A new report from the Economic Policy Institute (EPI), a left-leaning think tank, looks at the share of unemployment benefits as part of wage and salary income. They found that, prior to 2020, benefits from UI had never gone above 6% of a state’s salary and wage income; in 2020’s second quarter, it was above 20% in four states. EPI’s calculations used wage and salary data while Insider looked at unemployment insurance as a percentage of total personal income.
Importantly, according to the EPI report, the influx of federal UI benefits – both in the form of the additional $600 and the Pandemic Unemployment Assistance (PUA), which made more workers eligible for employment benefits – helped fill the holes in states’ unemployment benefits.
“In particular, states with a higher share of Black residents were more reliant on federal assistance to provide UI benefits,” the EPI report says. “But if the pandemic programs fade with no structural reforms, the UI system will revert to being one that sees stingier benefits precisely in those states with higher Black population shares.”
The fact that those holes needed to be filled, and the amount of income that unemployment made up during the pandemic, shows the need for unemployment reform, according to EPI. They argue that reforms could help codify some of the expanded eligibility and equity from beefed-up pandemic-era benefits, and help shore up the system ahead of future downturns.
EPI found that, by the end of 2020, benefits that came from PUA – the program that opened unemployment eligibility to workers who normally wouldn’t be able to access benefits – became the greatest share of federal UI. David Cooper, a senior economic analyst at EPI, said that there were nine states where the money from PUA made up over half of all UI going to workers there.
“I mean, that’s remarkable, that that more than half the assistance provided is going to folks who would not normally qualify for traditional funding,” Cooper said. “That just shows me that our existing eligibility requirements are way out of whack.
The amount of federal money pouring into unemployment – and going to Americans who were out of work during an unprecedented pandemic – helped close gaps in state UI programs and provide direct relief. It also helped to address racial inequities, since, according to EPI, Black workers were more likely to live in states that had weaker UI; on the whole, workers of color, particularly Black workers, were disproportionately impacted by pandemic unemployment.