployment services while they are 
still early in their claim. Although profiled claimants can access the 
services available to all job seekers through the one-stop system, 
participation in the services they are referred to is mandatory. State 
officials most often identified orientation and assessment as services 
that profiled claimants were required to receive. In addition, many 
officials told us that the services profiled claimants received 
depended on their individual needs following an assessment, the 
development of an individual plan, or the guidance of staff at a one-
stop center. While failure to report to required reemployment services 
can result in benefits being denied, states vary in the conditions that 
prompt denying benefits.
    From 2001 through last year, states made use of Labor's 
Reemployment Services Grants to fund these services.\17\ Although these 
grants are no longer available, officials in the majority of the states 
we interviewed told us their states had been using the Reemployment 
Services Grant funds to hire staff to provide reemployment services. 
Some states have also used these grants to direct reemployment services 
to claimants beyond those who have been profiled and to support other 
enhancements in the provision of reemployment services to claimants.
---------------------------------------------------------------------------
    \17\ Reemployment Services Grants, provided to ensure that UI 
claimants would receive necessary services to become reemployed, were 
provided to states annually from 2001 through 2005. No appropriation 
was made for these grants in fiscal year 2006, and no further 
appropriation has been requested for fiscal year 2007.
---------------------------------------------------------------------------
Little Information Exists to Provide a Complete Picture of Reemployment 
        Services for Unemployment Insurance Claimants
    Despite states' efforts to design systems that link UI claimants to 
reemployment services, little is known about the extent to which 
claimants receive reemployment services or about the outcomes they 
achieve. Although states must meet a number of federal reporting 
requirements for their UI and employment and training programs, none of 
these reports provides a complete picture of the services received or 
the outcomes obtained by UI claimants, and only recently has Labor 
begun to require that states provide information on the reemployment 
outcomes of UI claimants. We also found that few states monitor the 
extent to which claimants are receiving these services, and even fewer 
monitored outcomes for these claimants at the time of our review, 
largely because of limited information systems capabilities.
    As discussed earlier, UI claimants may access federally-funded 
reemployment assistance from the Wagner-Peyser Employment Service, WIA 
Adult or Dislocated Worker programs, and, if they are laid off because 
of trade, TAA. To monitor the performance of these programs, Labor does 
require states to meet a number of reporting requirements, but these 
reports are submitted on a program-by-program basis, and none of these 
reports provide a complete picture of the services received or the 
outcomes obtained by all UI claimants.
    Reporting requirements for the Wagner-Peyser funded Employment 
Service are similarly limited. States are required to provide quarterly 
reports that include summary information on the numbers of Employment 
Service participants who received specified services, or who obtained 
particular outcomes, and breaks out this information by several 
demographic categories, and whether or not the participant was a UI 
claimant. However, these reports only contain information on 
individuals who are registered with the Employment Service, and 
although anyone who receives services funded by Wagner-Peyser must be 
registered with the Employment Service, not all UI claimants receive 
Wagner-Peyser funded services.
    WIA and TAA reporting requirements also do not provide a complete 
picture of claimant services and outcomes. Although WIA tracks several 
performance measures directly related to outcomes for Adults and 
Dislocated Workers, including job placement, job retention, and wage 
gain or wage replacement, these records do not contain information for 
UI claimants who are not registered under WIA. Furthermore, many 
individuals served under WIA--particularly those who receive only self-
directed services--are not registered or tracked for performance and 
are, therefore, not reflected in any of the WIA data. Similarly, for 
the TAA program, Labor requires states to submit participant data files 
on all who exit the program each quarter, but the reports are limited 
to those claimants served by TAA.
    Having data that show the degree to which reemployment services are 
reaching UI claimants is key to good program management and provides a 
first step toward understanding the impact of these programs. However, 
knowing how many claimants may be accessing reemployment services and 
the type of outcomes they may be achieving has proven difficult for 
state and local officials.
    We found that only 14 states go beyond the federal reporting 
requirements to routinely track the extent to which claimants receive 
services from the broad array of federally funded programs that are 
designed to assist them. Of the remaining 36 states that do not 
routinely track claimant services, 4 told us it would not be possible 
for them to do so. In addition, 37 states reported that tracking UI 
claimants who receive reemployment services was somewhat or very 
difficult, while only 6 states said it was not at all difficult. States 
most often told us that tracking claimant services across multiple 
programs was made difficult by the fact that reemployment services and 
UI claimant data were maintained in separate data systems--systems that 
were either incompatible or difficult to link.
    While relatively few states routinely track claimants' services, 
even fewer track outcomes. Only 6 states go beyond the federal 
reporting requirements to routinely monitor any outcomes for UI 
claimants who receive reemployment services--outcomes such as 
reemployment rate, average benefit duration, and UI exhaustion rate. 
Eleven states reported that it would not be possible to calculate any 
of the outcomes for these claimants. The issues states cited in 
tracking outcomes across programs for UI claimants were similar to 
those for tracking use of services. Officials from 35 states told us 
that tracking one or more outcome measures was made difficult by the 
fact that reemployment services and UI claimant data were maintained in 
different systems that were either incompatible or difficult to link.
    Labor has some initiatives that may begin to shed light on claimant 
services and outcomes, including modifying its performance measures to 
require states to track a reemployment rate for their UI claimants--
defined as the percentage of UI claimants who are reemployed within the 
quarter following their first UI payment. Labor is also developing a 
system to consolidate reporting on performance for Labor's Employment 
and Training Administration (ETA) programs. This system--ETA's 
Management Information and Longitudinal Evaluation (EMILE) system--
would consolidate performance reporting across a range of Labor 
programs including WIA, Employment Service, and TAA. Current plans do 
not include incorporating UI reporting into EMILE.
    Last year, we recommended that the Department of Labor work with 
states to consider the feasibility of collecting more comprehensive 
information on UI claimants' services and outcomes. Although Labor 
generally agreed with our findings, Labor commented that current and 
planned data collection efforts would provide sufficient information to 
policy makers. While Labor's new initiatives, in combination with 
current reporting requirements, will provide valuable information on 
the reemployment activities of some UI claimants, these efforts will 
not allow for a comprehensive, nationwide understanding of claimants' 
participation in the broad range of reemployment services designed to 
assist them. Furthermore, these efforts will not move states in the 
direction of having the data they need to better manage their systems.
    Mr. Chairman, this completes my prepared statement. I would be 
happy to respond to any questions you or other Members of the 
Subcommittee may have at this time.
                               __________

