Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. B. Analysis Methods

09/01/2004

We conducted two types of analyses: (1) an examination of former TANF recipients’ potential UI eligibility, and (2) the sensitivity of UI monetary eligibility to changes in UI program parameters.

Analysis of Potential Eligibility. Much of the analysis in this study focuses on determining potential monetary eligibility for UI. In other words, we examined the extent to which former welfare recipients would have monetary eligibility for UI if they were to experience a qualifying job separation (that is, a job separation occurring through no fault of their own), and if they were available for full-time work. We focused on potential eligibility among all those who exited TANF for work in order to better understand what safety nets are available to these low-wage workers in case of job loss. Our examination of potential UI eligibility covers each of the eight quarters after the sample members’ exit from TANF. To estimate potential monetary UI eligibility during any given quarter after TANF exit, we used both data on the former TANF recipients’ earnings during the UI base period for that quarter and the eligibility rule for the appropriate year for the relevant state. Earnings used are based on those reported in the wage records data.

Based on each state’s rule, for each quarter after TANF exit, former TANF clients who had worked for at least two quarters in the relevant base period for that quarter and who met the minimum qualifying earnings and the high-quarter earning in that base period were treated as potentially having monetary eligibility for UI for that quarter. As mentioned in Section A of Chapter I, , “base period” typically refers to the first four of the last five completed quarters. The minimum qualifying earnings and the high-quarter earnings for each state are shown in Table I.2. It is important to recognize that our estimates of monetary UI eligibility are based on clients’ earnings during the relevant base period for each quarter if they were to experience a job loss during the particular quarter; our basic analysis is not restricted to those who actually experienced a job loss.

Sensitivity of Potential Eligibility to Alternative UI Program Parameters. Concerns about the decrease in UI participation rates over time and the desire that UI eligibility rules keep pace with the changing characteristics of the workforce have led some advocates to suggest reforms to the UI system. These reforms have focused on redefining labor force attachment, redefining the base period, better redefining separation through no fault, redefining ability and availability for work, and increasing the currently low benefit levels in many states. In our analysis, we examined the sensitivity of potential UI monetary eligibility to three types of changes in UI program parameters: (1) alternative definitions of the base period, (2) alternative definitions of earnings requirements, and (3) alternative definitions of weekly benefit calculations. For example, most of the analysis of potential UI eligibility is based on the standard definition of the base period used in most states—earnings during the first four of the last five completed quarters. However, we also used two alternative definitions of the base period in our examination of UI eligibility: (1) earnings during the last four completed quarters, and (2) earnings during the current quarter and the last three completed quarters. We conducted simulations to estimate the effects of each of these definitions of the base period, as well as to determine monetary eligibility if a state sequentially used all three rules to determine eligibility. We also examined the sensitivity of monetary UI eligibility to the alternative definitions of minimum qualifying earnings and high-quarter earnings currently in use across various states in the nation.

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