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Report to the Chairman, Subcommittee on Income Security and Family
Support, Committee on Ways and Means, House of Representatives:
United States Government Accountability Office:
GAO:
September 2007:
Unemployment Insurance:
Low-Wage and Part-Time Workers Continue to Experience Low Rates of
Receipt:
Unemployment Insurance:
GAO-07-1147:
Contents:
Letter:
Appendix I: Briefing Slides:
Appendix II: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Abbreviations:
CPS: Current Population Survey:
SIPP: Survey of Income and Program Participation:
UI: Unemployment Insurance:
United States Government Accountability Office:
Washington, DC 20548:
September 7, 2007:
The Honorable Jim McDermott:
Chairman:
Subcommittee on Income Security and Family Support:
Committee on Ways and Means:
House of Representatives:
Dear Mr. Chairman:
The Unemployment Insurance (UI) program has been a key component in
ensuring the financial security of America's workforce for more than 70
years. The UI program is a federal-state partnership designed to
partially replace lost earnings of individuals who become unemployed
through no fault of their own. In fiscal year 2006, the UI program
covered about 130 million wage and salary workers and paid about $30
billion in benefits to about 7 million workers who lost their jobs.
The UI program was established in 1935. At that time, most of the labor
force consisted of men who were employed full-time in the manufacturing
or trade sectors. Since then, the nature of both work and unemployment
has changed in fundamental ways. In recent decades there have been
increases in the share of low-wage jobs, the incidence of temporary and
contingent work, the number of women in the workforce and the number of
two-earner families, and the average duration of unemployment. Given
these changes in the labor force, questions about the types of workers
who are most likely to receive benefits require further investigation.
You asked that we provide information about the extent to which
different groups of workers are being served by the UI program. This
current work updates a prior GAO report that assessed UI's role as a
safety net for low-wage workers.[Footnote 1] Specifically, this report
examines (1) the overall trend in the usage of UI; (2) the likelihood
that low-wage workers will be unemployed and receive UI benefits,
especially when compared to higher-wage workers; and (3) the likelihood
that unemployed part-time workers receive UI benefits.
To address these issues, we used a combination of methods. To determine
the long-term trends in the usage of the UI program, we analyzed data
on UI regular program recipiency rates provided by the Department of
Labor. To compare the likelihood that low-wage unemployed workers
receive UI benefits with that of other workers, we examined data from
the Survey of Income and Program Participation (SIPP), a nationally
representative database maintained by the Bureau of the
Census,[Footnote 2] after determining that these data were sufficiently
reliable for the purpose of this report. For our purposes, SIPP data
were available for the period 1992 through 1995, 1998, and
2003.[Footnote 3] We ran analyses for all workers ages 16 to 64 who had
an employment history within the past 27 months, using their employment
status in March of each year.[Footnote 4] We excluded individuals who
were new entrants to the labor force, as well as those with a history
of self-employment; thus, our unemployment rates are not directly
comparable to national unemployment rates.[Footnote 5] We defined "low-
wage" as an hourly wage which is less than that required for a full-
time worker (40 hours per week/52 weeks per year) to earn the Census
poverty threshold for a family of four, e.g., less than $8.97 per hour
in 2003. We defined a "low-wage worker" as an individual who earned a
low wage in at least half of his or her most recent 6 months of
employment.
We conducted our work between June and August 2007 in accordance with
generally accepted government auditing standards.
On July 30, 2007, we briefed your staff on the results of our work.
This letter formally conveys the information provided during that
briefing. Appendix I contains the briefing slides.
In summary, we found that the UI regular program recipiency rate
gradually declined from the 1950s through the 1980s. Since the mid-
1980s, the recipiency rate has shown modest increase, but still remains
below the near-50 percent rate of the 1950s.
We found significantly lower UI rates of receipt among low-wage
unemployed workers compared with those of higher-wage unemployed
workers. During the period covered by our analysis, we observed that
although low-wage workers were almost two-and-one-half times as likely
to be out of work as higher-wage workers, they were about half as
likely to receive UI benefits. This was true even when job tenure for
both groups was similar: for example, among unemployed workers who had
worked for 35 weeks or more in the year prior to their unemployment,
low-wage workers were still about half as likely to receive UI benefits
as higher-wage workers. We also observed that low-wage workers were
likely to be employed in the retail trade and services sectors, the two
industry sectors with the lowest rates of UI receipt. Furthermore, we
found low-wage workers received UI at significantly lower rates within
most industry sectors, and regardless of whether they were part-time or
full-time. Low levels of UI receipt among low-wage workers may be
explained by the circumstances and preferences of low-wage workers
coupled with UI eligibility rules, particularly the base period for
meeting the minimum earnings requirement for UI and reasons for
separating from work. To determine eligibility for UI, many states
consider wages earned and/or hours worked in the first 4 of the last 5
completed calendar quarters preceding the claim; thus, a worker's most
recent work history is not included in the eligibility determination.