    Unemployment Insurance: Factors Associated with Benefit Receipt. 
GAO-06-341. Washington, D.C.: March 7, 2006.
    Trade Adjustment Assistance: Most Workers in Five Layoffs Received 
Services, but Better Outreach Needed on New Benefits. GAO-06-43. 
Washington, D.C.: January 31, 2006.
    Workforce Investment Act: Labor and States Have Taken Actions to 
Improve Data Quality, but Additional Steps Are Needed. GAO-06-82. 
Washington, D.C.: November 14, 2005.
    Unemployment Insurance: Better Data Needed to Assess Reemployment 
Services to Claimants. GAO-05-413. Washington, D.C.: June 24, 2005.
    Unemployment Insurance: Information on Benefit Receipt. GAO-05-291. 
Washington, D.C.: March 17, 2005.
    Trade Adjustment Assistance: Reforms Have Accelerated Training 
Enrollment, but Implementation Challenges Remain. GAO-04-1012. 
Washington, D.C.: September 22, 2004.
    Workforce Investment Act: States and Local Areas Have Developed 
Strategies to Assess Performance, but Labor Could Do More to Help. GAO-
04-657. Washington, D.C.: June 1, 2004.
    Workforce Training: Almost Half of States Fund Employment Placement 
and Training through Employer Taxes and Most Coordinate with federally 
Funded Programs. GAO-04-282. Washington, D.C.: February 13, 2004.
    Workforce Investment Act: One-Stop Centers Implemented Strategies 
to Strengthen Services and Partnerships, but More Research and 
Information Sharing Is Needed. GAO-03-725. Washington D.C.: June 18, 
2003.
    Multiple Employment and Training Programs: Funding and Performance 
Measures for Major Programs. GAO-03-589. Washington, D.C.: April 18, 
2003.
    Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is 
Limited. GAO-01-181. Washington, D.C.: December 29, 2000.

                                 

    [The GAO Report follows:]

