National Academy of Social Insurance Unemployment Insurance Task Force Final Report

Report shows problems faced by the Unemployment Insurance system — and bipartisan policy levers to fix them

Unemployment Insurance (UI) is a critical part of America’s social insurance fabric. In addition to providing countercyclical support during economic downturns, it helps people who have lost work through no fault of their own to maintain attachment to the workforce, prevent wage erosion, and help them pay bills, when forces out of their control (such as the COVID 19 pandemic) limit their income. However, the pandemic exposed major cracks in America’s UI system, including technology problems, an inability to pay benefits on time and to the right people (due in part to the unprecedented nature of the surge in layoffs in response to the pandemic), and a base set of laws and assumptions that varied widely in benefit amount, duration, and access.

The National Academy of Social Insurance’s UI Task Force, first convened in December 2020, has spent the past several years looking at lessons learned from the pandemic; solutions proposed over the past few decades; and the vast knowledge base and range of its diverse members’ views. In July 2024, the Task Force — comprised of 24 leading experts from across the political spectrum — released its final report, to help policymakers, the media, and the public understand what policy levers exist, how they work, and what the trade-offs are for each one.

Bipartisan legislation has been introduced in the U.S. Senate, and the House Committee on Ways and Means has recently held hearings to find common ground on how to fix these systems, and the Task Force’s report will provide timely context and insights to Congress and state policymakers, as they consider ways to improve the nation’s UI system to better prepare for future economic downturns.

The report notes:

“The most critical area of agreement is that the federal-state UI system was flawed before the pandemic and that the stress of paying historic levels of claims under both regular and huge new programs strained UI systems to the point of breaking. While the economy is currently healthy, it is critical that policymakers and states take steps to prepare for the next downturn, or the UI system may not be able to adequately and efficiently perform the critical countercyclical stabilization that it has done for nearly nine decades.”

Professor Till von Wachter served as one of the co-chairs of the task force. Von Wachter is the faculty director of the California Policy Lab’s UCLA site and led a team of researchers during the pandemic to produce more than 20 publications focused on providing real-time updates on California’s labor market, as well as highlighting issues of equity in the UI system, and areas for improving the accuracy of how unemployment insurance claims are measured. This research was made possible through a unique partnership with the Labor Market Information Division of the California Employment Development Department.

CPL’s extensive research on the pandemic unemployment crisis helped inform the task force’s final report, helping to improve our understanding of:

1) The shortcomings of current measures of unemployment and how to improve upon them. CPL’s research showed that the oft-cited “initial claims” measure dramatically overstated the number of workers entering the UI system during the pandemic, and proposed a new measure: “Entries into Paid Unemployment” which better captures how many individuals are actually entering the UI system each week. (See: Increasing Equity and Improving Measurement in the U.S. Unemployment System: 10 Key Insights from the COVID-19 Pandemic)

2) Disparities in access to unemployment insurance. For example, the share of unemployed workers receiving UI benefits varies dramatically across counties in California, with higher income counties tending to see higher UI recipiency rates. (See: CPL’s academic article: Disparities in Access to Unemployment Insurance During the COVID-19 Pandemic: Lessons from U.S. and California Claims Data, and report: Increasing Equity and Improving Measurement in the U.S. Unemployment System: 10 Key Insights from the COVID-19 Pandemic)

3) The benefits of short-time compensation (STC) as an underutilized (and superior) alternative to layoffs. Through STC, instead of laying off some workers while others remain full time, employers are able to retain employees at reduced hours. Workers whose wages have been reduced are then eligible to collect prorated UI benefits. (See: Till von Wachter’s policy paper for the Aspen Economic Strategy Group: Data-Driven Opportunities to Scale Reemployment Opportunities and Social Insurance for Unemployed Workers During The Recovery, his Fiscal Studies paper: Lost Generations: Long-Term Effects of the COVID-19 Crisis on Job Losers and Labour Market Entrants, and Policy Options, and CPL’s working paper presented at the Federal Reserve Bank of Boston’s 66th Economic conference: Short-Time Compensation in the U.S. and California from 2000 to 2022: A Descriptive Analysis of Program Incidence and Worker Outcomes.)