For low-wage workers with sporadic work histories, this restriction can
make it more difficult to achieve the earning level necessary for
eligibility.
Unemployed part-time workers were significantly less likely to collect
UI than those who were full-time. During the period covered by our
analysis, among unemployed workers who had worked for at least 35 weeks
in the past year, part-time workers received UI benefits at a rate of
29 percent, compared to 50 percent for full-time workers. Furthermore,
unemployed part-time workers were less likely to receive UI than full-
time workers regardless of whether they were low-wage or higher-wage.
Low levels of UI receipt among part-time workers may be explained by
many of the same factors that affect low-wage workers, because part-
time workers generally have lower pay, less-skilled jobs, and less job
security than full-time workers. In addition, 32 states do not consider
workers eligible for UI if they are only available for part-time work,
according to the National Employment Law Project.
We provided a draft of this report to officials at the Department of
Labor for their review. Labor generally agreed with our findings, and
noted that this work is consistent with previous research on the topic.
They provided technical comments, which we have incorporated where
appropriate.
Unless you publicly announce its contents earlier, we plan no further
distribution of this report until 14 days after the date of this
letter. At that time, we will send copies of this report to the
Secretary of Labor and other interested parties. We will also provide
copies to others on request. In addition, the report will be available
at no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me on (202) 512-7215. You may also reach me by e-mail at
fagnonic@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made major contributions to this report are
listed in appendix II.
Sincerely yours,
Cynthia M. Fagnoni Managing Director, Education, Workforce, and Income
Security Issues:
[End of section]
Appendix I: Briefing Slides:
Unemployment Insurance:
Low-Wage and Part-Time Workers Continue to Experience Low Rates of
Receipt:
Briefing for Staff of:
The Honorable Jim McDermott, Chair Subcommittee on Income Security and
Family Support Committee on Ways and Means:
U.S. House of Representatives:
July 30, 2007:
Introduction:
The Unemployment Insurance (UI) program is a federal-state partnership
designed to partially replace lost earnings of individuals who become
unemployed through no fault of their own (for “good cause”).
In fiscal year 2006, the UI program covered about 130 million wage and
salary workers and paid about $30 billion in benefits to about 7
million workers who lost their jobs.
The UI program was established in 1935. At that time, most of the labor
force consisted of males who were employed full-time in the
manufacturing or trade sectors. Since then, the nature of both work and
unemployment has changed in fundamental ways. In recent decades there
has been a rise in:
* The percentage of low-wage jobs:
* Temporary and contingent work:
* The average duration of unemployment:
* Women in the workforce:
* Two-earner families:
In addition, there has been a recognition of the need for workers to
balance their work with family obligations, potentially affecting
eligibility.
* This current briefing updates a prior GAO report that assessed UI’s
role as a safety net for low-wage workers.[Footnote 6]
Objectives:
What is the overall trend in the usage of UI?
How likely are low-wage workers to be unemployed and to receive UI
benefits, especially when compared with other workers?
How likely are unemployed part-time workers to receive UI benefits?
Scope and methodology:
To determine the overall trend in the usage of UI, we analyzed national
data on the UI regular program recipiency rate – the measure most
commonly used to assess the effect of the UI program – provided by the
Department of Labor for the years 1950 to 2006, after determining that
these data were reliable for our purpose. The regular program
recipiency rate effectively measures the percentage of the unemployed
who apply for UI benefits. It is calculated by dividing the number of
claims filed weekly with the state programs by the total number of
unemployed as counted in the Bureau of the Census’ Current Population
Survey (CPS). The rate includes those claims that eventually resulted
in benefits as well as those claims that were denied.
To compare low-wage workers to other workers, and part-time workers to
full-time workers, we analyzed Survey of Income and Program
Participation (SIPP) survey data for the years 1992 to 1995, 1998, and
2003,[Footnote 7] after ensuring that these data were reliable for our
purpose. We ran analyses for all workers age 16 to 64,[Footnote 8]
using their employment status in March of each year, and looking back
at 27 months of their employment history. Our unweighted sample sizes
for each year are shown in appendix II, table 4.
While SIPP data are nationally representative, the unemployment rates
we estimated are not comparable to national unemployment rates
primarily because our analysis did not include new entrants into the
labor force, as new entrants do not have a wage history.
In our analysis of SIPP data, we define the “UI rate of receipt” as the
percentage of the unemployed who received any income from UI. This
definition is not directly comparable to the Department of Labor’s
regular program recipiency rate, which effectively measures the
percentage of the unemployed who apply for UI benefits.
Our analysis compares UI rates of receipt for low-wage and higher-wage
unemployed workers. Many factors contribute to this difference in rates
of receipt that are not examined in this simple descriptive analysis,
but which would be important for a more comprehensive
analysis.[Footnote 9] For example, a more comprehensive analysis might
control for workers’ reasons for leaving work, union membership, recent
work history, and other factors when comparing recipiency for low-wage
and higher-wage workers.
