Unemployment Insurance as a Potential Safety Net for TANF Leavers: Evidence from Five States. A. Weekly Benefit Amounts

09/01/2004

  • Former TANF recipients in all five sites would be eligible for weekly benefits that were higher than the TANF benefits they would receive in that state.

Former TANF recipients who had exited welfare for work and who potentially had monetary eligibility for UI would likely be able to receive an average UI weekly benefit amount of between $155 and $200 per week (Table IV.1), which would translate to around $675 and $850 per month. The amount of benefits that an individual can potentially receive is a function of his or her earnings in the base period, as well as of the wage replacement rate and maximum weekly benefits set by the state.(1) The average weekly benefit amounts were the highest in Baltimore County, where former recipients had the highest level of earnings, and the state had relatively high wage replacement rates. In contrast, they were the lowest in Cook County; in that site, even though earnings were comparable to those in the other sites, the lower wage replacement rate led to relatively low potential benefit levels. Thus, it appears that state UI program parameters may drive more of the variation in potential benefits across the sites than do the earnings of clients. .(2)

Table IV.1.
Distribution of Weekly Benefit Amounts at Quarter 8 after TANF Exit
  Phoenix,
AZ
Cook Co.,
IL
Baltimore
Co., MD
Philadelphia,
PA
Tarrant Co.,
TX
Percentage with WBA of:

Less than $100

13 26 16 15 18

$100 to $150

22 27 13 22 25

$151 to $200

25 23 19 23 24

$201 to $250

40 13 16 19 18

$251 to $300

6 28 11 8

More than $300

6 8 10 9

(Average amount)

($165) ($155) ($199) ($187) ($175)
WBA Replacement Rate of Weekly Wages(a) .56 .49 .55 .52-.59 .52
Maximum WBA in 2001 $205 $296 $280 $430 $294
Sample Size 1,740 8,472 681 6,989 784
Source: Calculations from administrative records from selected Welfare-to-Work evaluation states, and state UI program rules, assembled by Mathematica Policy Research, Inc.

Note: Sample includes those who exited TANF for work within 12 months of reference date and were ever monetarily eligible for UI within the 8 quarters following TANF exit.

WBA = weekly benefit amount.

(a): Refers to high-quarter wages, except for Illinois, which is based on the two highest-quarter wages.

Potential average weekly benefits increase somewhat over time across all the sites, reflecting an increase in people’s earnings over time (Table IV.2). These UI benefit levels are relatively generous when compared with the maximum TANF grant of $187 to $430 per month for a family of three with no other income (shown in Table IV.2). The average monthly amount of TANF benefits these TANF recipients would actually receive is likely to be somewhat lower, because their other income will count toward the calculation of their TANF benefits.

Table IV.2.
Average Weekly Benefit Amounts, by Quarter after TANF Exit
  Phoenix,
AZ
Cook Co.,
IL
Baltimore
Co., MD
Philadelphia,
PA
Tarrant Co.,
TX
Quarter After TANF Exit

0

$135 $111 $169 $121 $132

1

130 115 172 124 132

2

139 123 170 143 144

3

145 130 169 157 152

4

151 136 170 164 160

5

156 142 177 172 167

6

161 148 187 179 173

7

162 152 195 183 175

8

165 155 199 187 175
WBA Replacement Rate of Weekly Wages(a) .56 .49 .55   .52-.59 .52
Maximum WBA in 2001 $205 $296 $280 $430 $294
Sample Size(b) 1,229-2,365 6,549-11,543 454-801 3,694-8,403 545-1,029
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: Sample includes those who exited TANF for work within 12 months of reference date and were ever monetarily eligible for UI within the 8 quarters following TANF exit.

WBA = weekly benefit amount.

(a): Refers to high-quarter wages, except for Illinois, which is based on the two highest-quarter wages.

(b): Sample size ranges represent the minimum and the maximum sample sizes for which the averages of WBA were computed across the quarters.

  • Individuals are more likely to potentially reach their maximum weekly benefit amounts in states with low maximum weekly benefit amounts, or in states whose former TANF recipients have relatively high earnings, than they would in other states.

As discussed, UI weekly benefit amounts are calculated as some fraction of an individual’s average base-period weekly earnings. However, each state also sets a limit at which a claimant’s weekly benefits are capped. If very few former recipients who are claimants have benefits that exceed their cap, then in essence, an increase in the maximum benefit levels would not affect the benefits these individuals would receive. In contrast, if many claimants “top out” at the maximum benefit levels, then any increase in the maximum benefit level would likely affect more individuals. Welfare recipients usually are low-wage workers, and it is possible that many do not earn enough to reach the maximum and, hence, may be capped at that level. If this is the case, an increase in the maximum weekly benefit levels may not benefit these individuals much.(3) The extent to which this is likely to be the case depends on the level at which a state sets its maximum weekly benefit amount, the wage replacement rate, and the earnings levels of individuals.

We found some variation in the rate at which individuals reach the maximum weekly benefit amount cap. In Philadelphia, where the maximum weekly benefits are set at fairly high levels, very few former TANF recipients would have reached the maximum benefit levels (Table IV.3). Similarly, in Cook County and Tarrant County, relatively modest maximum weekly benefit amounts combined with modest earnings levels and low wage replacement rates also would have led very few former TANF recipients in those sites to hit the maximum. In contrast, low maximum weekly benefit amounts would have led close to one-third of workers to reach the maximum benefit level in Phoenix, and the high earnings combined with the modest replacement rate of 55 percent would have led one in four former TANF recipients in Baltimore County to reach that level.(4)

Table IV.3.
Percentage of Individuals Who Would Potentially Reach the Maximum Weekly Benefit Amount
  Phoenix,
AZ
Cook Co.,
IL
Baltimore
Co., MD
Philadelphia,
PA
Tarrant Co.,
TX
Quarter After TANF Exit

0

18 2 26 0 3

1

16 2 24 0 2

2

17 2 20 1 2

3

19 2 16 1 3

4

23 2 16 1 4

5

26 3 18 1 6

6

31 3 21 1 6

7

34 4 23 2 6

8

36 4 24 2 6
Excess Amount in Quarter 8, Over the Maximum for Those Who Reach the Maximum $71 $106 $141 $20 $88
Maximum WBA in 2001 $205 $296 $280 $430 $294
Sample Size(a) 1,229-2,365 6,549-11,543 454-801 3,694-8,403 545-1,029
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: Sample includes those who exited TANF for work and were monetarily eligible for UI during the quarter.

WBA = weekly benefit amount.

(a): Sample size ranges represent the minimum and the maximum sample sizes for which the percentages were computed across the quarters.

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