Weathering Job Loss

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Abstract

Low-wage jobs are often characterized by uncertainty and unpredictable gaps in employment. A majority of workers in these jobs do not have access to the temporary income of unemployment insurance to tide them over when they suffer a job loss. This summary outlines recommendations for updating the program by extending benefits to more workers through changes in eligibility rules and establishing more uniform periods of benefit receipt.

Introduction

Most low-income families with children are headed by parents who work. But they work in low-wage jobs fraught with uncertainties and unpredicted spells of unemployment. Few of these families have enough assets to tide them over in hard times, and many lack access to unemployment insurance or other cash assistance programs.

In 2006, an estimated 4.9 million or 6.4 percent of all U.S. families had an adult member who was unemployed (Bureau of Labor Statistics 2007). In most of these families (70 percent), another adult member worked. But in about 1.5 million of them, no adult in the household was working. Low-income families with children are more likely to have unemployed members. Urban Institute calculations based on the March 2007 Current Population Survey reveal that in 15 percent of low-income families with children, a parent was unemployed some time during 2006, compared with 10 percent of moderate-income families with children and 6 percent of similar higher-income families (table 1).

Over one-fifth of the families weathering unemployment went through two or more spells within a year. About half the low-income families with multiple spells of unemployment were those in which no worker was employed full time, year-round (table 2). In many of these families, breadwinners who work less than full time, year-round do so either because they are mixing work and such other responsibilities as childrearing or because they cannot find steady full-time work the entire year. The fact that so many are counted as unemployed (and therefore looking for work) suggests that failure to find steady jobs contributes significantly to their low earnings.

Unemployment can devastate low-income families. While nearly three-quarters of all married-couple families with children in 2006 had more than one worker contributing to household income, less than half of families with incomes below 200 percent of the federal poverty level did. Thus, family income can plummet when the primary worker is jobless. And bouts of unemployment can be long for low-income families (table 3); indeed, the average spell was 21 weeks in 2006, compared with about 17 weeks on average for all workers.

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The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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