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What Share of the Unemployed Receive Unemployment Insurance? Context, Trends, and Influences

Unemployment insurance (UI) is a program jointly administered by the federal government and each state that provides relief to eligible unemployed workers by replacing a portion of their wages for a limited time. The U.S. Department of Labor (DOL) oversees UI while states retain significant latitude to administer their own programs. 

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What Is the Recipiency Rate?

A vital measure of reach and effectiveness of the UI system, the recipiency rate is the share of unemployed workers receiving UI benefits.i Two major factors underlie the recipiency rate: how many people are eligible for UI and how many successfully apply for UI. 

The UI system is designed to provide benefits to workers who were recently laid off through no fault of their own, so eligibility for UI depends on more than unemployment status. Reason for unemployment, length of unemployment, recent work history, and other factors can disqualify an unemployed worker from receiving UI benefits; this group can include new labor market entrants or reentrants, gig economy workers and independent contractors, and those who voluntarily quit their most recent job. The number of individuals eligible for UI is not consistently measured, but government officials and analysts often assume, as a rule of thumb, that roughly half of unemployed workers are eligible for UI at any given time. 

Also playing an important role in determining the recipiency rate, the UI take-up rate is the proportion of those who are eligible for UI who apply for and receive benefits. Recent research analyzed the period between 1989 and 2012 and found that the average take-up rate in those years was only 77%. Notably, increasing take up to 100% would result in a recipiency rate of around 50%ii—consistent with the rule-of-thumb assumption that about half of unemployed workers are eligible for benefits. 

With each state administering and designing its own UI program, the recipiency rate differs considerably across the country. In 2019, state-level recipiency rates ranged from 9.5% in North Carolina to 59.0% in New Jersey.

What Influences the Recipiency Rate?

As suggested by state-level variation, state UI policies have driven much of the recent decline in the recipiency rate, while the administrative failings in some states have caused much of the remainder. Both factors influence not only which applicants are eligible and approved for unemployment compensation, but also who applies for benefits in the first place. Data from the Census Bureau’s 2005 Current Population Survey revealed that only slightly more than 50% of workers who lost their job (and only 35% of all unemployed workers) applied for UI, mostly because they didn’t believe they would be eligible. 

Researchers have also suggested that unionization, alternative work arrangements (such as gig economy work and independent contracting), and age influence recipiency, but evidence of those factors driving recent trends is limited. 

State Policies 

Each state designs and administers its own UI program, setting eligibility requirements, benefit levels, and application processes within broad federal guidelines. These choices affect recipiency by impacting both the number of workers who are covered by the program and the portion of those eligible who claim benefits.  

States with stricter eligibility criteria, such as higher earnings requirements, can reduce recipiency rates by making fewer unemployed workers eligible for benefits. Likewise, a shorter maximum duration of UI benefits in some states than in others can cause more unemployed workers in those states to exhaust their benefits before finding a new job.  

An unemployed worker’s state of residence is also strongly associated with whether that person will apply for UI benefits in the first place. Perceived ineligibility is the primary reason unemployed workers do not apply for UI; in states with stricter eligibility requirements, fewer unemployed workers believe they are eligible, reducing program take-up by decreasing application rates. 

These state-level dynamics may supersede some of the direct effects of race and ethnicity on UI recipiency. Polling by BPC in 2020 highlighted racial disparities in the UI system and suggested that Black and Hispanic workers are significantly less likely than white workers to be approved for UI benefits. Recent research, however, has shown that state-level differences in program rules, from eligibility requirements to application procedures, might explain virtually all race- or ethnicity-based disparities in UI application and recipiency rates. This research does not negate the existence of racial and ethnic disparities; rather, it emphasizes that those disparities arise at least in part from state-level policy choices and administrative burdens. 

Administration and Administrative Burden 

Beyond program rules, states differ in how they administer UI, including how people must apply and what software they use. While some states’ systems are more user-friendly than others, the COVID-19 pandemic highlighted countless examples nationwide of flawed administrative processes limiting the receipt of UI benefits. Outdated technology and understaffed state UI agencies frequently held up approvals for weeks on end. In many states, the UI application process is difficult for people to navigate, likely resulting in benefit denials due to application mistakes rather than actual ineligibility. For some, the complicated application process simply prevented them from applying for benefits at all (or caused them to give up midway through). Declining claim volumes since the height of the pandemic have allowed these administrative issues to recede from the forefront, but many of the underlying problems remain. 

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