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_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

Expediting the Return to Work: Approaches in the Unemployment Compensation Program

Julie M. Whittaker, Specialist in Income Security

May 1, 2013

http://www.fas.org/sgp/crs/misc/R43044.pdf

[full-text, 38 pages]

 

Summary

The most recent recession led to an unprecedented increase in the number of those unemployed

for more than 26 weeks (the long-term unemployed). As a result, congressional interest in policy

initiatives to expedite the return to work grew. This report examines a variety of initiatives and

measures within the Unemployment Compensation (UC) program that might reduce long-term

unemployment for beneficiaries.

 

Even before the recent recession began, large numbers of UC recipients exhausted their

entitlement to regular state benefits before returning to work. In 2007, one in three recipients

exhausted their benefits. In the depths of the recession, more than half of the recipients exhausted

their regular benefits, with most of them continuing to receive unemployment insurance benefits

through federally financed extended unemployment benefits. Based on current forecasts of a slow

recovery and on trends that were apparent before the recession, it appears likely that the

exhaustion rate will remain well above its pre-recession level for many years to come. The

adverse consequences of not being able to find new work and of exhausting benefits can be

severe for the recipients themselves, as well as for government budgets in terms of lost revenue

and higher expenditures, and for the economy in lost output.

 

During and immediately following the recession, Congress provided incentives for states to adopt

innovative ways of helping unemployed individuals return to work and enacted legislation that

temporarily increased funding for various reemployment and training services. As the labor

market continues to recover and the temporary funding ends, Congress may again consider policy

initiatives that go beyond income replacement. These may include strategies that would speed up

the reemployment of recipients who will not be returning to their previous employers.

 

After a brief description of the federal-state unemployment insurance system, this report

examines trends in the duration of unemployment benefits and then reviews a wide range of

approaches for speeding the return to work. The report emphasizes measures that have recently

been considered by lawmakers or have been tried on an experimental basis, particularly if

evaluations of their impacts on duration of UC benefit receipt are available.

 

Contents

Introduction ...................................................................................................................................... 1

Overview of Unemployment Insurance Programs ........................................................................... 1

Regular Unemployment Compensation ..................................................................................... 1

Extended Benefits and Temporary Programs ............................................................................ 2

Extended Benefits ............................................................................................................... 2

Emergency Unemployment Compensation ......................................................................... 2

Long-Term Unemployment and Patterns of UC Benefit Exhaustion .............................................. 3

Duration of Regular UC Benefits .............................................................................................. 3

Trends in the Exhaustion Rate and in the Average Duration of Receipt.................................... 4

Exhaustion Rate................................................................................................................... 5

Average Duration of Regular UC Benefits .......................................................................... 6

Explaining the Trends in Increased Exhaustion Rates and Average Duration of

Benefit Receipt ....................................................................................................................... 8

Changes in Underlying UC Program .................................................................................. 8

Changes in the Labor Market .............................................................................................. 9

Outlook Under Current Law .................................................................................................... 11

Approaches for Expediting the Return to Work ............................................................................. 12

Job Search Requirements and Assistance ................................................................................ 13

Worker Profiling and Reemployment Services ................................................................. 15

Reemployment and Eligibility Assessments ..................................................................... 17

Additional Incentives to Recipients ......................................................................................... 19

Reemployment Bonuses .................................................................................................... 19

Wage Insurance ................................................................................................................. 21

Self-Employment Assistance ............................................................................................. 22

Additional Incentives to Employers ........................................................................................ 24

Prohibition of Discrimination ............................................................................................ 24

Tax Credits ........................................................................................................................ 25

GeorgiaWorks and Related State Programs ....................................................................... 27

Short-time Compensation .................................................................................................. 29

Retraining ................................................................................................................................ 32

Retraining While Receiving Unemployment Compensation ............................................ 32

Workforce Investment Act ................................................................................................. 33

Acknowledgement ......................................................................................................................... 35

 

Figures

Figure 1. Percentage of Recipients Exhausting Regular Unemployment Compensation Benefits, 1973 to 2012 ........................... 6

Figure 2. Average Duration of Regular Unemployment Compensation, 1973 to 2012 ................... 7

 

Contacts

Author Contact Information........................................................................................................... 35

 

 

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