Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. VI: Conclusions


In this study, we examined the extent to which former welfare recipients who leave welfare for employment are likely to be eligible for UI in case of a job loss, using data from the National Evaluation of the Welfare-to-Work Grants Program. In particular, we used data on welfare recipients who exited welfare for work in five sites to examine the extent to which these individuals potentially have monetary eligibility for UI at subsequent points in time. To calculate potential monetary UI eligibility, we use administrative UI wage records data for these welfare recipients who exited for work. Our data cover the period from 1999 to 2002 across the study sites.

We find that the vast majority of TANF recipients who exited welfare for work would potentially attain UI monetary eligibility at some point during the two-year period after TANF exit. However, we also find that there is considerable movement in and out of potential UI eligibility, so that many (between a third to a half) of those who would ever attain monetary eligibility also are likely to subsequently lose it over the following quarters. We also found that, as a group, those who actually experienced a job loss during the first year after TANF exit for work have considerably lower rates of potential UI monetary eligibility.

Thus our findings show that, compared with previous periods, a higher fraction of former TANF recipients who leave welfare and find employment potentially would attain monetary eligibility for UI. A large part of this observed increase may be attributable to the new welfare reforms and their increased emphasis on work, as the study period includes the years 2001 and 2002, years in which economic conditions were not particularly strong. However, despite these increases in potential UI monetary eligibility rates, a considerable minority of those who exit TANF for work are unlikely to attain UI monetary eligibility, and this is especially true for those who actually experience a job loss.

Concerns about declines in UI participation rates and need for UI program rules to keep pace with the changing characteristics and needs of the UI workforce have led some to reexamine the UI system. Many of these proposed reforms have focused on redefining labor force attachment, better identifying what constitutes separation through no fault, redefining ability and availability for work, and increasing the currently low levels of benefits in many states.

Our study shows that rates of potential monetary eligibility for this population are only slightly sensitive to the key UI program parameters when we consider the parameters used in various states across the country. In particular, potential monetary eligibility is only somewhat sensitive to levels at which states set their minimum qualifying earnings. 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 wage for a third of the year would likely qualify for UI benefits. We find that alternative definitions of the base period that allow more-recent quarters of work to count toward eligibility will enable more former TANF recipients who leave welfare for work to potentially become eligible for UI more quickly, but that they do not affect those individuals’ eligibility over the long run. The extent to which these rules might affect this population depends on the extent to which individuals experience periods of joblessness, especially soon after entering the labor force for the first time. Finally, when we examine the reasons for ineligibility among those ineligible, we find that the elimination of the two quarters of work requirements in the base period and the high-quarter requirements both would likely make between half to two-thirds of those who have no eligibility potentially attain monetary eligibility for UI. The remaining had no earnings in the relevant base period.

In this study, we have not been able to examine the extent to which individuals who have potential monetary eligibility would fail to qualify due to nonmonetary reasons. Other studies suggest that nonmonetary disqualifications are likely to be fairly important for this population; the population’s high rate of quits and the lack of availability to work full-time may cause many who have monetary eligibility to not qualify for nonmonetary reasons. Further research could focus on exploring these factors more carefully, as well as on assessing the implications of changes in nonmonetary factors on both UI eligibility rates and UI program costs.

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