4) How the sudden ending of benefit extension programs affected workers — namely by decreasing the share of unemployed who received UI, but having little effect on when claimants actually returned to work. (See: CPL’s policy report: Expirations of Pandemic Jobless Programs Caused an Unprecedented Drop in Access to Unemployment Insurance)

5) How unemployment insurance benefits affect unemployment duration, and how this effect changes over the business cycle. (See: CPL’s academic paper: UI Benefit Generosity and Labor Supply from 2002-2020: Evidence from California UI Records, which showed that the behavioral response of UI claimants (in terms of a decreased probability of “exiting” the UI system to find work in a given week) to UI benefit generosity was relatively unchanged throughout the Great Recession and ensuing recovery, but fell dramatically during the pandemic.

6) How policymakers can harness states’ UI systems and similar large social programs to target income support and workforce services to workers at risk of poverty or of adverse consequences from job loss and long-term unemployment. In December of 2020, as federal UI extensions were approaching expiration, California’s Employment Development Department (the UI agency in the state) sent messages to UI claimants about the availability of CalFresh benefits. (CalFresh is California’s version of SNAP). This led to a dramatic surge in CalFresh applications of close to 40,000 in a single day — demonstrating the potential benefits from harnessing existing service relationships between large government programs. (See: Till von Wachter’s policy paper for the Aspen Economic Strategy Group: Data-Driven Opportunities to Scale Reemployment Opportunities and Social Insurance for Unemployed Workers During The Recovery)

7) How reforms to the UI data infrastructure could enable data-driven UI and workforce policy, while supporting effective and equitable real-time decision making. The UI system has a wealth of untapped information that could be used to improve our understanding of the economy and increase the effectiveness of the UI program itself, yet that’s not possible under the current data infrastructure. By modernizing reporting requirements of states’ UI systems, expanding data collection during the administration of UI benefits, and providing access to de-identified, individual-level administrative data to researchers for evaluation purposes, UI data could become much more valuable for policymakers. (See: Till von Wachter’s policy paper for the Aspen Economic Strategy Group: Data-Driven Opportunities to Scale Reemployment Opportunities and Social Insurance for Unemployed Workers During The Recovery)

8) How a narrow measure of unemployment led to UI benefit extensions being turned off prematurely for workers in 33 states during the Pandemic. When “triggered on,” the Extended Benefits (EB) program extends how many weeks a person can claim Unemployment Insurance (UI) benefits. The EB program triggers on and off depending on when the share of workers claiming regular UI benefits crosses a certain threshold. However, this measure does not include individuals receiving benefits through extension programs. As a result, when a large share of unemployed workers transition from regular UI to extension programs, EB can mechanically trigger off, even if the total number of UI claimants remains unchanged or is increasing. (See: CPL’s policy brief: Why Extended UI Benefits were Turned Off Prematurely for Workers in 33 States)

Members of the Academy’s Unemployment Insurance Task Force:
Michele Evermore, The Century Foundation and Rutgers University – Principal Investigator
Ben Gitis – Co-Chair
Julia Simon-Mishel, Philadelphia Legal Assistance – Co-Chair
Till von Wachter, California Policy Lab, University of California, Los Angeles – Co-Chair
David Balducchi, U.S. Department of Labor (retired)
Judy Chesser, U.S. Social Security Administration (retired)
Calvin Colbert, Challenger, Gray & Christmas
Matthew Darling, MEF Associates
Rebecca Dixon, National Employment Law Project
Brendan Duke, Center for American Progress
Althea Erickson, Working Matters
Mary Gable, American Federation of State, County, and Municipal Employees
Heidi Hartmann, American University
Douglas Holmes, National Foundation for Unemployment Compensation and Workers’ Compensation
Ray Khalfani, Georgia Budget and Policy Institute
Christopher O’Leary, Upjohn Institute
John Pallasch, One Workforce Solutions
Amy Perez, Stanford University RegLab
Will Raderman, Niskanen Center
Lily Roberts, Center for American Progress
Amy Simon, Simon Advisory
Ralph Smith, Congressional Budget Office (retired)
Amy Traub, National Employment Law Project
James Van Erden, National Association of State Workforce Agencies
Matt Weidinger, American Enterprise Institute

Learn more about the task force and the report on the National Academy of Social Science’s website.