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This paper is a response to New Safety Net Paper 6, "Weathering Job Loss: Unemployment Insurance" by Margaret Simms.
The U.S. labor market has undergone significant changes over the past few decades. The primary cause of unemployment has shifted from cyclical to structural factors. Although the overall unemployment rate has been falling, the duration of unemployment has been rising. These changes have taken place across the country, as unemployment rates have converged across states.
U.S. labor market adjustment programs, designed to address conditions that existed decades ago, have not kept up with these developments. For example, unemployment insurance (UI), designed in response to the Great Depression, does not provide assistance to the majority of unemployed workers, leaving millions of workers without the assistance they desperately need.
UI’s original goals were to smooth a worker’s income stream by providing income support during periods of unemployment, to provide insurance against the risk of job loss, and to serve as a counter-cyclical stimulus during periods of economic downturns. In achieving these goals, it would also reduce the incidence of poverty among low-income families who face unemployment and have little savings to fall back on.
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