oversight

Unemployment Insurance: Economic Circumstances of Individuals Who Exhausted Benefits

Published by the Government Accountability Office on 2012-02-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                United States Government Accountability Office

GAO             Report to the Chairman, Committee on
                Finance, U.S. Senate



February 2012
                UNEMPLOYMENT
                INSURANCE
                Economic
                Circumstances of
                Individuals Who
                Exhausted Benefits




GAO-12-408
                                            February 2012

                                            UNEMPLOYMENT INSURANCE
                                            Economic Circumstances of Individuals Who
                                            Exhausted Benefits
Highlights of GAO-12-408, a report to the
Chairman, Committee on Finance, U.S.
Senate




Why GAO Did This Study                      What GAO Found
The recession of 2007 to 2009 was the       Among the 15 million workers who lost jobs from 2007 to 2009, half received
most severe in the United States since      Unemployment Insurance (UI), and about one-fourth of the recipients exhausted
the 1930s, resulting in a net loss of 7.5   UI benefits by January 2010. This represents 2 million displaced workers who
million jobs. Workers who lose a job        exhausted UI as of early 2010, the most recent survey data available. Labor
through no fault of their own (referred     estimated that about an additional 3-1/2 million individuals exhausted benefits in
to as “displaced workers” in this report)   2010 and 2011.
may turn to financial assistance offered
through the Unemployment Insurance          Many of the displaced workers who exhausted UI by January 2010 appear to
(UI) program. Currently, through            have faced difficult economic circumstances. Their unemployment rate was
benefit extensions authorized by            high—46 percent in January 2010. Most, however, appeared to have worked at
Congress, eligible displaced workers        some point in 2009 or to have been supported by another household member
can receive UI benefits for up to 99        who was working, and some had income from assets, such as interest or
weeks in certain states. However, with      dividends. Nevertheless, the poverty rate of displaced workers who exhausted UI
the slow economic recovery, some            was higher than the rate among working-age adults—18 percent compared to 13
may exhaust UI benefits without finding     percent, and more than 40 percent had relatively low incomes, below 200
a new job. This raises questions about      percent of the federal poverty threshold (see figure). Few (less than 3 percent) of
how Temporary Assistance for Needy          the households of those who exhausted UI received TANF benefits in 2009. Most
Families (TANF), a program that             would not have qualified for TANF because they did not have children age 18 or
provides cash assistance to low-
                                            younger, a general TANF eligibility criteria. More of these households received
income families with children, and
                                            benefits from Social Security programs (18 percent) and the Supplemental
other support programs are aiding
those who have exhausted UI benefits.       Nutrition Assistance Program (15 percent for the program formerly known as the
                                            Food Stamp Program).
GAO was asked to examine: (1) how
many of the workers who lost jobs in        While there are no federal requirements to refer those exhausting UI benefits to
the recession received and exhausted        other support programs, most (45) of the state UI agencies GAO surveyed reported
UI; (2) what are the economic               providing such individuals with information or connecting them to support
circumstances of those who exhausted        programs. UI agencies made these connections in a variety of ways, such as
UI, and how many received support           through websites, mail, staff referrals, and interagency coordination. For example,
from TANF and other programs; and           Washington state has a multiagency workgroup which developed a resource guide
(3) the extent to which UI agencies         that was mailed to those exhausting UI benefits and posted online and established
refer those exhausting UI to other          a phone number to handle questions from these individuals.
support programs. GAO analyzed data
from the Current Population Survey’s        Income-to-Poverty Ratios of Individuals Who Exhausted UI Compared to Civilian Working-Age
2008 and 2010 Displaced Worker              Adults, Based on Annual Family Incomes in 2009
Supplements and the 2010 Annual
Social and Economic Supplement and
data from the Departments of Labor
and Health and Human Services. GAO
also surveyed 51 state UI agencies
and conducted interviews with 16 state
TANF agencies, selected to reflect a
range of unemployment rate changes
in recent years.
GAO is making no recommendations in
this report.

