Improving Access to Unemployment Insurance
In a time when more low-income families are
relying on their work efforts to make ends meet, the Unemployment Insurance
(UI) system should provide a temporary means of assistance for persons out of
work. Unfortunately, many low-income
families are excluded from the UI system in Minnesota, despite the fact that
their employers are paying into the system on their behalf.
In 1998, only 47% of unemployed Minnesotans
received unemployment benefits.[1] This is in part because eligibility is based
on the conditions of job loss, the length of work history, and the level of
earnings.
Features of Unemployment Insurance
- The Unemployment Insurance system is jointly
administered by the federal and state government. Within certain restrictions set by the federal government, states
have the authority to determine who is eligible and how much and how long
benefits can be received.
-
The Unemployment Insurance system is funded by
state and federal taxes levied on employers.
The federal government collects a 0.8% tax from employers on up to $7,000 of each employee’s wages. This tax funds UI program administration and
other federal costs.[2] Employers in Minnesota pay
between 0.1% and 9% of up to $19,000 of each worker’s wages into the Minnesota
Unemployment Compensation Trust Fund.
Generally, the more past UI claims against an employer, the higher the
tax rate will be.[3] UI benefits are paid out of the Trust Fund.
- Eligibility is limited to persons who leave
work for good cause, are actively looking for and are available for work, and
have met the minimum earnings required for UI.
A worker must have earned at least $1,000 during the three-month period
in which the highest wages were earned (the “high quarter”) and an additional
$250 during the rest of the “base period.”
The base period is the first four of the last five completed quarters
before the quarter when the UI claim is filed.
The base period can exclude as much as six months of recent employment.
-
Benefits
vary depending on the UI recipient’s earnings during the base period. Benefits are generally limited to 26 weeks,
although they may be extended in times of high unemployment or large layoffs.
- UI
recipients have access to Minnesota’s Workforce Centers, which provide
workshops in job hunting and job-seeking skills, computers and printers to
create resumes, job listings, and a library of employment and job search
materials.
Barriers to Unemployment Insurance
- Individuals
with shorter work histories are ineligible for UI, since only individuals who
have sufficient earnings during the base period are eligible. This makes it difficult for those with only a recent work history or who work
intermittently to be eligible.
-
UI
is available to persons seeking part-time work only when that person has a
history of part-time work, excluding persons who recently worked full-time but
seek part-time employment in order to balance work and child rearing
responsibilities.
-
UI
eligibility requires a “good cause connected to employment” for leaving the
job, such as a serious illness or sexual harassment on the job. Family illness or transportation problems
are generally not considered good cause.
Under Minnesota law, child care problems can be considered good cause if
an employer’s changes to an employee’s work hours causes child care
problems. Child care issues can also be
considered good cause in circumstances where an employer dismisses an employee
who could not report to work because of child care problems called the employer
to indicate he/she would be in as soon as possible.
-
UI
benefit levels may be insufficient to support a family. In Minnesota, the minimum weekly benefit
amount is $38 and the maximum is $410.
The low level of benefits means that few families can subsist on UI
alone.
Policy Options
At
the end of 1999, the Department of Economic Security reported a $688 million
positive balance in the UI Trust Fund.
A total of $366 million was collected in taxes and $357 million were
paid in benefits that year. The Trust
Fund also earned $41 million in interest.
This indicates that some expansion of eligibility and benefits is
affordable within the current funding system.
Advocates for working families suggest the following improvements:[4]
- Consider more recent
employment: Eleven states have a “movable base period”
that considers a more recent period of employment to determine the eligibility
and benefit levels of unemployed workers.
- Provide allowances for
dependents: Thirteen states provide additional benefits
to families with dependent children to supplement low benefit levels and reduce
the number of families who might otherwise turn to welfare after a job loss.[5]
- Expand the definition of
“good cause” for voluntarily leaving work: The definition of “good cause” could
recognize transportation problems or family illness as legitimate reasons for
leaving employment.
- Allow those seeking
part-time work to be eligible, if family obligations limit the feasibility of
full-time work.
- Use UI to cover family
leave: In
1999, states were given the flexibility to expand UI to include parents of
newborn or newly adopted children (given that the parent meets all other
conditions for collecting UI).
Click on the footnote number to return to text.
[1] Bureau of Labor Statistics,
1998.
[2] California Budget Project, Making the Unemployment Insurance System
Work For California’s Low Wage Workers, August 1997.
[3] Except where otherwise noted,
information about the Unemployment Insurance system in Minnesota comes from the
Department of Economic Security (www.des.state.mn.us).
[4] Center on Budget and Policy
Priorities and Economic Policy Institute, Pulling
Apart, 2000.
[5] California Budget Project, Making the Unemployment Insurance System
Work for Low Wage Workers.
Revised October 2000
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