We excluded people with a history of self-employment, because self-
employment is not covered by UI.
We excluded new entrants to the labor force, because we needed a work
history to determine whether workers were “low wage.”
We defined “low wage” as an hourly wage which is less than that
required for a full-time worker (40 hours per week/52 weeks per year)
to earn the Census poverty threshold for a family of four (less than
$8.97 per hour in 2003.)
We defined a “low-wage worker” as a person who earned a low wage in at
least half of his or her most recent 6 months of employment.
Results in Brief:
Objective 1: The UI regular program recipiency rate has risen since a
low point in the mid-1980s, but is still below the rate of
approximately 50 percent in the 1950s.
Objective 2: From 1992 to 2003,[Footnote 10] low-wage workers were
almost two-and-a-half times as likely to be out of work as higher-wage
workers, but about half as likely to receive UI benefits.
* Even among unemployed workers who had worked for similar periods of
time, low-wage workers were still less likely to receive UI benefits
than higher-wage workers.
* Unemployed low-wage workers were most likely to have been employed in
the retail trade and services sectors, the two industry sectors that
had the lowest UI rates of receipt.
* Low levels of UI receipt among low-wage workers may be explained by
the circumstances and preferences of low-wage workers (such as
intermittent employment) coupled with UI eligibility rules,
particularly the base period for meeting the minimum earnings
requirement, and the good-cause requirements for reasons for separating
from work.
Objective 3: Unemployed workers who were part-time at their last job
were significantly less likely to collect UI than those who were full-
time. • Part-time workers generally have lower pay than full-time
workers and therefore face many of the same issues facing low-wage
workers. • In addition, UI eligibility rules in 32 states do not cover
workers who are only available for part-time work,[Footnote 11]
according to the National Employment Law Project (NELP).
Background:
The UI program was established by Title III of the Social Security Act
in 1935.
UI is a key component in ensuring the financial security of America’s
workforce.
The UI program’s primary objective is to temporarily replace a portion
of earnings for workers who become unemployed through no fault of their
own.
To receive UI benefits, an unemployed worker generally must meet the
state minimum earning requirements (a minimum amount of earnings and/or
employment) over a defined base period. In addition, workers must have
become unemployed for good cause as determined under state law, and be
able and available to work.
Federal law provides minimum guidelines for state programs and
authorizes grants to states for program administration.
* States design their own programs, within the guidelines of federal
law, and determine key elements of these programs, including who is
eligible to receive state UI benefits, how much they receive, and the
amount of taxes that employers must pay to help provide these
benefits.Footnote 12]
* State unemployment tax revenues are held in trust by the Secretary of
the Treasury and are used by the states to pay for regular weekly UI
benefits, which typically can be received for up to 26 weeks.
During the years we examined between 1992 and 2003,[Footnote 13] low-
wage workers made up about 50 percent of the unemployed former workers
in our sample of the experienced labor force, even though they were
only about 30 percent of the total experienced labor force.[Footnote
14]
Previous GAO work has shown that the likelihood of receiving UI
benefits among UI-eligible workers is lower for those with lower annual
earnings, controlling for a range of economic and demographic
factors.[Footnote 15]
Objective 1: Overall Trend in UI Usage:
From 1950 through the mid-1980s, the UI regular program recipiency rate
gradually declined, dropping to its lowest point in the early 1980s.
Since the mid-1980s, the UI recipiency rate has shown modest increase.
Figure: Average UI Recipiency Rate since 1950:
[See PDF for image]
Source: GAO analysis of Department of Labor data for state UI programs.
Note: Recession years are shaded. Any year at least one quarter in a
business cycle contraction (as defined by the National Bureau of
Economic Research) is defined as a recession year.
[End of figure]
Several factors may explain the decline in UI recipiency.
There is some evidence that the general decline in UI recipiency since
the 1950s is partly explained by the reduction in union
employment—making workers less aware of benefits— and the migration of
manufacturing from high- benefit states to low-benefit states—making
applying for benefits less remunerative.
Objective 2: Low-Wage Workers:
Low-wage workers were more than twice as likely to be unemployed, but
about half as likely to receive UI benefits.
During the years we examined between 1992 and 2003,[Footnote 16] low-
wage workers were almost two and a half times as likely to be out of
work as higher- wage workers, but about half as likely to receive UI
benefits.[Footnote 17]
Compared with higher-wage workers, low-wage workers were at least twice
as likely to be unemployed between 1992 and 2003.
Figure: Unemployment rate, 1992 to 2003:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: Data for 1996, 1997, and 1999 to 2002 were not available.
Differences between low- and higher- wage workers in every year were
significant at the 99 percent confidence level or higher.
