Chapter 4: Unemployment Insurance

Unemployment Insurance (UI) is a joint federal-state program that provides income to eligible, unemployed workers through the payment of state UI benefits. Each state oversees its own UI program within federal guidelines, so there is wide variance within and among states. Although generally there are up to 26 weeks of benefits available in most states. For example: Generally, most states provide up to 26 weeks of UC benefits. Montana and Washington provide up to 28 and 30 weeks, respectively. Additionally, there are nine states provide fewer than 26 weeks. The amount of compensation is usually based on the individual’s earnings over the based on a 12-month period. In Fiscal Year 2018, there were an estimated 5.4 million first UI benefit payments made and total UI benefit outlays were estimated to be $28.8 billion.

One purpose of the UI program is to help counter economic fluctuations such as recessions. This intent is reflected in the current UI program’s funding and benefit structure. When the economy grows, UI program revenue rises through increased tax revenues while UI 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 available funds for the UI program to draw upon during a recession. During recessions, UI tax revenue falls and UI program spending increases as more workers lose their jobs and receive UI benefits. The increased amount of UI payments to unemployed workers dampens the economic effect of earnings losses by injecting additional funds into the economy.

UI benefits may be extended at the state level by the permanent law 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 typically funded 50% by the federal government and 50% by the states who decide to operate a program. In addition, Congress can authorize additional temporary unemployment insurance programs during economic downturns.

Congressional Research Service (CRS) Reports

For more programmatic information, please see reports published by the Congressional Research Service.

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.

Legislative History

The following provides a brief legislative history for Unemployment Insurance from the prior Green Book through most of the 115th Congress. For prior legislative history, please see prior editions of the Green Book.

Bipartisan Budget Act of 2018 (P.L. 115-123)

The Ways and Means Committee is responsible for UI benefits, while the Appropriations Committee is responsible for the providing administrative funds to operate the program. Since 2005, as the overall appropriation for UI administration has declined with the caseload, Appropriations has been specifying increasing amounts of funds for RESEAs. Without any authorizing language from Ways and Means, the program has been completely designed and operated by the Department of Labor. This law retakes the Committee’s jurisdiction over RESEAs so that they are administered by the states in a more consistent manner from year to year.

The law:

  • Authorizes the structure of reemployment services and eligibility assessments (RESEA) within the unemployment insurance (UI) program to reduce benefit durations and improve overall program integrity.
  • Expects preparation for work in exchange for benefits. This new work requirement would be used to engage claimants based on the existing worker profiling system to help claimants return to work more quickly.
  • Improves coordination with and access to the existing workforce development system to provide a more successful claimant experience.
  • Focuses on outcomes:
    • Requires use of evidence-based interventions using a tiered-evidence structure to focus funds on proven services; and
    • Reserves funds for bonus payments to states that improve employment outcomes and reduce average duration of weekly UI benefits.

Within the ten-year period, this bill authorizes $117 million annually within the discretion of the Appropriations Committee, that then must be funded before an additional amount, the cap adjustment, is provided. According to CBO, a total investment of $2.8 billion produces a net savings of $500 million over ten years.

 

This page was prepared August 2018 for the 2018 version of the House Ways and Means Committee Green Book.