UI as a Safety Net for Former TANF Recipients. UI eligibility and benefits

03/01/2008

Unemployment insurance eligibility rules are set to ensure that those compensated are strongly attached to the labor force and temporarily jobless through no fault of their own. To qualify initially for UI, a claimant must have sufficient prior earnings and employment — these are called monetary eligibility conditions. Furthermore, the job separation must be involuntary. Non-monetary eligibility rules prohibit quits and discharge for misconduct or other causes justifiable by an employer. Employer discharge for cause is usually related to frequent tardiness, unexplained absences, misconduct, or poor job performance.(1) UI applicants must also be able, available, and actively seeking full-time work, as defined by UI rules. For initial and continuing eligibility, beneficiaries may not refuse an offer of suitable work.

Monetary eligibility for UI is determined by base period earnings. The UI base period is normally the first four of the previous five completed calendar quarters before the date of claim for benefits.(2)Table 1 lists the minimum base period earnings required to qualify for the minimum UI weekly benefit amount. For 1997, base period earnings requirements in the four states studied ranged from $1,628 in Texas to $3,400 in Florida. By 2003, the requirement remained at $2,640 in Ohio, had not changed in Florida, and had risen to $2,997 in Michigan, and to $1,887 in Texas.(3)

 

Table 1.
Comparison of State Provisions for UI and TANF Programs
  Florida Michigan Ohio Texas
UI Minimum Base Period Earnings (*1)
   1997
   2000
   2001
   2003
   
$3,400
3,400
3,400
3,400
   
$2,020
2,020
3,219
2,997
   
$2,640
2,640
2,640
2,640
   
$1,628
1,739
1,776
1,887
UI Covered Weeks of Work (*2)
   1997
   2000
   2001
   2003
   
   
   
$3,058
3,432
3,504
3,680
   
State Average Weekly Wage (*3)
   1997
   2000
   2001
   2003
   
$497
578
596
630
   
$636
726
731
767
   
$556
624
637
669
   
$579
687
708
719
UI Average Weekly Benefit Amount
   1997
   2000
   2001
   2003
   
$192
220
223
225
   
$222
244
261
291
   
$208
236
248
252
   
$196
227
241
261
TANF Earnings Disregard

(Table does not show small changes in rules over time or other disregards that may affect benefits.)

$200 plus 50% of remainder

$200 plus 20% of remainder

$250 plus 25% of remainder

$120 plus 90% of remainder (33% for eligibility), $120 after 4 mos.

TANF Breakeven Earnings (*4)
   1997
   2000
   2001
   2003
   
$806
806
806
806
   
$774
774
774
774
   
$932
996
996
996
   
$1568 / 308
1581 / 321
1581 / 321
1593 / 333
TANF Monthly Benefit (*5)
   1997
   2000
   2001
   2003
   
$303
303
303
303
   
$459
459
459
459
   
$341
373
373
373
   
$188
201
201
213
Note:  (*1) Base period earnings (BPE) is the sum of earnings in the first four of the previous five completed calendar quarters. For Michigan in 1997 and 2000, the requirement is for at least 20 weeks in which the person earns 30 times the state minimum wage ($101). An alternative, flat requirement is 14 weeks of work and base period earnings that total 20 times the state’s average weekly wage. High quarter earnings requirement is $2,667 for Florida for all years and is $1,998 in 2002-2003 for Michigan.

(*2) For Ohio, the weeks of work requirement is 20 weeks at 27.5 percent of the state’s average weekly wage. The earnings requirements implied by the Ohio rule are listed in the UI covered weeks of work row.

(*3) State average weekly wage (AWW) earned by those working in UI covered employment for study states.

(*4) This is the point at which the TANF benefit is zero due to earnings. Breakeven earnings is computed as (TANF benefit amount) divided by (1-disregard rate) plus the lump sum disregard. Texas has a $1,400 cap on the earned income that can be subject to the 90 percent disregard for 4 of 12 months of TANF receipt (HHS 2006, Table 12-5, footnote 8).

(*5) Family of three (one adult and two children with no income).

Sources:  HHS (2006) Tables 12-2 and 12-5; USDOL (2008); USDOL (1997, 2000, 2001, 2003).

Some states have a high quarter earnings requirement.(4) Most states also have an earnings dispersion requirement — all of the four states studied require earnings in at least two calendar quarters of the base period. Ohio is one of a few states in the nation with a base period employment requirement, and it is a very restrictive rule.(5) The Ohio weeks of employment rule limits eligibility to those with at least 20 weeks of work in which earnings each week are at least 27.5 percent of the state average weekly wage in covered employment (Table 1). For Ohio in 2000, a week of insured employment required earnings of at least $172, which is, more than 33 hours of work at the federal minimum wage of $5.15 per hour.

For those who qualify, UI pays benefits weekly with the cash amount increasing with the level of prior earnings up to a state maximum. Table 1 lists the state-wide average UI weekly benefit amounts. Also listed in Table 1 are average weekly wages of all workers covered by UI in the states examined for the years of our analysis cohorts. This provides a sense of the average wage replacement rate provided by UI to regular full-time workers.

Prior research has suggested that TANF leavers would have a high probability of passing monetary eligibility requirements, but speculates that non-monetary eligibility requirements would eliminate a greater share of TANF leavers from UI eligibility. Regarding monetary eligibility, prior research has failed to recognize the importance of employment requirements separate from earnings rules, and there has been little prior direct evidence on the job separation patterns for recent TANF leavers.

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