The overall unemployment rates we calculated differ from the standard
unemployment rates provided by the Bureau of Labor Statistics. For the
6 years presented, standard rates were 7.5 percent for 1992, 6.9
percent for 1993, 6.1 percent for 1994, 5.6 percent for 1995, 4.5
percent for 1998, and 6.0 percent for 2003. These rates differ because
our calculations excluded workers who were new entrants to the labor
force, those who had a history of self-employment, and those who were
younger than 18 or older than 64 in March of the survey year, and
because there were technical differences between the database we used
for our calculations (SIPP) and that used for the standard unemployment
rates (CPS).
[End of figure]
At the same time, unemployed low-wage workers received UI benefits at
less than half the rate of higher-wage workers in almost every year.
Figure: UI Rates of Receipt among the Unemployed:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: Data for 1996, 1997, and 1999 to 2002 were not available.
Differences between low- and higher-wage workers in every year were
significant at the 99 percent confidence level or higher.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Even with similar work tenures, unemployed low-wage workers were still
less likely to receive UI benefits than unemployed higher-wage workers.
Fifty-five percent of unemployed higher-wage workers who had worked at
least 35 weeks during the year collected UI.
In comparison, 30 percent of unemployed low-wage workers with similar
work tenures collected UI.
Even with similar work tenures, unemployed low-wage workers were still
less likely to receive UI benefits than unemployed higher-wage workers.
Table: UI Rate of Receipt for Unemployed Low-Wage and Higher-Wage
Workers, by Number of Weeks Worked, Combining SIPP Data for Years 1992-
2003:
Weeks worked prior to unemployment[B]: 35 weeks or more;
UI rate of receipt[A]: Low-wage workers (percent): 29.6;
UI rate of receipt[A]: Higher-wage workers (percent): 55.0;
All (percent):45.1 ;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher wage workers)[C]:.538 .
Weeks worked prior to unemployment[B]: 20-34 weeks;
UI rate of receipt[A]: Low-wage workers (percent): 24.4;
UI rate of receipt[A]: Higher-wage workers (percent): 46.1;
All (percent): 33.8;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher wage workers)[C]: .529.
Weeks worked prior to unemployment[B]: Less than 20 weeks;
UI rate of receipt[A]: Low-wage workers (percent): 12.0;
UI rate of receipt[A]: Higher-wage workers (percent): 25.4;
All (percent): 16.5;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher wage workers)[C]: .470.
Weeks worked prior to unemployment[B]: All;
UI rate of receipt[A]: Low-wage workers (percent): 21.8;
UI rate of receipt[A]: Higher-wage workers (percent): 47.9;
All (percent): 34.9;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher wage workers)[C]: .455.
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998 and 2003. Data for 1996,
1997, and 1999 to 2002 were not available.
Differences between low- and higher wage workers in each work tenure
group were significant at the 99 percent confidence level or higher.
[A] We calculated the rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[B] Weeks worked prior to unemployment is the sum of the number of
weeks that the person worked in the 12-month period immediately before
his or her unemployment. Data are restricted to a subsample of
unemployed persons who had a job during the 15 months prior to
unemployment.
[c] For example, among those who had worked 35 weeks or more in the
year prior to unemployment, low-wage workers were 54 percent as likely
to receive UI as higher-wage workers.
[End of figure]
Circumstances and preferences of low-wage workers may run counter to UI
eligibility rules.
Low levels of UI receipt among unemployed low-wage workers may be
explained in part by the circumstances and preferences of low-wage
workers coupled with state UI eligibility rules, particularly:
* the base period for meeting the minimum earnings requirement, and
* reasons for separating from work.
The base period for meeting the minimum earnings requirement for UI may
make eligibility difficult for some low-wage workers.
To determine eligibility for UI, 31 states[Footnote 18] consider wages
earned and/or hours or weeks worked in the first 4 of the last 5
completed calendar quarters preceding the claim, according to the
National Employment Law Project.
* Because the base period in many states excludes the latest calendar
quarter, a worker’s most recent work history is not used in making the
eligibility determination.
* For low-wage workers with sporadic work histories this exclusion of
recent earnings may make it more difficult to achieve the minimum
earning level necessary for eligibility.
Many states do not recognize family obligations as good cause for
leaving employment, which may make eligibility difficult for some low-
wage workers.
Good cause: To be eligible for UI, a person who voluntarily leaves work
must have good cause, as determined under state law.
For low-wage workers, particularly those without paid sick leave,
however, issues such caring for children or sick family members may
make keeping a job more challenging or result in preferences for
certain types of work.
* According to the National Employment Law Project, 35 states[Footnote
19] do not recognize serious illness or disability of a family member
as good cause for leaving employment.
Low-Wage Workers Low-wage workers are more likely to have worked in
industries that have low rates of UI receipt overall.
