A variety of benefits may be available to unemployed workers to provide them with income support during a spell of unemployment. The cornerstone of this support is the joint federal-state Unemployment Compensation (UC) program, which may provide income through the payment of UC benefits for up to a maximum of 26 weeks.[i] Other programs that may provide workers with income are more specialized. They may target special groups of workers, be automatically triggered by certain economic conditions, be temporarily created by Congress with a set expiration date, or target typically ineligible workers through a disaster declaration.
Originally, the intent of the UC program, among other things, was to help counter economic fluctuations such as recessions.[ii] This intent is reflected in the current UC program’s funding and benefit structure. When the economy grows, UC program revenue rises through increased tax revenues while UC program spending falls as fewer workers are unemployed. The effect of collecting more taxes than are spent dampens demand in the economy. This also creates a surplus of funds or a “cushion” of available funds for the UC program to draw upon during a recession. In a recession, UC tax revenue falls and UC program spending rises as more workers lose their jobs and receive UC benefits. The increased amount of UC payments to unemployed workers dampens the economic effect of earnings losses by injecting additional funds into the economy.
UC benefits may be extended at the state level by the permanent Extended Benefit (EB) program if high unemployment exists within the state. Once regular unemployment benefits are exhausted, the EB program may provide up to an additional 13 or 20 weeks of benefits, depending on worker eligibility, optional state laws, and economic conditions in the state. The EB program is funded 50% by the federal government and 50% by the states, although the 2009 stimulus package (P.L. 111-5, as amended) temporarily provides for 100% federal funding of the EB program.
A temporary unemployment insurance program, the Emergency Unemployment Compensation (EUC08) program, began in July 2008. The authorization for the EUC08 program expires the week ending on or before January 3, 2012. Those beneficiaries receiving tier I, II, III, or IV EUC08 benefits before December 31, 2011 (January 1, 2012, in New York), are “grandfathered” for their remaining weeks of eligibility for that particular tier only. There will be no new entrants into any tier of the EUC08 program after December 31, 2011. If an individual is eligible to continue to receive his or her remaining EUC08 tier I benefit after December 31, 2011, that individual will not be entitled to tier II benefits once those tier I benefits are exhausted. This was the eighth time Congress has created a federal temporary program that has extended unemployment compensation during an economic slowdown.[iii] The EUC08 benefit is 100% federally funded. State UC agencies administer the EUC08 benefit along with regular UC benefits and EB.
The underlying framework of the UC system is contained in the Social Security Act (the Act). Title III of the Act authorizes grants to states for the administration of state UC laws, Title IX authorizes the various components of the federal Unemployment Trust Fund (UTF), and Title XII authorizes advances or loans to insolvent state UC programs. The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. 3304, note). The EUC08 program is temporarily authorized by the Supplemental Appropriations Act of 2008 (P.L. 110-252), as amended.
The federal government appropriates funds for federal and state UC program administration, the federal share of EB payments, EUC08 benefits, and federal loans to insolvent state UC programs. In FY2010, states received $5.5 billion from the federal government for the administration of their UC programs, $7.8 billion for the federal share of EB payments, and $72.1 billion for the temporary, federally financed EUC08 program. In FY2011, a preliminary estimate from the President’s Budget Proposal FY2012 is that the states will receive an estimated $5.5 billion from the federal government for the administration of their UC programs, $9.5 billion for the federal share of EB payments, and $55.4 billion for the temporary EUC08 program.
The U.S. Department of Labor (DOL) administers the federal portion of the UC system, which operates in each state, the District of Columbia, Puerto Rico, and the Virgin Islands. Federal law sets broad rules that the 53 state programs must follow. These include the broad categories of workers that must be covered by the program, the method for triggering the EB and EUC08 programs, the floor on the highest state unemployment tax rate to be imposed on employers (5.4%), and how the states will repay UTF loans. If the states do not follow these rules, their employers may lose a portion or all of their state unemployment tax credit when their federal income tax is calculated. The federal tax pays for both federal and state administrative costs, the federal share of the EB program, loans to insolvent state UC accounts, and state employment services.
This chapter of the Green Book includes a series of Congressional Research Service (CRS) Reports organized under the following general headings.
Readers should consult the reports listed under each of these headings for information and data related to these topics. A separate section identifies Tables and Figures included in the CRS reports and also provides additional tables and figures related to the UI program. Additional sections include Legislative History and Links to Additional Resources.
[i] Arkansas provides up to 25 weeks, Missouri provides up to 20 weeks, Montana provides up to 28 weeks, and Massachusetts provides up to 30 weeks of regular unemployment benefits. For changes in benefit duration in 2012 see Table 1 in CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs.
[ii] See, for example, President Franklin Roosevelt’s remarks at the signing of the Social Security Act at https://www.ssa.gov/history/fdrstmts.html#signing.
[iii] The other temporary programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002. For details on these programs, see CRS Report RL34340, Extending Unemployment Compensation Benefits During Recessions, by Julie M. Whittaker and Katelin P. Isaacs.
