On Thursday, May 20, Congress is expected to take up legislation that extends federal emergency unemployment insurance (UI) benefits and supplemental COBRA health insurance benefits through the end of 2010. New eligibility for federal UI benefits will expire June 2 if Congress doesn’t act. (On a side note, this bill is also carrying several other important provisions, including the extension of the enhanced Medicaid matching rate, an extension of TANF emergency funds, and an adjustment to physicians’ reimbursement rates under Medicare.)
What would federal inaction on unemployment insurance mean for Minnesota?
- Minnesota currently has 180,000 people receiving unemployment benefits, according to the Department of Employment and Economic Development (DEED). Some 500-600 workers a week are running out of benefits before they find a job. Even if Congress extends UI benefits, it won’t help those who have already used all their benefits. But if Congress doesn’t extend UI benefits, the number of people exhausting their benefits will accelerate.
- Between state and federal programs, Minnesota workers are eligible for up to 86 weeks of UI benefits. Without federal action, it would drop to a maximum of 39 weeks.
- More people would be on the financial brink because they couldn’t find work. During the fourth quarter of 2009, Minnesota had 8.2 unemployed people for each job vacancy statewide, up from 5.5 unemployed people per vacancy the year before, according to DEED‘s most recent job vacancy survey.
With the economy in a slow recovery, UI dollars are critical to family budgets and the state’s economy. UI puts money in the hands of unemployed workers who otherwise would be cutting their spending dramatically. As the Center on Budget and Policy Priorties highlights, this creates demand and spurs the economy.
UI Modernization
We recently received a question about how Minnesota had modernized its unemployment insurance system in response to incentives in the federal Recovery Act. Minnesota successfully made the few fixes to existing law required to meet the modernization criteria and qualified for $130 million in aid to the state’s Unemployment Trust Fund (the full amount available).
To get part of the money, Minnesota made it easier for people with shorter work histories to qualify for unemployment insurance benefits they had earned. Under the old law, Minnesota calculated eligibility based on the first four of the last five completed quarters. That meant that some people who had enough earnings to qualify might have missed out because the most recent quarter wasn’t counted. Minnesota changed the law so that if a person did not have sufficient earnings to qualify under the traditional method, it would look at their last four completed quarters of work.
The National Employment Law Project said such alternative base period calculations especially help low-wage workers by counting their most recent earnings. These low-wage workers, “are twice as likely as higher-wage workers to find themselves unemployed, but they are only one-third as likely to collect jobless benefits,” its report said.
To qualify for the rest of the UI modernization money, Minnesota had to choose from two of four reform options. It chose:
- To expand UI eligibility for those who quit for “compelling family reasons.” It expanded provisions that provide eligibility for people who quit because of domestic abuse. It added eligibility provisions for those who quit work to care for immediate family members because of illness, injury or disability, and those who quit and moved because their spouse’s job location changed.
- To allow people who worked part-time before becoming unemployed to seek similar part-time work as they had before, and not lose eligibility because they refused to take full-time work.
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