In 2003, 63 percent of low-wage unemployed workers had been employed in
jobs from retail trade and services, as opposed to about one-half (48
percent) of higher-wage workers.
Compared with all other industry sectors, the retail trade and services
industries had the lowest UI rates of receipt.
Sixty-three percent of low-wage unemployed workers had been employed in
jobs from retail trade and services, as opposed to about one-half (48
percent) of higher-wage workers.
Figure: Industry Sector of Last Job for Unemployed Low-Wage and Higher-
Wage Workers:
[See PDF for image]
Source: GAO analysis of SIPP data, March 2003.
Note: "Services include private household services, business services,
personal services, entertainment/recreational services, hospitals,
medical services, educational services, and other professional
services.
[End of figure]
Compared with all other industry sectors, the retail trade and services
industries had the lowest UI rates of receipt.
Figure: Average UI Rate of Receipt by Industry, March 2003.
[See PDF for image]
Source: GAO analysis of 2003 SIPP data.
Note: "Services" includes private household services, business
services, personal services, entertainment/recreational services,
hospitals, medical services, educational services, social services, and
other professional services.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Within many industry sectors unemployed low-wage workers had lower
rates of UI receipt than unemployed higher-wage workers.
Table: UI Rate of Receipt by Industry of Last Job and Low-Wage/Higher-
Wage Status, March 2003.
Industry: Construction and mining[B];
UI rate of receipt[A]: Low wage workers (percent): 16.5;
UI rate of receipt[A]: Higher-wage workers (percent): 52.3;
UI rate of receipt[A]: Total {percent}: 43.8.
Industry: Manufacturing[B];
UI rate of receipt[A]: Low wage workers (percent): 26.6;
UI rate of receipt[A]: Higher-wage workers (percent): 52.6;
UI rate of receipt[A]: Total {percent}: 42.5.
Industry: Services[B];
UI rate of receipt[A]: Low wage workers (percent): 10.5;
UI rate of receipt[A]: Higher-wage workers (percent): 31.8;
UI rate of receipt[A]: Total {percent}: 23.6.
Industry: Retail trade[B];
UI rate of receipt[A]: Low wage workers (percent): 8.4;
UI rate of receipt[A]: Higher-wage workers (percent): 32.6;
UI rate of receipt[A]: Total {percent}: 16.8.
Industry: Transportation and utilities[B];
UI rate of receipt[A]: Low wage workers (percent): 7.9;
UI rate of receipt[A]: Higher-wage workers (percent): 41.4;
UI rate of receipt[A]: Total {percent}: 32.0.
Industry: Public administration[C];
UI rate of receipt[A]: Low wage workers (percent): 13.2;
UI rate of receipt[A]: Higher-wage workers (percent): 48.7;
UI rate of receipt[A]: Total {percent}: 39.6.
Industry: Wholesale trade[C];
UI rate of receipt[A]: Low wage workers (percent): 24.1;
UI rate of receipt[A]: Higher-wage workers (percent): 51.9;
UI rate of receipt[A]: Total {percent}: 44.2.
Industry: Agriculture[C];
UI rate of receipt[A]: Low wage workers (percent): 38.2;
UI rate of receipt[A]: Higher-wage workers (percent): 27.1;
UI rate of receipt[A]: Total {percent}: 34.0.
Industry: Finance[C];
UI rate of receipt[A]: Low wage workers (percent): 28.5;
UI rate of receipt[A]: Higher-wage workers (percent): 43.0;
UI rate of receipt[A]: Total {percent}: 37.8;
Total;
UI rate of receipt[A]: 14.8;
UI rate of receipt[A]: 40.5;
UI rate of receipt[A]: 29.7.
Source: GAO analysis of SIPP data, March 2003.
[A] We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[B] Differences between low- and higher-wage workers are significant at
the 99 percent confidence level.
[C] Differences between low- and higher-wage workers are not
statistically significant.
[End of table]
Objective 3: Part-Time Workers:
Unemployed workers who were part-time at their last job were
significantly less likely to collect UI than unemployed workers who
were full-time at their last job.
Part-time workers generally have lower pay, less-skilled jobs, and less
job security than full-time workers; thus they face many of the same
issues facing low-wage workers.
In addition, 32 states[Footnote 20] do not consider workers eligible
for UI if they are only available for part-time work, according to the
National Employment Law Project.
Even when workers had similar job tenures, unemployed workers who had
been full-time at their last job were more likely to receive UI than
those who had been part-time.
Figure: UI Rate of Receipt by Part/Full-Time Status, Unemployed Workers
with at Least 35 Weeks of Employment in the Past Year:
[See PDF for image]
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and to 1999 to 2002 were not available.
Full-time employment is defined as 35 hours per week or more. Data are
restricted to a subsample of unemployed persons who had a job during
the 15 months prior to unemployment.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Part-Time Workers Part-time, low-wage unemployed workers were the least
likely to receive UI.
