Weathering Job Loss - Summary

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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

Low-wage jobs are often characterized by uncertainty and unpredictable gaps in employment. Few low-income families have enough assets to tide them over after a job loss. And many don’t have access to the temporary income of unemployment insurance, since the program’s eligibility requirements can work against low-income families.We recommend updating the program to extend benefits to more workers and better reflect changes in the labor force.

Who's Eligible for Unemployment Benefits?

In 2006, an estimated 4.9 million families had an unemployed adult. In about 1.5 million of those families, no adult in the household was working. Bouts of unemployment for low-income families can be long— the average spell in 2006 was 21 weeks, compared with an average 17 weeks for all workers. In the past, families could fall back on public assistance, but in the postwelfare reform era, fewer have this option because of time limits and stricter eligibility requirements.

Unemployment insurance (UI) is part of the social safety net designed to catch families after a job loss, often keeping them from sliding into poverty. But lowwage workers are only half as likely as higher-wage workers to get benefits, even though they’re 2.5 times as likely to be unemployed. Short job tenure and low wages make it difficult for workers to meet the program’s minimum earnings requirement.

Also, benefits are only available to workers who meet “good cause” reasons for losing a job, such as downsizing, but states vary in how they interpret this rule. Low-wage workers who have to quit a job due to illness or family emergency don’t meet the “good cause” standard. In many states, women who leave jobs because of pregnancy, child care problems, domestic violence, or a spouse’s job-related move also do not qualify.Workers who are looking for part-time jobs are not eligible in 20 states. Even if a worker does qualify, the program only replaces a portion of income, so the benefits often aren’t enough to cover basic family needs.

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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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