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    Chairman HERGER. Thank you very much, Dr. Nilsen. I want to 
thank you and your team again for the excellent work of this 
report. It challenges many assumptions about unemployment 
benefits. In the process it challenges policymakers to consider 
ways to better serve people who lose jobs and all other 
taxpayers. One of the most commonly stated assumptions about 
unemployment benefits is that collecting benefits allows people 
time to find higher paying jobs. That would seem to make sense. 
It certainly has been one of the operating assumptions of this 
program since its beginning. Is there any evidence to show that 
those who collect unemployment benefits, especially for longer 
periods of time, return to better-paying jobs? If not, do you 
think this type of information should be collected?
    Dr. NILSEN. You are right, Mr. Chairman. This is a very 
important aspect of knowing what the program is achieving, but 
in our work so far we have not been able to look at the 
employment outcomes, whether or not people who spend more time 
in a job search and more time on Unemployment Insurance 
benefits end up getting a better job than those who are on for 
a shorter period of time, or those who don't get benefits. One 
study that we did recently that is not part of what I talked 
about today, looked at a series of case studies on the Trade 
Adjustment Assistance Program, and we looked at five plant 
closings across the country, and we tracked every worker who 
was laid off. Some workers made it into a one-stop to get 
reemployment assistance. Some people made it into training, and 
other people didn't come in for services at all.
    One of the things we found was that the reemployment 
experiences of all those workers was about the same. They all 
got reemployed at about the same rate, and they all got 
reemployed at about the same wage replacement level. The 
differences between the workers was that those who didn't go 
into the one-stops were the higher wage workers, more likely 
had better skills and better networks, and were able to get 
reemployment quicker, where those who needed additional 
assistance were the ones who came into the one-stop, they were 
the lower wage workers. The lowest wage workers were the ones 
who needed to change careers and got into training. I think we 
need to know a lot more about the dynamics of how UI works and 
how it helps workers, and which workers are the ones that 
really need more assistance to become reemployed.
    Chairman HERGER. Thank you. I think this is a key challenge 
to those of us who are policymakers, from your report, 
specifically how can we best ensure that States engage 
unemployment benefit recipients to ensure that these benefits 
help laid-off workers quickly return to work, and in high-
paying jobs. With that, the gentleman from Washington, Mr. 
McDermott, to inquire.
    Mr. MCDERMOTT. Dr. Nilsen, what is unemployment for; what 
are we trying to do with it? I have trouble understanding some 
of the data and all the rest, because it seems to me 
unemployment is one of those issues where you are trying to 
replace income while people look for another place, and when 
you have two-thirds of the people not eligible for it, what is 
the point of the system? Why do we just pick that third? Why do 
the States pick that third and say, ``We will help them, and 
then the rest we will exclude by a various set of means?''
    Dr. NILSEN. I can't speak for the States and why they 
design their systems in particular ways, but you are right. In 
the early fifties, about 50 percent of workers unemployed 
received benefits, and now it is closer to a third. The two 
focuses of the Unemployment Insurance system are for wage 
replacement, earnings replacement, while people are unemployed, 
looking for work, and to provide economic stabilization for the 
economy by pumping money into the economy. There are a lot of 
factors that have driven the UI system down from a 50 percent 
recipiency rate to about a 33 percent recipiency rate, and a 
lot of it has to do with the changes in the workforce, changes 
away from manufacturing and unionized work, which traditionally 
had much higher recipiency rates, part of that as a result of 
being full-time workers for long periods of time. Also, the 
declining proportion of full-time workers. There are many more 
workers who are part time now, and if you are a part-time 
worker and if you are looking to go into another part-time job, 
most States do not provide you benefits. So that is up to the 
States. As you know, Title III of the Social Security Act 
established the UI system, but allowed States that met certain 
criteria to operate and manage their own systems. Very often, 
these are designed cooperatively between labor and management 
with the State legislatures, and they work out the sort of 
system they want to serve their State.
    Mr. MCDERMOTT. Is the data you are collecting then 
collected against a model that no longer exists of employment? 
You don't go to work for Boeing today and work for 40 years for 
Boeing, or you don't go in the woods and work felling trees for 
40 years, knowing that every winter you will be off, and then 
you will be back on in the next--or fishing. Our State, we have 
had ups and downs in our employment all the time related to the 
local industries. It seems to me the data that you are 
collecting now doesn't really--is it not looking at what the 
workforce is.
    Dr. NILSEN. I think it is--an important consideration is, 
is the system meeting the current workforce needs? The people 
who are becoming unemployed now, is the system able to help 
them? That is something that would be important to look at.
    Mr. MCDERMOTT. It seems to me there is a lot of difference 
between a 35-year-old employee of a software company in 
Seattle, who is laid off, but knows that job is going to come 
back when that next contract comes due in about 4 months, so 
they say, why should I go get unemployment benefits, as opposed 
to somebody who gets laid off in a manufacturing job or 
something where there is no idea whether the job will ever come 
back. The system seems to be aimed at those people who are the 
long-term ones. It doesn't have anything to say about what 
happens to people in the short term.
    Dr. NILSEN. One thing that we found is the different 
experiences of people who are on Unemployment Insurance, and 
their duration of unemployment. If you have more education--and 
that is correlated with higher skills--you are not on UI as 
long as somebody else who has less education. You have 
marketable skills is this is allowing you to reenter the 
workforce and find employment relatively quicker. Those who 
have a harder time have less education, likely less marketable 
skills, are having a harder time finding another job.
    Mr. MCDERMOTT. I happen to know that my State collects 