Figure: UI Rate of Receipt by Wage and Part/Full-Time Status,
Unemployed Workers with at Least 35 Weeks of Employment in the Past
Year.
[See PDF for image]
Source: GAO analysis of SIPP data.
Differences between full-time and part-time workers and differences
between low-wage and higher-wage workers were all significant at the 99
percent confidence level.
Full-time employment is defined as 35 hours per week or more. Data are
restricted to a subsample of unemployed persons who had a job during
the 15 months prior to unemployment.
We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of figure]
Appendix Tables:
Appendix Table 1: Unemployment Rates for Low-Wage and Higher Wage
Workers:
March 1992;
Unemployment rate[A]: Low-wage workers (percent): 10.6;
Unemployment rate[A]: Higher wage workers (percent): 4.8;
Unemployment rate[A]: Overall (percent): 6.5;
March 1993;
Unemployment rate[A]: Low-wage workers (percent): 10.4;
Unemployment rate[A]: Higher wage workers (percent): 4.3;
Unemployment rate[A]: Overall (percent): 6.2;
March 1994;
Unemployment rate[A]: Low-wage workers (percent): 9.5;
Unemployment rate[A]: Higher wage workers (percent): 3.6;
Unemployment rate[A]: Overall (percent): 5.5;
March 1995;
Unemployment rate[A]: Low-wage workers (percent): 7.6;
Unemployment rate[A]: Higher wage workers (percent): 3.2;
Unemployment rate[A]: Overall (percent): 4.6;
March 1998;
Unemployment rate[A]: Low-wage workers (percent): 7.8;
Unemployment rate[A]: Higher wage workers (percent): 2.6;
Unemployment rate[A]: Overall (percent): 4.2;
March 2003;
Unemployment rate[A]: Low-wage workers (percent): 9.3;
Unemployment rate[A]: Higher wage workers (percent): 4.2;
Unemployment rate[A]: Overall (percent): 5.5;
All years, 1992-2003;
Unemployment rate[A]: Low-wage workers (percent): 9.2;
Unemployment rate[A]: Higher wage workers (percent): 3.8;
Unemployment rate[A]: Overall (percent): 5.4;
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and 1999 to 2002 were not available.
Differences between low- and higher-wage workers in every year were
significant at the 99 percent confidence level.
[A] The overall unemployment rates we calculate differ from the
standard unemployment rates provided by the Bureau of Labor Statistics.
For the 6 years presented, standard rates were 7.5 percent for 1992,
6.9 percent for 1993. 6.1 percent for 1994, 5.6 percent for 1995, 4.5
percent for 1998, and 6.0 percent for 2003. These rates differ because
our calculations excluded workers who were new entrants to the labor
force, those who had history of self-employment, and those who were
younger than 18 or older than 64 in March of the survey year, and
because there were technical differences between the database we used
for calculations (SIPP} and that used for the standard unemployment
rates (CPS}.
[End of table]
Appendix Table 2: UI Rate of Receipt among Unemployed Low-Wage and
Higher-Wage Workers:
1992;
UI rate of receipt[A]: Low-wage workers (percent): 27.8;
UI rate of receipt[A]: Higher-wage workers (percent): 58.9;
UI rate of receipt[A]: All (percent): 43.6;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .472.
1993;
UI rate of receipt[A]: Low-wage workers (percent): 26.7;
UI rate of receipt[A]: Higher-wage workers (percent): 50.8;
UI rate of receipt[A]: All (percent): 38.2;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .526.
1994;
UI rate of receipt[A]: Low-wage workers (percent): 20.5;
UI rate of receipt[A]: Higher-wage workers (percent): 45.3;
UI rate of receipt[A]: All (percent): 31.3;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .453.
1995;
UI rate of receipt[A]: Low-wage workers (percent): 15.2;
UI rate of receipt[A]: Higher-wage workers (percent): 40.7;
UI rate of receipt[A]: All (percent): 27.7;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .373.
1998;
UI rate of receipt[A]: Low-wage workers (percent): 9.9;
UI rate of receipt[A]: Higher-wage workers (percent): 31.9;
UI rate of receipt[A]: All (percent): 19.6;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .310.
2003;
UI rate of receipt[A]: Low-wage workers (percent): 13.6;
UI rate of receipt[A]: Higher-wage workers (percent): 37.1;
UI rate of receipt[A]: All (percent): 27.0;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .367.
All years, 1992-20003;
UI rate of receipt[A]: Low-wage workers (percent): 21.8;
UI rate of receipt[A]: Higher-wage workers (percent): 47.9;
UI rate of receipt[A]: All (percent): 34.9;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .455.
Source: GAO analysis of SIPP data.
Notes: SIPPS data 1992 to 1995, 1998, and 2003. Data for 1996, 1997,
and 1999 to 2002 were not available.
