How does unemployment insurance work? And how is it changing during the coronavirus pandemic? by Manuel Alcalá Kovalski and Louise Sheiner published by Brookings, indicated by Alvaro Manoel (7/2020).
“Unemployment insurance is a major element of the U.S. government’s response to the economic dislocation caused by the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, expanded the unemployment insurance system to provide relief to those who are out of work, but some of those benefits expire on July 31 unless Congress acts before then. Here is a primer on unemployment insurance before and during the pandemic.
HOW DOES UNEMPLOYMENT INSURANCE WORK IN ORDINARY TIMES?
Created in 1935, the federal-state unemployment insurance (UI) program (as it was structured pre-COVID-19) temporarily replaces a portion of wages for workers who have been laid off, as long as they are looking and available for work. Although benefits vary by state, in most states the program provides up to 26 weeks of benefits to unemployed workers and, on average, replaces half of a workers’ previous wages. Because more workers lose their jobs during economic downturns, this program also provides needed economic stimulus that helps mitigate the severity of recessions.
WHAT ARE INITIAL CLAIMS?
Initial claims are the number of new applications filed by individuals seeking UI benefits—one indication of the health of the job market. In late March, initial claims for UI benefits surged to roughly 6.9 million in a single week—which followed an unusually large 3.3 million new claims filed the week before—because workplaces were shut by lockdown measures put in place to slow the spread of coronavirus. The previous high was 695,000 claims filed the week ending October 2, 1982.
While initial claims have declined since then, they continue to exceed 1 million per week. The total number of workers collecting unemployment benefits (often called “continuing claims”) stood at 32 million, or roughly one in every five people in the labor force, during the week ending on June 27, 2020. The total includes more than 15 million people who are collecting benefits under pandemic-related expansions of the program…”
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