data, and I would like to hear why six States collect for your 
study, and 44 States don't. What is going on here? Why don't 
they want to know what is going on?
    Dr. NILSEN. I can't answer that question directly in terms 
of why don't they want to know, but the history of these 
programs are that the UI system very separate from the job 
training and reemployment system.
    Mr. MCDERMOTT. Still today?
    Dr. NILSEN. They have been in the past. They are starting 
to get better integrated. The Workforce Investment Act (P.L. 
105-220) was passed in 1998. One of the things it established 
was the one-stop centers which required that 17 job training 
programs be more highly integrated, bringing services together, 
at least linked, centrally. This is starting a movement in that 
direction, but right now, very often, UI data systems are still 
separate, and while the linkages are there, they refer people 
to the one-stops, to the employment service, I think more needs 
to be done to get these systems together with the same outcome 
in mind, and that is, getting people reemployed.
    Mr. MCDERMOTT. Thank you.
    Chairman HERGER. The gentleman's time has expired. The 
gentleman from Louisiana, Mr. McCrery, to inquire.
    Mr. MCCRERY. Thank you, Mr. Chairman. I heard my colleague 
from Washington say something about six States and 44 States 
didn't participate. What is he talking about?
    Dr. NILSEN. Whether or not they have outcomes for people 
who are on Unemployment Insurance, whether or not they were 
linked--information on the extent to which they were kinked 
with the workforce development system, and then did you have 
information on the outcomes that were achieved? Did they get 
reemployed, and what kind of wage replacement? There are only 
six States that have that kind of data.
    Mr. MCCRERY. Your study includes data other than just those 
six States.
    Dr. NILSEN. Right. We covered all 50 States. This was a 
nationally representative sample. Then when we looked at the 
linkages, we surveyed all State workforce development systems 
to find out how their systems were linked.
    Mr. MCCRERY. Even though it is one-third, approximately 
one-third unemployed workers who receive unemployment benefits, 
there is fully 76, 77 percent who are eligible to receive 
benefits who become unemployed.
    Dr. NILSEN. Right.
    Mr. MCCRERY. Only about half of those, for whatever reason, 
collect unemployment benefits. In a typical State, do you know 
how long between the time a worker loses his job and the time 
he gets his first unemployment check is?
    Dr. NILSEN. It is usually on the order of 1 to 2 weeks. 
Some States have a 1 week waiting period, but it is then really 
1 to 2 weeks.
    Mr. MCCRERY. I am just trying to figure out, or get some 
idea of why there is fully one-half of people who become 
unemployed who do not collect unemployment benefits. I didn't 
really see anything in your study that clearly says this is the 
reason.
    Dr. NILSEN. No. We would like to get behind our analysis 
and the factors, and understand the motivations of people to 
find out, okay, was it because you thought you could get out 
there yourself and get a job quicker? Were you going to drop 
out of the workforce anyway? There are some who may have tried 
to get benefits and might have been denied benefits that we 
were not able to measure in this.
    Mr. MCCRERY. Clearly, those who don't get unemployment 
benefits get jobs more quickly than those who do get 
unemployment benefits by a long shot.
    Dr. NILSEN. That is correct.
    Mr. MCCRERY. On average 8 weeks for those who don't collect 
unemployment benefits, and what is it, 21----
    Dr. NILSEN. Twenty-one.
    Mr. MCCRERY. Twenty-one weeks. More than two-and-a-half 
times the amount of time. Certainly, I think we can conclude 
that motivation is a big factor for those who aren't collecting 
unemployment benefits, they are obviously more motivated to get 
a job. That is--yes, they may be more educated, they may be--
they have more skills, but I don't think the data clearly shows 
that. Human nature is, if you are not getting some kind of 
check, you are going to get out there and try to get a job. I 
am just wondering how much--and this would be a good study for 
a sociologist or somebody to conduct--what else in involved in 
that motivation? Is it a higher sense of one's ability? Is it a 
higher sense of self-worth? Just what are those factors in 
those individuals that lead them to forego pretty much a sure 
check, and get out there and find a job in a relatively short 
period of time? I don't know. I was disappointed that the study 
didn't go more into that, or didn't develop any data that could 
give us some better ideas. I agree with Mr. McDermott that our 
goal should be to help people through those, what we hope are 
temporary periods of unemployment, but I think also our goal 
should be to do what we can to encourage and help those people 
to find a job, and to reduce their time on unemployment 
benefits. In welfare, for example, we put into the law 
requirements for States to get welfare recipients to work. Is 
there something that maybe we should do, maybe we should 
mandate in the unemployment field for States, either by rewards 
or by sticks, to get them to provide more services to people to 
get them back in the workforce in a shorter period of time?
    Dr. NILSEN. Two points. It was just in 2005, I believe, 
that the Labor Department established a performance measure for 
the States that measured the speed at which people became 
reemployed. Prior to that, all their performance measures 
focused on getting a check out quickly, and then also focusing 
on getting the right check out, basically, making sure people 
were eligible and they were doing the calculations correctly. 
Now they have a reemployment measure that is a performance 
measure. However, there are no consequences associated with 
meeting or not meeting that measure. There are two States that 
have established much more aggressive reemployment programs for 
people on Unemployment Insurance, and one of the States is 
Washington, where the Governor set a goal that they would--of 
not paying out more than about three-quarters of total 
benefits, total eligible benefits, to bring down to 73 percent 
is the measure. One way they do that is target people. Once 
people hit halfway on their UI term, they really target those 
people with reemployment assistance in addition to the 
federally required, what is called profiling for people likely 
to exhaust their benefits. This happens at the State level.
    Mr. MCCRERY. My time is up, Mr. Chairman, but I would like 
for GAO, if he could, to present to us in writing any 
suggestions that GAO might have for legislation directing 
States to engage more forcefully in reemployment efforts. Thank 
you.
    [The written response of Dr. Nilsen follows:]

