The Current State of Unemployment Insurance: Challenges and Prospects

Summary: As the crisis of the Great Recession gives way to economic recovery, the federal-state Unemployment Insurance (UI) system that helped sustain the country during the height of unemployment continues its essential function in the American economy. The program that made headlines during each successive wave of extraordinary unemployment compensation extensions continues its fundamental work of providing income replacement to workers laid off from a job. The present period, when the demands on the system are relatively low, is precisely the time to have reasoned conversations about reforming it – before the next high-stress period of sustained and widespread use.

This need for timely reform inspired the National Academy of Social Insurance to convene a roundtable discussion on “Rethinking Unemployment Insurance” in Washington, D.C. on October 16, 2015. The meeting was chaired by Stephen Wandner, Visiting Fellow at the Urban Institute and Visiting Scholar at the W.E. Upjohn Institute for Employment Research, and William Rodgers, Professor and Chief Economist at the Heldrich Center for Workforce Development at Rutgers University. This brief presents the issues, problems, and proposals for reform that were identified at the roundtable, and represents an up-to-date accounting of some of the most pressing issues facing the UI system as articulated by leading experts on the program.

This brief, like the roundtable discussion on which it is based, is organized into three broad issue areas: reemployment through the UI system, problems in UI financing, and the capacity of UI to serve the modern workforce.