Unemployment Insurance: Information on Benefit Receipt		 
(17-MAR-05, GAO-05-291).					 
                                                                 
The Unemployment Insurance (UI) program, administered by the U.S.
Department of Labor in partnership with states, plays a critical 
role in ensuring the financial security of America's workforce.  
Established in 1935, UI 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 unemployed  
workers money for basic needs, which helps boost demand for goods
and services. In fiscal year 2004, approximately 8.8 million	 
workers received UI benefits, totaling $41.3 billion across all  
UI programs. To gain a better understanding of the UI program, we
asked the following questions: (1) How many people ever receive  
UI benefits during their early working lives, and how many	 
receive UI benefits more than once? and (2) Does UI benefit	 
receipt change over time, and does receipt vary by industry or	 
occupation?							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-291 					        
    ACCNO:   A19598						        
  TITLE:     Unemployment Insurance: Information on Benefit Receipt   
     DATE:   03/17/2005 
  SUBJECT:   Labor statistics					 
	     Statistical data					 
	     Surveys						 
	     Unemployment insurance				 
	     Unemployment insurance benefits			 
	     Unemployment rates 				 
	     State-administered programs			 
	     Federal/state relations				 
	     DOL Unemployment Insurance Program 		 
	     National Longitudinal Survey of Youth		 

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GAO-05-291

United States Government Accountability Office

 GAO	Report to the Chairman, Subcommittee on Human Resources, Committee on Ways
                      and Means, House of Representatives

March 2005

UNEMPLOYMENT INSURANCE

                                 Information on
                                Benefit Receipt

GAO-05-291

Contents

                                    Letter 1

Appendix I Briefing Slides

  Appendix II	Confidence Intervals for Estimated Numbers of UI-Eligible Spells
  of Unemployment and UI Receipt Spells

      Appendix III        GAO Contact and Staff Acknowledgments            34 
                                       GAO Contact                         34 
                                   GAO Acknowledgments                     34 
                                  Other Acknowledgments                    34 

Related GAO Products

  Tables

Table 1: Estimates and 95 Percent Confidence Intervals for UI

eligible Spells of Unemployment among Workers Born

between 1957 and 1964 (1979-2002) 32 Table 2: Estimates and 95 Percent
Confidence Intervals for UI benefit Receipt of UI among Workers Born
between 1957 and 1964 (1979-2002) 33

  Figure

Figure 1: UI Benefit Receipt and Estimated UI Eligibility among Workers
Born between 1957 and 1964 (1979-2002) 3

Abbreviations

NLSY79 National Longitudinal Survey of Youth 1979 UI Unemployment
Insurance

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United States Government Accountability Office Washington, DC 20548

March 17, 2005

The Honorable Wally Herger
Chairman
Subcommittee on Human Resources
Committee on Ways and Means
House of Representatives

Dear Mr. Chairman:

The Unemployment Insurance (UI) program, administered by the U.S.
Department of Labor in partnership with states, plays a critical role in
ensuring the financial security of America's workforce. Established in
1935, UI 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 unemployed workers money for basic needs, which helps boost
demand for goods and services. In fiscal year 2004, approximately
8.8 million workers received UI benefits, totaling $41.3 billion across
all UI
programs.

To gain a better understanding of the UI program, we agreed with your
office to provide information on the following questions:

1. 	How many people ever receive UI benefits during their early working
lives, and how many receive UI benefits more than once?

2. 	Does UI benefit receipt change over time, and does receipt vary by
industry or occupation?

To answer these questions, we analyzed data from the National Longitudinal
Survey of Youth 1979 (NLSY79).1 This survey information offers a
perspective that is not typically available from other data sources.
Spanning more than two decades (1979-2002), it includes information from
periodic interviews with a nationally representative sample of individuals

1U.S. Department of Labor's Bureau of Labor Statistics directs and
sponsors this survey. (For more information on the NLSY79, go to
http://www.bls.gov/nls/nlsy79.htm.) Much of the analysis was performed
under our direction through a contract with Dr. Brian McCall of the
University of Minnesota.

who were born between 1957 and 1964-a group we refer to as late baby
boomers. Additionally, it provides detailed information about these
individuals' experiences, including work history, UI benefit receipt,
family background, and education. This dataset allowed us to analyze a
single birth cohort over time; therefore, it does not represent the
experiences of all workers during this time period. Using the survey
information, combined with information on state UI program eligibility
rules, we estimated whether individuals were likely to have been eligible
for UI benefits following a job separation. This work was conducted from
December 2003 to February 2005 in accordance with generally accepted
government auditing standards.

On February 24, 2005, we briefed your staff on the results of our work.
This report conveys the information provided during that briefing, which
is contained in appendix I.

In summary, we estimate that about 38 percent of workers born between 1957
and 1964 received UI at least once between 1979 and 2002, with almost half
of these individuals receiving UI benefits more than once (see fig. 1).
Another 39 percent of this age group of workers were eligible to receive
UI benefits at least once but never did so. Nine percent of all workers in
this age group are estimated to have been unemployed at least once but
never eligible for UI benefits, mostly because of the conditions under
which they separated from their jobs, such as leaving a job to look for
other employment. The remaining 15 percent were employed at least once and
subsequently never unemployed.

Figure 1: UI Benefit Receipt and Estimated UI Eligibility among Workers
Born between 1957 and 1964 (1979-2002)

21%

Eligible and received UI once

17%

Eligible and received UI more than once

Unemployed at least once but never eligible for UI

Employed at least once and subsequently never unemployed

Unemployed and eligible at least once but never received UI Source: GAO
analysis of NLSY79 data.