    At this time, we are unable to provide recommendations for 
legislative action that would direct states to involve more UI benefit 
recipients in reemployment efforts. However, we have recommended that 
Labor work with states to consider collecting more comprehensive 
information on UI claimants' use of reemployment services and the 
outcomes they achieve. As stated above, results from Labor's ADARE and 
5-year evaluation initiatives may provide useful information to guide 
future decisions about the structure of the UI system. Nevertheless, we 
continue to believe that having more comprehensive information on UI 
claimants who are and are not receiving services is an important step 
in the development of reemployment efforts that hasten workers' 
reemployment and minimize UI benefit costs.

                                 

    Chairman HERGER. I thank the gentleman from Louisiana, and 
that would be very good data and information for us to have. 
The gentleman from California, Mr. Becerra, to inquire.
    Mr. BECERRA. Thank you, Mr. Chairman. Dr. Nilsen, thank you 
very much for being here. Let me pick up on what the gentleman 
from Louisiana just said. I think he hit on the most important 
point about this hearing, and that is that it seems like we 
have information, but the information doesn't lead us to any 
clear conclusions. I think most of us are here to find out we 
can make sure that some American who has just become 
unemployed, as quickly as possible, and with the best job 
opportunity possible, gets back to work. It seems to me that 
the missing link here is the fact that while we have services 
for those who become unemployed, they are principally services 
to linkage information or to a contact to perhaps find that 
next job, but it is not to get you prepared for that next job 
if your previous experience hasn't trained you for it, and 
certainly not necessarily to train you for that new job, 
because most of the services that are provided are not 
retraining services. I am correct in saying that, right?
    Dr. NILSEN. It depends. We did another study last year 
looking at spending in the Workforce Investment Act on training 
services, and about 40 percent of the funds were spent on 
training. At each of what is called the one-stop centers, 
people come in and they do an assessment of what people need. 
Depending upon how much funds they have available and how much 
assistance they feel somebody needs to get reemployed, you may 
or may not be referred to training.
    Mr. BECERRA. That----
    Dr. NILSEN. I just want to make one point.
    Mr. BECERRA. Sure.
    Dr. NILSEN. This kind of work, getting behind the 
motivation is an important point. This is the first kind of 
comprehensive study of this nature to get this far, to 
understand at least this much about how the system is 
operating. I think you are right, looking at, now, what is the 
difference, at a different level, between those people who are 
using the Unemployment Insurance system? Is it because they are 
looking for a better job to replace higher wages, or is there 
some other reason behind it?
    Mr. BECERRA. I think you raise more questions than can be 
answered. For example, it goes against logic to think that 
someone who earns more in a previous job, then becomes 
unemployed, is more likely to draw Unemployment Insurance 
benefits than someone who earns less. You would think the 
person who makes less money and now become unemployed needs it 
more and would apply. It makes no sense why a third of all 
those who are eligible for Unemployment Insurance don't apply 
or don't get it. There is a missing link here in that 
information. Returning back to the reemployment services, over 
the last several years we have begun to cut back moneys for 
retraining services that can be offered, which would seem to 
fly in the face of what you are presenting here that says that 
we have folks who need services beyond just the linkage to a 
potential new job. You have got to, in many cases, be 
retrained, especially since these days we are seeing more and 
more manufacturing jobs being lost, and so folks who may have 
spent 20 years doing work in the manufacturing industry, all of 
a sudden have to, perhaps, consider doing work in a high-tech 
company, and they may not be ready.
    My concern would be, one, we need to get a clear answer--
and maybe GAO can help us in doing this analysis, as Mr. 
McCrery has suggested--in helping direct Congress to figure out 
where we go next with services, unemployment services. At the 
same time I think we have to have a clearer exploration of what 
reemployment services are essential, and here I think 
retraining services are essential. I think one of the first 
things Congress has to do is stop cutting moneys for training 
programs, and I think the President's budget would cut 
retraining programs by some $2 billion compared to 2002 levels. 
So we are really seeing a marked abandonment of retraining 
programs at a time when we are finding that there are a lot of 
folks who don't use unemployment benefits to begin with, and 
those who do aren't necessarily finding a lot of success. I 
think it is good that you give us the report. I think though, 
perhaps, the clearest answer we get from your report is that we 
need more information, and we need to go that next step now 
beyond just compiling data about who some of these folks are 
who are unemployed, but how we actually get them back to work 
at a good job, not just back to work, because too many folks 
are finding that they are losing a $16 an hour job and obtain a 
$7 an hour job, and that is really tough. That is a big hit. 
Thank you for the information. Lots of questions. I will yield 
back my time, but I hope that what we are able to do is follow 
this up with information that tells us how we get the next step 
that Americans are expecting of us, and how we link all this to 
make sure that there is a job at the end of the day that 
someone is ready and willing to take. Thank you. Yield back.
    Chairman HERGER. I thank the gentleman from California, 
Again, this is a very helpful hearing, some information that, 
again, has not been out there before. Again, I thank the GAO, 
and I thank each of the Members on this Subcommittee for some 
very good questions and some great observations. With that, the 
gentlelady from Pennsylvania, Ms. Hart, to inquire.
    Ms. HART. Thank you, Mr. Chairman. I agree that this 
information probably brings up more questions than it answers, 
but one of the points that is made regarding the States and 
some of the requirements that States place upon those who are 
actually recipients of Unemployment Insurance, that they are 
monitored, that they be searching for a job, a number of 
different things. I have been informed that 49 States have some 
kind of requirements placed on recipients regarding searching 
for work or going to school, but Pennsylvania does not.
    Dr. NILSEN. Right.
    Ms. HART. Have you noticed a glaring difference, or is 
there statistical information that would actually separate 
Pennsylvania out to show that maybe there is more stubborn 
unemployment as a result, or there is any difference as a 
result of that?
    Dr. NILSEN. I haven't really studied the difference between 
the 49 other States and Pennsylvania because it does not have a 
work search requirement.
    Ms. HART. Is the work search requirement a Federal 
requirement that has been waived in Pennsylvania, or is it just 
something that they have chosen?
    Dr. NILSEN. The Federal Government requires that people be 
ready, willing and available for work, and the 49 other States 
implement that in a particular way that says there is a work 
search requirement, and Pennsylvania doesn't. Really, we 
haven't looked at that difference.
    Ms. HART. I am interested in if there is something that 
came out of this report that would direct us to determine that 
there should be certain requirements placed on those who are 
actually receiving the benefit. If that comes to light, I 
certainly would be very interested in knowing that.
    Dr. NILSEN. Sure. I think that the important thing, again, 
is to see--we would like better information I think that we can 
make better suggestions for improving the program by having 
better information about what happens to people once they 
become unemployed and they are on the UI rolls. Are they 
actually actively working with a reemployment system to become 
reemployed? Is it the labor market that is stopping them, or is 
it something else?
    Ms. HART. The other thing that seemed a little counter-
intuitive at first when I read the information that said that 
people who are receiving the benefit are more likely to be more 
educated, until I thought about it, and then I thought, well, 
there are probably fewer positions that are available for those 
folks, so they are probably more likely to take longer to find 
a similar position.
    Dr. NILSEN. Well, actually, the duration for those who are 
more educated is less. You are more likely, if you are higher 
educated, you are more likely to get benefits, and it could be 
because you know more about how the system operates or 
whatever, and you are more willing to take advantage, use the 
system, but once you are on benefits, if you are higher 
educated, your duration is less than someone who is less 
educated.
    Ms. HART. You are just more likely to seek them?
    Dr. NILSEN. Yes.
    Ms. HART. Get them, qualify for them. The folks who don't 
qualify--well, actually, you said they are eligible, they are 
not receiving.
    Dr. NILSEN. Yes. In our analysis they are likely eligible, 
but not receiving.
    Ms. HART. Do we know anything more about them than that?
    Dr. NILSEN. Well, similarly, we looked at their 
characteristics, and that is how we were able to compare the 
different educational levels, age----
    Ms. HART. The folks who in your 39 percent unemployed and 
eligible, are less educated?
    Dr. NILSEN. Yes, on average.
    Ms. HART. On average. Is there anything else that was a 
distinguishing characteristic?
    Dr. NILSEN. Younger workers are more likely to get 
benefits.
    Ms. HART. You are saying they are older than----
    Dr. NILSEN. We controlled for each of these factors. Older 
workers are less likely. Men are less likely. Women are more 
likely.
    Ms. HART. Just the opposite of all the ``more likelys.''
    Dr. NILSEN. Yes.
    Ms. HART. One of the things, just anecdotally, that we 
experience in the communities I represent is there is 
significant turnover in positions that require fewer skills. 
Always the employers are talking to me, saying we've got to 
find ways to get these people to stay here, to retain them, 
that sort of thing, trying to pay them more, trying to provide 
them with benefits, trying to provide whatever they can to help 
secure people in these jobs. The complaints have been that 
people just are not used to working, people show up drunk for 
work, all those kinds of problems that, obviously, they end up 
not working. The concern I think that I have is that a lot of 
folks who may qualify for unemployment benefits--or maybe they 
don't qualify--but I am presuming that a lot of people qualify 
for unemployment benefits because the employer doesn't want to 
fight it in the incidents such as some of the employers in my 
district would talk about people show up constantly late, they 
show up drunk, and then they kind of leave, and then they apply 
for unemployment benefits and normally get them. Is there any 
information in any of the surveys that you did that deal with 
the employers' behavior regarding whether or not they will just 
accept a person's application for unemployment benefits or 
fight it, anything that you did at all?
    Dr. NILSEN. No. We really haven't looked at the application 
and appeals process.
    Ms. HART. Nothing at all?
    Dr. NILSEN. I think the----
    Ms. HART. Is there any study that you can refer me to?
    Dr. NILSEN. I think DOL does have information on the 
appeals. I am not sure. I could check on that.
    Ms. HART. We could follow up with DOL.
    [The written response of Dr. Nilsen follows:]