The House Ways and Means Committee is making available selected reports by the Congressional Research Service (CRS) for inclusion in its 2011 Green Book website. CRS works exclusively for the United States Congress, providing policy and legal analysis to Committees and Members of both the House and Senate, regardless of party affiliation. Certain CRS reports with cover dates earlier than 2011 are included here because their content remains relevant.
RL33362: Unemployment Insurance: Programs and Benefits
RS22915: Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)
R41622: Unemployment Insurance: Legislative Issues in the 112th Congress
R41777: Antipoverty Effects of Unemployment Insurance
RL34340: Extending Unemployment Compensation Benefits During Recessions
R41859: Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws
RS22077: Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits
RS22954: The Unemployment Trust Fund: State Insolvency and Federal Loans to States
RS22006: The Unemployment Trust Fund and Reed Act Distributions
RS21356: Taxation of Unemployment Benefits
R41253: The Self-Employment Assistance (SEA) Program
R40689: Compensated Work Sharing Arrangements (Short-Time Compensation) as an Alternative to Layoffs
RS22440: Unemployment Compensation (Insurance) and Military Service
The Department of Labor, Chronology of Federal Unemployment Compensation Laws, provides information on the history and chronology of unemployment compensation law since 1935.
Following is a list of tables and figures related to Unemployment Compensation that can be found in the CRS reports section of this chapter.
RL33362: Unemployment Insurance: Programs and Benefits
Figure A-1. Unemployment Insurance: Available Unemployment Benefits
Table 1. State Unemployment Compensation Benefits Amounts, January 2011
Table 2. State Unemployment Taxes: Taxable Wage Base and Rates, January 2011
Table 3. Revenue and Expenditures Associated with Unemployment Compensation, FY2001-FY2011
Table B-1. Emergency Unemployment Compensation Program: Public Law, Benefits, Effective Dates, and Financing
RS22915: Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)
Figure A-1. Unemployment Insurance: Available Unemployment Benefits
Table 1. Summary of Emergency Unemployment Compensation (EUC08) Program: Public Law, Benefits, Effective Dates, and Financing
Table 2. Summary of EUC08 Program Authorization Lapses
R41777: Antipoverty Effects of Unemployment Insurance
Figure 1. Monthly and Annual Average Unemployment Rate
Figure 2. Median Duration of Unemployment among Unemployed Workers in Weeks,
January 1987 to February 2011
Figure 3. Unemployment Rate and an Alternative Measure of Underutilization (BLS U-6 Definition)
Figure 4. Percent of Unemployed Receiving Unemployment Benefits
Figure 5. Percentage of Unemployed Receiving Temporary (EUC, TEUC, or EUC08) Benefits or Extended Benefits
Figure 6. Pre- and Post-UI Benefit Poverty Rates of Persons, 1987-2009
Figure 7. Number of Persons Lifted Above Poverty as a Result of UI Benefit Receipt, 1987-2009
Figure 8. Pre- and Post-UI Benefit Poverty Rates of Persons in Families that Received UI Benefits, 1987-2009
Figure 9. Percent Reduction in the Poverty Rate as a Result of UI Benefit Receipt, Overall Poverty Rate and Poverty Rate for Persons in Families that Received UI Benefits, 1987 - 2009
Figure 10. UI Benefits: Aggregate Dollars and Dollars Reducing Poverty, 1987-2009
Figure 11. Share of Aggregate UI Benefits Going Toward Reducing Poverty, 1987-2009
Figure 12. Pre-Post UI Poverty Rates Among Unemployed Persons Who Received UI Benefits and Those Who Did Not, 1987-2009
Figure B-1. Persons Who Reported UI Benefit Receipt, by Labor Force Status: 2009
Figure B-2. Share of Unemployed and Underutilized Workers at Any Time During the Year Compared to Monthly and Annual Average Unemployment
Figure B-3. Expanded Definitions of Unemployment and Labor Underutilization, 1987-2009
Figure B-4. An Expanded Definition of Unemployed and Underutilized Workers, 1987-2009
Figure B-5. Unemployment Insurance Receipt Among Persons, by Selected Labor Force Status, 1987 - 2009
Figure C-1. UI Recipients and Aggregate UI Dollars CPS/ASEC Estimates as a Percent of Administrative Benchmarks 1987 to 2009
Table 1. General Description of Temporary Federal Unemployment Insurance Programs, 1987- 2010
RL34340: Extending Unemployment Compensation Benefits During Recessions
Figure 1. Economic Recessions, Percentage of Regular UC Beneficiaries to All Unemployed, and UC Benefit Exhaustees, January 1979-November 2010
Figure 2. Recessions, Changes in Unemployment Compared with the Same Month in Previous Year, Unemployment Rates, and Temporary Federal Benefit Availability,
January 1979-November 2010
Figure 3. Recessions, Changes in Regular UC Benefit Exhaustions Compared with the Same Month in Previous Year, and Unemployment Rates, January 1979-November 2010
Figure 4. Recessions, Changes in Long-Term Unemployment Compared with the Same Month in Previous Year, and Unemployment Rates, January 1979-November 2010