As this baby boom group aged, its members experienced fewer UI-eligible
unemployment spells but were more likely to receive UI benefits during
these spells. Late baby boom workers had the greatest number of UIeligible
unemployment spells around the time of the recessions of the early 1980s,
when most were beginning their working careers. Over time, the number of
UI-eligible unemployment spells declined. This is not surprising, given
changes in the overall economy and age-related changes for individuals,
such as increasing levels of education, training, work experience, and job
tenure, that made their employment more stable and made them less likely
to become unemployed. Although these workers had more unemployment when
they were younger, higher proportions of those who became unemployed when
they were older (up to age 45) received UI benefits. More specifically, at
ages 18 to 20, 15 percent of those eligible received UI benefits; at ages
36 to 45, the rate of receipt was 30 percent. Regarding UI receipt by
industries and occupations, we found that rates varied.

We provided a draft of this report to officials at the Department of Labor
for their technical review and incorporated their comments where
appropriate.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days
from its date. At that time, we will send copies of this report to
relevant congressional committees, the Secretary of Labor, and other
interested parties. We will also make copies available to others upon
request. The report will be available at no charge on GAO's Web site at
http://www.gao.gov. If you or members of your staff have any questions
about this report, please contact me at (202) 512-7215 or Gale Harris at
(202) 512-7235. Other major contributors are listed in appendix III.

Sincerely yours,

Sigurd R. Nilsen, Director Education, Workforce, and

Income Security Issues

Appendix II: Confidence Intervals for Estimated Numbers of UI-Eligible Spells of
Unemployment and UI Receipt Spells

Table 1: Estimates and 95 Percent Confidence Intervals for UI-Eligible
Spells of Unemployment among Workers Born between 1957 and 1964
(1979-2002)

                              Number in thousands

                Estimated UI-eligible   Lower bound for       Upper bound for 
Year        spells of unemployment confidence interval confidence interval 
1979                         2,697               2,368               3,026 
1980                         4,809               4,363               5,255 
1981                         4,912               4,476               5,349 
1982                         5,930               5,458               6,403 
1983                         5,385               4,923               5,848 
1984                         4,476               4,061               4,891 
1985                         4,043               3,639               4,446 
1986                         3,442               3,066               3,818 
1987                         2,699               2,357               3,041 
1988                         2,351               2,048               2,653 
1989                         2,517               2,199               2,835 
1990                         2,475               2,152               2,798 
1991                         2,719               2,365               3,073 
1992                         2,839               2,462               3,215 
1993                         2,238               1,909               2,568 
1994                         1,857               1,554               2,161 
1995                         1,444               1,171               1,718 
1996                         1,594               1,301               1,887 
1997                         1,208                 945               1,471 
1998                         1,295               1,023               1,568 
1999                           876                 646               1,105 
2000                         1,066                 816               1,316 
2001                         1,251                 971               1,532 
2002                           750                 547 
              Source: GAO analysis of                     
                         NLSY79 data.                     

Appendix II: Confidence Intervals for Estimated Numbers of UI-Eligible Spells of
                       Unemployment and UI Receipt Spells

Table 2: Estimates and 95 Percent Confidence Intervals for UI Benefit
Receipt of UI among Workers Born between 1957 and 1964 (1979-2002)

                              Number in thousands

                         Estimated UI   Lower bound for       Upper bound for 
Year                receipt spells confidence interval confidence interval 
1979                           520                 368 
1980                         1,135                 905               1,365 
1981                         1,103                 883               1,323 
1982                         1,563               1,299               1,826 
1983                         1,091                 865               1,316 
1984                         1,091                 869               1,312 
1985                         1,060                 834               1,285 
1986                           915                 709               1,121 
1987                           184                  93 
1988                           518                 358 
1989                           605                 427 
1990                           741                 526 
1991                           870                 646               1,094 
1992                           826                 597               1,054 
1993                           720                 510 
1994                           555                 364                 746 
1995                           507                 322                 693 
1996                           423                 253                 593 
1997                           380                 210                 550 
1998                           245                 121                 368 
1999                           303                 150                 456 
2000                           318                 166                 470 
2001                           397                 232                 563 
2002                           190                  81                 299 
              Source: GAO analysis of                     
                         NLSY79 data.                     

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

GAO Acknowledgments

  Other Acknowledgments

Gale Harris, Assistant Director (202) 512-7235 Regina Santucci, Analyst in
Charge (202) 512-6317

In addition to the individuals mentioned above, the following staff
members made major contributions to this report: Karyn Angulo, William
Bates, Cheri Harrington, Gene Kuehneman, Lise Levie, Edward Nannenhorn,
James Pearce, Dan Schwimer, and Shana Wallace.

We contracted with Dr. Brian McCall from the University of Minnesota for
analysis of the NLSY and other technical assistance.

Related GAO Products

Unemployment Insurance: Survey of State Administrators and Contacts with
Companies Promoting Tax Avoidance Practices. GAO-03-819T. Washington,
D.C.: June 19, 2003.

Unemployment Insurance: States' Use of the 2002 Reed Act Distribution.
GAO-03-496. Washington, D.C.: March 6, 2003.

Unemployment Insurance: Enhanced Focus on Program Integrity Could Reduce
Overpayments. GAO-02-820T. Washington, D.C.: June 11, 2002.

Unemployment Insurance: Increased Focus on Program Integrity Could Reduce
Billions in Overpayments. GAO-02-697. Washington, D.C.: July 12, 2002.

Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is
Limited. GAO-01-181. Washington, D.C.: December 29, 2000.

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