    In reference to background information on employer certification of 
unemployment benefit applications, all states provide employers the 
opportunity to contest UI benefit claims and to provide evidence that 
may invalidate these claims. A summary and comparison of state laws on 
processing UI claims appeals are available online at: http://
workforcesecurity.doleta.gov/unemploy/uilawcompar/2005/appeals.pdf. 
(See the following attachment.)
                               __________

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    Dr. NILSEN. We have not looked into that to see whether or 
not there is a difference in terms of employers' behavior about 
whether or not if people go in to file for benefits, but very 
often, it is a fairly rigorous process, and the UI system calls 
back the employer to verify the information about why someone 
was fired or let go.
    Ms. HART. Do they become not eligible when they get a 
negative report?
    Dr. NILSEN. They can. If they say they were fired for 
cause, in most States they are not eligible for benefits. The 
information on wages and how long they worked, that all comes 
from a data system that is maintained by the UI system.
    Ms. HART. Do you think there is too much flexibility? I 
know I am running over time. Is there too much flexibility, yes 
or no, in what we allow the States to do as far as determining 
whether people are eligible?
    Dr. NILSEN. That is your decision, I think.
    [Laughter.]
    Ms. HART. All right. I will take it back. Thank you, Mr. 
Chairman.
    Chairman HERGER. I thank the gentlelady from Pennsylvania. 
This has been a very interesting hearing. I think we probably 
all agree we have far more questions than we have answers here. 
I want to thank the GAO, and particularly you, Dr. Nilsen, and 
your staff, who has worked with you on bringing this 
information to light. I believe the gentleman from Washington 
had a comment to make.
    Mr. MCDERMOTT. In answer to the gentlewoman from 
Pennsylvania, it is not in the employer's interest to tell the 
employee that they are eligible for benefits, is it? Since if 
it gets reported, it goes on their tax rate?
    Dr. NILSEN. Well, if an employee is let go and files for 
benefits, it could affect the UI tax rate of the employer, that 
is correct.
    Mr. MCDERMOTT. If they let them go but there is nothing 
that encourages them to say, ``But there are benefits out there 
for you.''
    Dr. NILSEN. I do not believe employers are required to let 
employees know.
    Mr. MCDERMOTT. They are required to?
    Dr. NILSEN. I don't believe they are----
    Mr. MCDERMOTT. They are not required to. I think that is 
part of what she was asking was, when somebody quits. I 
remember when I was in the State legislature, when we had 
unemployment benefits for college students who worked the 
summer and then drew their benefits during the school year, 
lived off their benefits. We had a real wide open system that 
everybody understood, and we gradually squeezed it down to the 
point where--that is why you only have half the people getting 
the benefits. We had way more than 50 percent in the State of 
Washington who worked fishing and logging and all sorts of 
things I the summertime, and made it the rest of the year. 
Thank you, Mr. Chairman.
    Chairman HERGER. I thank you. Again, Dr. Nilsen, thank you 
very much again for your testimony today. This information will 
be invaluable as we continue reviewing ways to improve out 
unemployment program. With that, this Committee stands 
adjourned.
    [Whereupon, at 11:23 a.m., the hearing was adjourned.]
    [Questions submitted from Chairman Herger to Dr. Nilsen and 
responses follow:]

    Question: The report (page 16) finds that on average a person 
collecting unemployment benefits spends 21 weeks unemployed, compared 
with only 8 weeks unemployed for a person who doesn't collect 
unemployment benefits. Do we know whether people who spend more time 
unemployed get additional training or job skills that help them stay in 
the labor force once they get back to work or gain higher wages when 
they return to work, compared to their peers who don't collect 
unemployment benefits?

    Answer: As we reported last year (GAO-05-413), although UI 
claimants have access to a variety of reemployment services, Federal 
reporting requirements for states' UI programs and for federally funded 
employment and training programs do not provide a full picture of the 
services received or the outcomes obtained by all UI claimants. Few 
states monitor the extent to which claimants are receiving these 
services or outcomes for these claimants. Therefore, we do not have 
data to determine whether people who spend more time unemployed receive 
additional training or job skills to help them stay in the labor force 
once they return to work, or whether they gain higher wages when they 
return to work, compared to their peers who do not receive UI benefits.