Table A-1. Summary of Extended Unemployment Compensation Programs
Table A-2. Details: Federal Supplemental Compensation (FSC) Benefits
Table A-3. Details: Emergency Unemployment Compensation (EUC) Benefits of 1991
Table A-4. Details: Emergency Unemployment Compensation (EUC08) Benefits of 2008
Table A-5. Timing of Recessions, 12-Month Change of at Least One Million, and Extended Unemployment Benefits, 1990-2010
Table A-6. Funding Temporary Unemployment Programs
R41859: Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws
Table 1. States with Unemployment Compensation (UC) Law Changes in 2011 That Decrease Benefit Duration
Table 2. Adjusted Maximum EUC08 and EB Benefit Duration Resulting from Changes to State Maximum UC Benefit Duration
Table 3. Extended Benefit (EB) Trigger Components Enacted by States
RS22077: Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits
Figure 1. The Unemployment Trust Fund
RS22954: The Unemployment Trust Fund: State Insolvency and Federal Loans to States
Table 1. State Unemployment Trust Fund Accounts: Financial Information by State, 1st Quarter 2011
Table 2. Schedule of State Tax Credit Reduction and Net Federal Unemployment Tax Act (FUTA) Tax for July 2011 Onwards
RS22006: The Unemployment Trust Fund and Reed Act Distributions
Table 1. Reed Act Distributions
RS21356: Taxation of Unemployment Benefits
Table 1. Returns With Unemployment Benefits and Amount of UC Benefits, Tax Years 1998-2009
Table 2. Estimated Effect of Taxing Unemployment Compensation, by Income Class, 2005
R41253: The Self-Employment Assistance (SEA) Program
Table 1. States with SEA Programs
Table 2. Number of Recent Participants in the Self-Employment Assistance (SEA) Program, by State, 2000-2010
R40689: Compensated Work Sharing Arrangements (Short-Time Compensation) as an Alternative to Layoffs
Table 1. Short-Time Compensation (STC) and Regular Unemployment Insurance (UI) Beneficiaries, 1982 to 2010
Table 2. State Legislation and Short-Time Compensation (STC) First Payments as Percentage of Regular Unemployment Compensation First Payments
Table A-1. States with Short-Time Compensation Programs
RS22440: Unemployment Compensation (Insurance) and Military Service
Table 1. Unemployment Compensation Benefit Eligibility for Workers Who Voluntarily Quit Because of a Spousal Transfer
Below are selected major federal statutes for the Unemployment Compensation program, the Extended Benefits program, and the Emergency Unemployment Compensation program.
Please note that the official version of the US Code was last published in 2006 with supplements. Some of the links below are to the unofficial version of the US Code updated and maintained by the Office of the Law Revision Counsel (OLRC). For recent updates to the US Code, please consult the US Code classification tables on the OLRC’s website, a commercial source such as LexisNexis or Westlaw, or contact CRS.
1. General Unemployment Compensation and Federal Law
2. Emergency Unemployment Compensation (EUC08) Federal Law
3. EUC08 Amendments and Reauthorizations
4. Extended Benefits Federal Law
5. Disaster Unemployment Assistance Federal Law
6. Unemployment Compensation for Federal Employees Federal Law
1. General Unemployment Compensation and Federal Law
General provisions of unemployment compensation are included in the following titles of the Social Security Act as amended (below). They are codified in Title 42 of the U.S. Code.
The Federal Unemployment Tax Act (FUTA), along with state unemployment taxes, provides for payments of unemployment compensation.
2. Emergency Unemployment Compensation (EUC08) Federal Law
The Emergency Unemployment Compensation (EUC08) legislation was originally included in the Supplemental Appropriations Act, 2008, Pub. L. 110-252, Title IV, 122 Stat. 2353 (p. 31 of the PDF). This legislation was subsequently amended and the authorization extended several times.
3. EUC08 Amendments and Reauthorizations
For additional information on the EUC08 program, please see RS22915, Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)
4. Extended Benefits Federal Law
5. Disaster Unemployment Assistance Federal Law
6. Unemployment Compensation for Federal Employees Federal Law
The following sources highlight state and regional unemployment insurance (UI) benefits and programs.
Department of Labor, Employment and Training Administration
National Association of State Workforce Agencies This organization includes state administrators of unemployment insurance laws and employment services centers.
National Conference of State Legislatures, Labor & Employment This site compiles data on state unemployment and labor related issues, including pending legislation and monthly reports on state unemployment trends and spending.
The following sources represent selected federal agency statistics and databases on unemployment insurance program statistics (such as weekly claimants), unemployment trends, and demographic data.
Employment and Training Administration, Unemployment Insurance, Program Statistics
Bureau of Labor Statistics