Economic Snapshot | Jobs and Unemployment

Historically Small Share of Jobless People Are Receiving Unemployment Insurance

Unemployment insurance (UI) is a crucial component of the American social safety net, but since 2010, the share of unemployed workers receiving UI benefits has eroded to one of its lowest points in decades. The figure below shows the share of unemployed workers in the United States who receive unemployment compensation benefits, including standard benefits and the extended benefits that are often legislated in the wake of economic downturns. Because unemployment is seasonal, the line in the chart shows a 12-month moving average of the recipiency rate. Because this 12-month moving average includes months that occurred before the latest round of emergency extended benefits were cut off, the blue dots pinpoint the recipiency rate for August 2014 (the last month of available data) and the rate that prevailed in August of each of the previous years as well. This August-to-August comparison helps emphasize how low UI recipiency is likely to be for the full 12 months of 2014.

As unemployment spiked during the Great Recession, the overall UI recipiency rate reached roughly two-thirds of all unemployed workers. Between stubbornly long average durations of unemployment spells and cutbacks in UI at both state and federal levels, the recipiency rate dropped sharply in 2012 and 2013. Then the Emergency Unemployment Compensation (EUC) program that was signed into law in the middle of 2008 expired at the end of 2013, and Congress failed to extend it. This led to an acceleration of the pace of decline in the UI recipiency rate. By August 2014 this rate had declined to 25.9 percent, one of the lowest since the beginning of 1987. With 2.1 job seekers for every job opening, Congress has essentially shredded the safety net while chances of finding work remain distressingly low.

 


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