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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separately.
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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