Unemployment Compensation: A Broken System

Millions of workers have lost their jobs in the current recession. Employment is down 12% in manufacturing, 7% in professional and business services, and more than 5% overall in the private sector compared to last year. Over 5.6 million people have lost their jobs since last June. The ranks of the unemployed are continuing to grow; the unemployment rate in June hit 9.5%. Good thing that unemployment insurance provides income to help tide these workers over this rough patch, right? Not so fast.

The share of unemployed workers receiving benefits has gradually shrunk since the 1970s. In 1975, over half of unemployed workers received regular benefits. But in 2008, only 37% of the unemployed did; in some states the figure was less than 25%. And so-called “discouraged workers,” those who want but are not actively seeking employment, are not considered part of the labor force and so are not even included in these figures.

Unemployment insurance, in short, is not a benefit that everyone who loses a job can count on. Several groups are working to change this. The American Recovery and Reinvestment Act (ARRA), better know as the Obama stimulus package, provides temporary funding for states that expand their unemployment coverage, and so far this year 25 states have done so. Others, however, are resisting even a temporary expansion of coverage that would be fully federally funded.

via Unemployment Compensation: A Broken System | Dollars & Sense.