Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. C. Study Questions and Key Findings


In this study, we examine the following key questions:

  • To what extent can former recipients who leave welfare for work rely on UI as a temporary safety net in case of job loss? How do their potential monetary eligibility rates change over time? What is the overall eligibility rate among all those who exited TANF—including those who exited for work and those who exited without work but may have obtained work in future quarters?
  • What are the UI benefit amounts for former welfare recipients who are potentially eligible for UI? How many former recipients would be eligible to receive benefits that exceed the maximum weekly benefit amount according to the benefit calculation formula? In other words, how many are “capped” at the maximum weekly benefit levels set by the state? What is the potential duration of benefits?
  • How might changes in UI program rules affect eligibility? How sensitive are UI eligibility rules and benefit levels to alternative definitions of key program parameters currently used in various states, such as qualifying earnings requirements, the weekly benefit amount formula, the maximum weekly benefit amount, and the definition of the base period?

To study these issues, we examine a sample of recipients living in urban counties in five states who left TANF for work; the data are from the Welfare-to-Work (WtW) evaluation. In addition, where appropriate, we compare these findings with findings obtained from the analysis using data from New Jersey collected as part of the Work First New Jersey Evaluation.(3) To summarize our main findings:

  • TANF recipients who find jobs are more likely than welfare recipients from earlier periods to potentially have monetary UI eligibility. Eligibility rates varied considerably across states, but between 50 percent and 80 percent of those who had exited TANF for work potentially would have monetary eligibility for UI during any given quarter over the two-year period after TANF exit. These numbers are higher than the estimates of 30 to 40 percent based on data from the mid- and late-1980s on clients of the Aid to Families with Dependent Children program. However, between 20 and 50 percent still would not attain monetary eligibility. Furthermore, people who lost their jobs and people who left TANF for reasons other than work were less likely to potentially have monetary eligibility for UI.
  • Although most former TANF recipients who find jobs are likely to potentially ever attain UI monetary eligibility, many also are likely to move in and out of having UI monetary eligibility in any given period. Across the sites, among TANF recipients who exited for work and who would have potentially become eligible for UI during the first year after TANF exit, between 30 and 50 percent would have lost their eligibility sometime between the time they became eligible and the end of the eight-quarter period. Across the sites, only half of the sample members who would obtain monetary eligibility within the first year after TANF exit would have retained it throughout the eight-quarter period.
  • Potential UI benefit amounts for former TANF recipients are higher than what these individuals would receive as TANF payments. In general, UI benefit amounts were typically more than twice the amount of the TANF benefits. Former recipients are most likely to reach the weekly benefit amount’s cap in states that set maximum weekly benefit amounts at low levels. For instance, in Arizona, the state with the lowest maximum benefit amount level, roughly one-third of all former TANF recipients would potentially be capped at the maximum level of the weekly benefit amounts.
  • UI monetary eligibility is not strongly sensitive to changes in UI program rules using parameters currently being used in states across the nation; other changes, such as eliminating the two quarters of work requirement rule will likely have a larger effect in increasing potential UI monetary eligibility rates for this population. UI monetary eligibility is only somewhat sensitive to changes in the minimum qualifying earnings and alternate base period rules. If a state at the top decile of minimum qualifying earnings changes its rule to that of a state at the lowest decile, the new rule would increase monetary eligibility by only about four or five percentage points. This result is driven partly by the fact that, even in the high-requirement states, the minimum qualifying earnings are relatively low; consequently, an individual working at minimum wages for a third of the year would likely qualify for UI benefits. Similarly, alternate base period rules that include more-recent periods would enable people to attain monetary eligibility more quickly, but they do not much affect the fraction likely to be eligible in any given quarter. In comparison, a programmatic change, such as eliminating the requirement of two quarters of work in the base period would likely lead to a 9 to 14 percentage point increase in UI potential monetary eligibility across the sites.

In the next chapter, we discuss in greater detail the sample, data, and analysis methods used in this study. We follow with examinations of the patterns of monetary UI eligibility, patterns of UI benefit amounts, and sensitivity of key outcomes to changes in UI program parameters.

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