Differences between low-and higher-wage workers in every year were
significant at the 99 percent confidence level.
[A] We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[End of table]
Appendix Table 3: UI Rate of Receipt by Wage and Part-Time Status
(Workers with at least 35 weeks of employment prior to unemployment):
Employment status: Full-time[B];
UI rate of receipt[A]: Low-wage workers (percent}: 33.2;
UI rate of receipt[A]: Higher-wage workers (percent): 57.9;
UI rate of receipt[A]: All (percent): 49.6;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .573.
Employment status: Part-time;
UI rate of receipt[A]: Low-wage workers (percent}: 22.0;
UI rate of receipt[A]: Higher-wage workers (percent): 37.8;
UI rate of receipt[A]: All (percent): 28.5;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): .581.
Employment status: Relative likelihood of receiving UI (part-time/full-
time);
UI rate of receipt[A]: Low-wage workers (percent}: .661;
UI rate of receipt[A]: Higher-wage workers (percent): .652;
UI rate of receipt[A]: All (percent): .574;
Relative likelihood of receiving UI (UI rate of receipt for low-wage
workers divided by rate for higher-wage workers): [Empty].
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and 1999, to 2002 were not available.
Differences between the low- and higher-wage workers and differences
between the full- and part time workers were all significant at the 99
percent confidence level.
[A] We calculated the UI rate of receipt by dividing the number of
unemployed workers who reported UI as a source of income by the number
of workers who were unemployed.
[B] Full-time employment is defined as 35 hours per week or more. Data
are restricted to a subsample of unemployed persons who had a job
during the 15 months prior to unemployment.
[End of table]
Appendix Table 4: Unweighted Sample Sizes, by Year:
Year: 1992;
Employed: Low-wage: 5,871;
Employed: Higher-wage: 14,300;
Employed: Total: 20,171;
Unemployed: Low-wage: 694;
Unemployed: Higher-wage: 710;
Unemployed: Total: 1,404;
Total: Low-wage: 6,565;
Total: Higher-wage: 15,010;
Total: Total: 21,575.
Year: 1993;
Employed: Low-wage: 3,758;
Employed: Higher-wage: 9,369;
Employed: Total: 13,127;
Unemployed: Low-wage: 415;
Unemployed: Higher-wage: 394;
Unemployed: Total: 809;
Total: Low-wage: 4,173;
Total: Higher-wage: 9,763;
Total: Total: 13,936.
Year: 1994;
Employed: Low-wage: 5,565;
Employed: Higher-wage: 12,457;
Employed: Total: 18,022;
Unemployed: Low-wage: 539;
Unemployed: Higher-wage: 449;
Unemployed: Total: 988;
Total: Low-wage: 6,104;
Total: Higher-wage: 12,906;
Total: Total: 19,010.
Year: 1995;
Employed: Low-wage: 5,104;
Employed: Higher-wage: 12,515;
Employed: Total: 17,619;
Unemployed: Low-wage: 401;
Unemployed: Higher-wage: 392;
Unemployed: Total: 793;
Total: Low-wage: 5,505;
Total: Higher-wage: 12,907;
Total: Total: 18,412.
Year: 1998;
Employed: Low-wage: 8,690;
Employed: Higher-wage: 20,559;
Employed: Total: 29,249;
Unemployed: Low-wage: 704;
Unemployed: Higher-wage: 548;
Unemployed: Total: 1,252;
Total: Low-wage: 9,394;
Total: Higher-wage: 21,107;
Total: Total: 30,501.
Year: 2003;
Employed: Low-wage: 6,266;
Employed: Higher-wage: 19,075;
Employed: Total: 25,341;
Unemployed: Low-wage: 657;
Unemployed: Higher-wage: 849;
Unemployed: Total: 1,506;
Total: Low-wage: 6,923;
Total: Higher-wage: 19,924;
Total: Total: 26,847.
Total;
Employed: Low-wage: 35,254;
Employed: Higher-wage: 88,275;
Employed: Total: 123,529;
Unemployed: Low-wage: 3,410;
Unemployed: Higher-wage: 3,342;
Unemployed: Total: 6,752;
Total: Low-wage: 38,664;
Total: Higher-wage: 91,617;
Total: Total: 130,281.
Source: GAO analysis of SIPP data.
Notes: SIPP data from 1992 to 1995, 1998, and 2003. Data for 1996,
1997, and 1999 to 2002 were not available.
[End of table]
[End of section]
Appendix II: GAO Contact and Staff Acknowledgments:
GAO Contact:
Cynthia M. Fagnoni, Managing Director, 202-512-7215:
Staff Acknowledgments:
Patrick di Battista, Assistant Director:
Rhiannon Patterson, Analyst-in-Charge:
Gretta L. Goodwin, Senior Economist, made significant contributions to
this report. Shana Wallace and Douglas Sloane provided methodological
assistance, and Jessica Botsford provided legal assistance. The team
also benefited from the expert advice and assistance of Susan Offutt,
Thomas McCool, and Ronald Fecso.