    Question: It is telling that you found ``only one UI program factor 
(other than current UI receipt) has a statistically significant impact 
on an individual's unemployment duration. Specifically, individuals who 
are unemployed in states with higher denial rates for continuing UI 
claims have higher escape rates from unemployment'' (p. 71). Does that 
mean the only thing states do that actually can be shown to help 
unemployed workers return to work quickly is to deny them unemployment 
benefits? Are there other ways states try to speed returns to work?

    Answer: Our data does suggest that, in the aggregate, individuals 
who are unemployed in states with higher denial rates for continuing UI 
claims have higher escape rates for unemployment. However, the NLSY79 
dataset does not include information about whether or not an individual 
worker was denied continued UI benefits; therefore, we are unable to 
determine how denying an individual's claim might influence their 
individual reemployment outcome, or whether or not this is an effective 
strategy for helping unemployed workers return to work quickly. 
Although we included several state program factors in our analysis, 
including the rate of denial for continuing UI claims, these factors do 
not represent the full range of state program variables, since 
including all aspects of state programs was not within the scope of our 
analysis. It is possible that other program variables that were not 
included in our analysis may help speed returns to work for UI 
beneficiaries. For example, officials in Washington state have the 
ability to identify various subgroups of claimants using a tracking 
device called the Claimant Progress Tool. Officials told us that staff 
typically use this tool to identify claimants who are about 100 days 
into their claim, and then contact them for targeted job search 
assistance and job referrals. Similarly, in Georgia, a state-funded 
Claimant Assistance Program identifies claimants who are seen to be 
ready for employment and requires them to participate in reemployment 
services. However, we are unable to determine how effective these 
services are, based on our work to date.

    Question: It is commonly observed that the length of time someone 
collects unemployment benefits is related to the unemployment rate. So 
unemployment durations would typically rise as unemployment rates go 
up, and then fall back as more workers return to work. In the past 15 
years, however, average unemployment durations have remained high even 
as unemployment rates have fallen to historically low levels. For 
example, at the height of the recession in the early nineties, the 
unemployment rate was 7.8 percent and the average duration of 
unemployment was 18 weeks. This past month, the unemployment rate was 
4.8 percent and the average duration of unemployment was still about 
17.5 weeks. Is there anything in your report than might help explain 
this phenomenon? Your report finds that women and longer tenured 
workers are more likely to collect unemployment benefits. Further, 
experience collecting unemployment benefits makes a worker more likely 
to collect benefits, and benefit collection is associated with longer 
spells of unemployment. That all seems to suggest that an aging 
workforce including relatively more women might result in longer 
average durations of unemployment. Is that consistent with what your 
data found? This suggests states may wish to target job search and 
other reemployment services to groups that might otherwise spend the 
longest times out of work. Is that happening in any states?

    Answer: Although we cannot fully answer this question, your 
conclusion is consistent with our findings. Yet, because our analysis 
does not cover unemployed workers who are older than 45, we cannot say 
what will happen as this cohort of individuals ages. Again, your 
question points out a key weakness in this program. That is, research 
and data are lacking in how to speed reemployment for UI claimants. Our 
analysis used state unemployment rates rather than national 
unemployment rates, so we are unable to comment on how national rates 
are related to unemployment duration. While we found that higher state 
unemployment rates are associated with longer unemployment durations 
for the population we studied (younger baby-boom workers), we cannot 
generalize our results to all ages of workers. It is possible that 
longer durations overall are more closely related to changes in the 
economy, which may be causing the skills of certain displaced workers 
to become less marketable. With respect to women and longer tenured 
workers, we did find that the likelihood of UI receipt is higher for 
these groups of workers, and that women have somewhat longer average 
unemployment durations, and it may be that this has influenced the 
trend of longer unemployment duration for all workers over the last 
several years. However, our results are specific to one age cohort, and 
these trends may not hold for workers from other age cohorts, who could 
have different experiences over time. Since 1993, the Federal 
Government has required that states establish a Worker Profiling and 
Reemployment Services (WPRS) system and implement a process typically 
referred to as claimant profiling. The claimant profiling process uses 
a statistical model or characteristics screen to identify claimants who 
are likely to exhaust their UI benefits before finding work and targets 
services to these claimants. A number of states have found that job 
tenure is a meaningful variable and have incorporated it in their 
profiling model.

    Question: A 2005 GAO report on unemployment benefit recipients 
noted that a slight majority of laid off workers who were eligible to 
collect unemployment benefits actually turned down those benefits. 
Specifically, out of a large sample of workers tracked over more than 
two decades, 39 percent were ``unemployed and eligible at least once 
but never received UI'' while 38 percent were ``eligible and received 
UI'' at least once. Does your March 2006 report shed more light on that 
decisionmaking, specifically why so many apparently eligible unemployed 
workers might turn down these benefits? Elsewhere the report suggests 
that ``receiving or not receiving UI benefits may be a personal choice 
based on unobserved worker characteristics or preferences'' (p. 15). 
What are some examples of the ``worker characteristics or preferences'' 
influencing someone's decision to collect unemployment benefits--or not 
collect them?

