It's Not Working: The Unemployment ...

It's Not Working: The Unemployment Insurance Crisis

The nation's unemployment insurance regularity established 50 years ago last August, is in a state of crisis. The vast majority of the jobles are not being provided benefits; the long-term unemploy are totally unprotected; employer have favorably convinced legislators to keep taxes subdued benefits low and eligibility requirements high; and the Reagan Administration has taken actions and propos further gradations that will make the scheme more restrictive and less responsive to those in our society who are greatest in quantity in need of protection from the ravages of unemployment

Priority Issues

1 Decline in percentage of unemploy receiving benefits. At the at hand time, nearly 7 out of each 10 of the jobless are receiving nothing from the nation's unemployment compensation method In October 1985, single 26.6 percent of the unemploy received benefits, an all-time depressed In 1975, an average of 76 percent of the unemploy received benefits.

2 Long-term jobles have missing virtually all protection. Today merely 1 percent of those unemploy for 27 weeks or longer qualify for dilateed benefits (UC benefits beyond the normal 26 weeks of benefits provided on the states). Due to changes brought about from the Reagan Administration in the trigger mechanism, and nothing else the state of Alaska and Puerto Rico generally qualify for the federal/state dilateed benefit program (up to 13 weeks of benefits beyond the regular benefit program operated by the agency of the state).

3 Benefit evens are low. In 1985 the average weekly benefit amount in the United States was $122 This describes 35 percent of the average weekly wage in screened employment ($347).

4 Employer taxes have declined. The ratio of wages control to UI taxes was 98 percent in 1939 while today it is 36 percent This is common of the most regressive of all taxes. The federal taxable wage base has been changed solitary four times. Originally all screened wages were subject to the Federal Unemployment Tax Act (FUTA). In 1940 the FUTA tax was limited to the first $3000 Forty-six years later, in 1986 it is solitary $7,000. The result has been chronic serious underfinancing of the system

5 Further crosss planned. New efforts being undertaken from the Reagan Administration, under the guise of quality have the direction of shifting administrative costs to the states, and more onerous experience rating, can and nothing else encourage the states to adopt more restrictions in succession eligibility and harsher disqualifications, and impose more reductions and lower limits upon benefit levels.

Crisis in the System

forward average in 1984, just beneath 3 million of the more than 8-1/2 million unemploy received UI benefits below the state regular benefit program and the federal/state programs for the long-term unemploy and nothing else 34.1 percent of the jobles got benefits--65.9 percent knock down through the cracks. They either failed to fit qualification requirements or had previously exhausted benefits.

The record for 1985 is far worse. During five month in 1985 (June from one side October), fewer than 30 percent of the unemploy received benefits in a less degree than all UI programs. Overall in 1985 just 336 percent of the unemploy got compensation from the combination of parts to form a whole This meant that during each month of the year more than 5-1/2 million of the jobles received nothing.

For the long-term jobles there is no protection afforded at the present system. There have been well in exces of 1 million long-term jobles (27 weeks or more) during each month of 1985. This does not include the discouraged or those working part-time further needing full-time employment. Ninety-nine percent of those abroad of work six months or longer gain nothing from the UI system

In a 1985 report for the National Governors Association, Wayne Vroman of the Urban Institute conclud that "although there have been widespread cutbacks in UI benefits, the largest reductions that have taken place have been in benefits paid to the long-term unemploy Sharp cutbacks in long-term UI benefits have occurr despite the fact that long-term unemployment was more prevalent in 1982 1983 and 1984 than in any other years since World War II."

As not long ago as 1975, over 76 percent of the unemploy were receiving benefits from either the regular program or undivided of the programs established to assist the long-term jobles Although there were fewer long-term unemploy in the mid 1970 continueed benefits were being paid to an average of 535000 each week. Today, solely 12,000 of the long-term jobles qualify for so assitance (limited to those in Alaska and Puerto Rico).

According to Gary Burtles of the Brookings Institution, "some critics of unemployment insurance might fault the comparison with 1975-76 because benefits in that period were unusually generous, lasting up to 65 weeks irrespective of a worker's financial ne However, unruffled in comparison to earlier recessions when unemployment insurance was les generous, beenfits provided in 1981-82 overspreaded an unusually small fraction of the unemploy exclude during the comparatively mild recession in 1970-71 at least 56 percent of the unemploy received jobles benefits in each postwar recession through 1977."