Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. A. Alternative Definitions of Minimum Qualifying Earnings

09/01/2004

States vary substantially with respect to the minimum earnings that individuals must have in order to qualify for UI. We calculated potential UI eligibility rates for the five study sites, using a range of minimum qualifying earnings that corresponded roughly to the bottom decile ($900), the median ($1,600), and the top decile ($2,800) among all 50 states. During these simulations, we used the two-quarter work requirement, which is the employment requirement rule used in all five study states, as well as in a majority of states across the country.

  • UI monetary eligibility rates for this population are only somewhat sensitive to the specification of the minimum qualifying earnings based on rules currently used in states across the country.

Figure V.1 contains information for each study site about potential monetary eligibility for the eighth quarter after TANF exit, including information on the percentage of former TANF recipients in each site who would be eligible under the current state rule, and the percentage who would be eligible under different minimum qualifying earnings rules (equivalent to the bottom, median, and top decile of minimum qualifying earnings from all states). The bottom panel presents information on the relative change in UI monetary eligibility rate that results from each of these simulations.

Potential monetary eligibility rates do not vary much under alternative definitions of minimum qualifying earnings currently being used by states. Even when we consider the largest changes in the rules (for example, a change from Texas’s minimum qualifying earnings of $1,776 to that for the lowest-decile state [$900]), we observe only a four percentage point increase (a 9 percent increase over the base) in potential UI monetary eligibility for the study sample members (Figure V.1).(2) Similarly, if Maryland, which has a minimum qualifying earnings of $900, made its rule as restrictive as that of the top-decile state ($2,800), we would observe only a six percentage point reduction in the fraction with potential monetary eligibility (or a 10 percent decrease). Of course, these findings may be driven by the fact that the overall minimum qualifying requirements for most states are relatively low compared with typical earnings (even among the group of workers in the study); in this case, changes in the earnings requirements would be unlikely to make a large difference.

Figure V.1.
Sensitivity of UI Monetary Eligibility to Alternative Definitions of Minimum Qualifying Earnings over the Base Period
Sensitivity of UI Monetary Eligibility to Alternative Definitions of Minimum Qualifying Earnings over the Base Period
Sensitivity of UI Monetary Eligibility to Alternative Definitions of Minimum Qualifying Earnings over the Base Period
Source: Calculations from administrative records from selected Welfare-to-Work evaluation study sites, and state UI program rules, assembled by Mathematica Policy Research, Inc.

Note: Dollar values in parentheses refer to the minimum qualifying earnings (MQE) for each state. The percentage change (in the lower panel) was calculated as the difference between eligibility calculated under the current state MQE rule compared with the alternative definitions of the MQE, divided by the eligibility under current state rules. Sample includes those who exited TANF and held a job within three months of TANF exit.

MQE = Minimum qualifying earnings.

  • Significant increases in UI monetary eligibility can be achieved if the two-quarters of work rule were to be eliminated.

To obtain a better understanding of factors that monetary UI eligibility might be more sensitive to, we examined the reasons for ineligibility among sample members who had exited TANF for work and would potentially be ineligible for UI during the 8th quarter after TANF exit. As seen in Figure V.2, across the sites, between 30 to 48 percent did not have monetary UI eligibility during this quarter. Among those ineligible, about one in three (and close to half in two states) would have been ineligible because they had no earnings in the base period. Another one-quarter to one-third of these workers would have been ineligible because they did not have employment for more than one quarter in the base period. For instance, removing the two-quarter work requirement rule could increase monetary UI eligibility in quarter 8 by between 9 and 14 percentage points across the sites. Similarly, another 2 to 10 percentage points more of sample members had the required base period earnings and had worked at least two quarters but did not meet the high-quarter earnings requirement.(3)

Figure V.2.
Potential Monetary Eligibility for UI at Quarter 8 after TANF Exit, and Reasons for Ineligibility
Potential Monetary Eligibility for UI at Quarter 8 after Tanf Exit, and Reasons for Ineligibility
Source: Administrative records from selected Welfare-to-Work evaluation study sites, and state UI program rules, assembled by Mathematica Policy Research, Inc.

Note: Earnings and quarters worked pertains to earnings and employment in the base period.

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