[End of section]
Related GAO Products:
Unemployment Insurance: Factors Associated with Benefit Receipt and
Linkages with Reemployment Services for Claimants. GAO-06-484T.
Washington, D.C.: March 15, 2006.
Unemployment Insurance: Factors Associated with Benefit Receipt. GAO-
06-341. Washington, D.C.: March 7, 2006.
Unemployment Insurance: Information on Benefit Receipt. GAO-05-291.
Washington, D.C.: March 17, 2005.
Highlights of a GAO Forum: Workforce Challenges and Opportunities for
the 21st Century: Changing Labor Force Dynamics and the Role of
Government Policies. GAO-04-845SP. Washington, D.C.: June 2004.
Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is
Limited. GAO-01-181. Washington, D.C.: December 29, 2000.
Footnotes:
[1] GAO, Unemployment Insurance: Role as Safety Net for Low-Wage
Workers Is Limited, GAO-01-181 (Washington, D.C.: Dec. 29, 2000).
[2] Our analysis compares UI rates of receipt for low-wage and higher-
wage workers. Many factors contribute to this difference in rates of
receipt that are not examined in this simple descriptive analysis, but
which would be important for a more comprehensive analysis. For
example, a more comprehensive analysis might control for workers'
reasons for leaving work, union membership, recent work history, and
other factors when comparing recipiency for low-wage and higher-wage
workers or when comparing recipiency for part-time and full-time
workers.
[3] New SIPP panels were initiated each year from 1990 to 1993, in
1996, and in 2001. These panels provided us with 27-month employment
histories for sample members in 1992 through 1995, 1998, and 2003. Data
for 1996, 1997, and 1999-2002 were not available because no new SIPP
panels were initiated in the years 1994, 1995, 1997, 1998, or 1999. A 3-
year panel was started in 2000 but cancelled after 8 months for
budgetary reasons, and thus could not be used for our analysis.
Unweighted sample sizes by year can be found in appendix I, table 4.
[4] Sample members were age 16 or older at the start of the 27-month
panel and 64 or younger at the end of the 27-month panel; thus they
were age 18 to 64 in March of the panel year when we determined
employment status and UI rates of receipt.
[5] Our analyses of UI recipiency rates by employment status and by
work tenure (weeks worked prior to employment) were further restricted
to a subsample of persons who were unemployed in March of the last
panel year and who had a job during the 15 months prior to unemployment
(as compared with the 27-month lookback period for the original
sample).
[6] GAO, Unemployment Insurance: Role as Safety Net for Low-Wage
Workers Is Limited, GAO-01-181 (Washington, D.C.: Dec. 29, 2000).
[7] Data for 1996,1997, and 1999-2002 were not available.
[8] Sample members were age 16 or older at the start of the 27-month
panel and 64 or younger at the end of the 27-month panel; thus they
were age 18 – 64 in March of the panel year when we determined
employment status and UI rates of receipt.
[9] A multivariate analysis of UI use that GAO conducted in 2006, which
controlled for many such factors including simulated UI eligibility,
also found that low-wage workers were less likely to receive UI
benefits than higher-wage workers. GAO, Unemployment Insurance: Factors
6 Associated with Benefit Receipt, GAO-06-342 (Washington, D.C.:Mar. 7,
2006).
[10] Data for 1996,1997, and 1999-2002 were not available.
[11] In counting states that cover workers who are available only for
part-time work, NELP excludes several states that have laws requiring
more than a majority of part-time work during the base period and one
state where the part-time work provision sunsets in 2008.
[12] UI benefits are funded through payroll taxes levied on employers.
All state UI systems are experience-rated so that employers’
contributions vary according to how much or how little their workers
received unemployment benefits.
[13] Analysis based on SIPP data. Data for 1996,1997, and 1999-2002
were not available.
[14] Our calculations of unemployed former workers excluded people who
did not have a job in the 27-month period before the month that they
were unemployed. Thus, all new entrants and some reentrants into the
labor force were excluded.
[15] GAO, Unemployment Insurance: Factors Associated with Benefit
Receipt, GAO-06-342 (Washington, D.C.: Mar. 7, 2006).
[16] Data for 1996,1997, and 1999-2002 were not available.
[17] In addition to the results presented here, we also ran all
analyses using the SIPP for a sample of “prime age workers” (age 22 to
54), for comparison purposes. Results were similar, although the
difference in UI receipt rates between low-wage and other workers was
somewhat smaller than among workers aged 16 to 64, as was the
difference between part-time and full-time workers.
[18] Out of 51; the remainder, including the District of Columbia, have
an alternative base period.
[19] Including the District of Columbia.
[20] Out of 51; the remainder, including the District of Columbia, have
some coverage for workers seeking part-time employment.
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