    Answer: The 2005 GAO report on UI benefit receipt (GAO-05-291) 
concluded that a slight majority of unemployed workers who were likely 
eligible for UI benefits did not receive them. Given what was available 
in the dataset we used for that study, we were unable to determine how 
many of these workers did not seek to apply for benefits, or if they 
applied, how may were denied benefits. Our March 2006 report relied on 
the same data, and does not provide more information on whether or not 
these unemployed, UI-eligible workers decided to apply for benefits. 
Our March 2006 report describes the strong relationship between past 
and current receipt/non-receipt of UI benefits, when other factors are 
taken into account. In describing the possible explanations for this 
relationship, we suggested that unmeasured worker characteristics may 
be at play. For example, a lack of information about the UI program or 
personal preference could explain the continued non-receipt of UI 
despite meeting possible eligibility requirements when unemployed on 
multiple occasions. However, we are unable to determine the extent to 
which these or other unmeasured characteristics contribute to an 
individual's decision to file for UI benefits. In our 2005 report (GAO-
05-291, p. 23) we cited the results of two supplements to the Current 
Population Survey designed to explore the reasons why some unemployed 
workers did not file for UI benefits. In these supplements, the most 
cited reasons for not applying for benefits were perceived 
ineligibility, and optimism about becoming reemployed quickly.

    Question: The report finds that younger workers are more likely to 
receive unemployment benefits. What factors might cause that?

    Answer: Our 2006 report notes that we are unable to explain why 
younger workers are more likely than older workers to receive UI 
benefits (GAO-06-341, p. 11). However, we posit three possible 
explanations: (1) our analysis isolates the effect of age more 
carefully than prior studies by controlling for the interactions 
between age and other factors that are associated with age, such as the 
number of previous job losses and periods of UI receipt, job tenure, 
earnings, and so forth., (2) older workers (through age 45) may be 
better able to weather a period of unemployment without the assistance 
of UI benefits, or (3) younger workers may simply be less confident 
about future prospects for reemployment than older workers. An 
important point to remember is that our analysis only covers workers 
through age 45. These are generally considered prime age workers who do 
not have the reemployment problems faced by older workers (ages 55 and 
older).

    Question: In the world of welfare, states are expected to engage 
low-income parents in work and training. Federal welfare funds for 
states depend at least in part on state success in helping more welfare 
recipients go to work. And as a result, work and earnings among low-
income parents rose dramatically in recent years. When it comes to 
providing Federal unemployment funds, are states held to any similar 
performance standards related to helping laid off workers more quickly 
return to work? Have states ever experienced any loss of Federal funds 
for failure to satisfy such Federal performance standards related to 
returns to work, to your knowledge? If not such return to work 
outcomes, what generally determines how much Federal funding is 
provided to states to administer unemployment benefit programs today?

    Answer: Federal law provides a great deal of flexibility to states 
in how they design their UI programs, including whether or not they 
have goals for reemployment of UI benefit recipients. Labor does not 
currently have a performance goal for reemployment of UI recipients. 
However, Labor is working on developing such a measure for its 
Strategic Plan, and has required that states track a reemployment rate 
for their UI claimants--defined as the percentage of UI claimants who 
are reemployed within the quarter following their first UI payment--
since summer 2005. To date, no state has experienced a loss of funds as 
a result of failing to satisfy Federal goals related to reemployment--
in fact, administrative funding is only based on projected workloads 
and the cost of processing claims. Additional Federal funds that help 
pay for regular or temporary extended benefits, or Disaster 
Unemployment Assistance benefits, are based on whether or not claimants 
meet UI program eligibility requirements and are not contingent on 
state performance.

    Question: Your testimony indicated that states have little data to 
gauge the extent to which unemployed individuals are receiving 
reemployment services, or the outcomes these services achieve. It seems 
that having this type of information would be essential to determine 
which federally funded activities are most effective in helping laid 
off workers get back on the job. Do you have any suggestions for what 
Congress can do to see that this type of information becomes available 
and is used to improve the effectiveness of programs in helping 
unemployed workers go back to work?

    Answer: Beyond our previous recommendation that the Secretary of 
Labor work with states to consider the feasibility of collecting more 
comprehensive information on UI claimants' use of reemployment services 
and the outcomes achieved by claimants, GAO is not making additional 
recommendations at this time. However, Labor has two initiatives that 
have the potential to provide somewhat better information about the 
effectiveness of federally funded activities targeted to unemployed 
workers. The first initiative, the Administrative Data Research and 
Evaluation project (ADARE), is an alliance of 9 state partners that 
provide authorized third-party researchers with detailed, longitudinal 
data on participants in the Wagner-Peyser Employment Service, Workforce 
Investment Act (WIA) programs, Temporary Assistance for Needy Families 
(TANF), and Perkins Vocational Education, as well as UI wage and 
benefit records and education records. Together, participating states 
represent 43 percent of the civilian workforce in the United States. 
While using ADARE would enable analysis of claimants' use of services 
and of their outcomes in a few states, efforts so far have focused 
largely on evaluating welfare-to-work programs and WIA. Labor last 
provided funds for ADARE in October 2004 and has not requested 
additional work. The second initiative is a 5-year evaluation of the UI 
benefits program that researchers hope will include data from up to 25 
states. This study was designed to identify changes in the labor 
market, population, and economy relative to the UI program, as well as 
detailed characteristics of those receiving or not receiving UI 
benefits. The original design of the study included an assessment of 
the extent to which claimants are receiving reemployment services and 
their outcomes, but those plans were sidelined due to resource 
constraints. The study is due to be completed in 2009.

    Question: In general, states provide unemployment benefit claimants 
with information about reemployment services and some states require at 
least some interaction with the employment services program in order 
for recipients to maintain unemployment benefit eligibility. Is there 
any evidence to suggest there are positive benefits in the states that 
require stronger interaction between their unemployment and 
reemployment programs? What do the most effective states do to help the 
typical unemployed worker return to work, and at higher wages?

    Answer: Because little data are available to gauge reemployment 
outcomes, it not possible at this time to determine whether or not 
states that require stronger interaction between their unemployment and 
reemployment programs have different outcomes for claimants.

                                 
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