View GAO-12-408. For more information,
contact Kay E. Brown at (202) 512-7215 or
brownke@gao.gov.
                                            Note: Percentages may not total 100 due to rounding.
                                                                                            United States Government Accountability Office
Contents


Letter                                                                                          1
                       Background                                                               3
                       2 Million of Those Who Lost Jobs in the Recession Years
                         Exhausted UI Benefits by Early 2010                                    8
                       Many UI Exhaustees Faced Difficult Economic Circumstances, but
                         Few Were Likely to Qualify for TANF                                   17
                       Most State UI Agencies Reported Efforts to Provide UI Exhaustees
                         with Information about Other Support Programs                         27
                       Conclusions                                                             29
                       Agency Comments and Our Evaluation                                      30

Appendix I             Objectives, Scope, and Methodology                                      31



Appendix II            Comments from the Department of Labor                                   40



Appendix III           GAO Contact and Staff Acknowledgments                                   41



Related GAO Products                                                                           42



Tables
                       Table 1: Number of States Receiving Recovery Act Incentive Funds        12
                       Table 2: Percentage of UI Exhaustees’ Households with Private
                                Income Sources, 2009                                           19
                       Table 3: Receipt of Benefits from Government Programs within UI
                                Exhaustee Households, 2009                                     22
                       Table 4: Receipt of Benefits from Government Programs within
                                Households of UI Exhaustees with Minor Children and
                                Annual Incomes Below 200 Percent of the Federal Poverty
                                Threshold, 2009                                                24
                       Table 5: Methods Reported by State UI Agencies to Provide
                                Information and/or Connect UI Exhaustees with Support
                                Programs                                                       27




                       Page i                                    GAO-12-408 Unemployment Insurance
Figures
          Figure 1: Typical Potential Maximum Duration of UI Benefits, as of
                   January 2012                                                     5
          Figure 2: UI Receipt among Displaced Workers                              9
          Figure 3: Percentage of Displaced Workers Receiving UI,
                   Comparing Workers in the Bottom 30 Percent and Top 70
                   Percent in Average Weekly Earnings                              11
          Figure 4: Benefit Exhaustion among Displaced Workers Who
                   Received UI                                                     14
          Figure 5: Weekly UI Claims, by UI Program                                15
          Figure 6: Unemployed Persons per Job Opening                             16
          Figure 7: Employment Status of Displaced Workers Who
                   Exhausted UI                                                    17
          Figure 8: Income-to-Poverty Ratios of UI Exhaustees Compared to
                   Working-Age Civilian Adults, Based on 2009 Annual
                   Family Incomes                                                  20
          Figure 9: Ages of UI Exhaustees, January 2010                            23
          Figure 10: Most Commonly Reported Limitations Associated with
                   Connecting UI Exhaustees with TANF, SNAP, and Other
                   Support Programs                                                29




          Page ii                                    GAO-12-408 Unemployment Insurance
Abbreviations
ASEC               Annual Social and Economic Supplement
CPS                Current Population Survey
HHS                Department of Health and Human Services
Labor              Department of Labor
Recovery Act       American Recovery and Reinvestment Act of 2009
SNAP               Supplemental Nutrition Assistance Program
TANF               Temporary Assistance for Needy Families
UI                 Unemployment Insurance
USDA               Department of Agriculture


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Page iii                                             GAO-12-408 Unemployment Insurance
United States Government Accountability Office
Washington, DC 20548




                                   February 17, 2012

                                   The Honorable Max Baucus
                                   Chairman
                                   Committee on Finance
                                   United States Senate

                                   Dear Mr. Chairman:

                                   The recession from 2007 to 2009 was the most severe in the United
                                   States since the Great Depression of the 1930s. From the start of the
                                   recession in December 2007 to its official end in June 2009, the U.S. lost
                                   a net total of 7.5 million jobs. Since then, the economy has been slow to
                                   recover. In January 2012, the unemployment rate was 8.3 percent, with
                                   more than 40 percent of the 12.8 million unemployed out of work for 6
                                   months or longer. Workers who involuntarily lose a job—referred to as
                                   “displaced workers” in this report—may turn to financial assistance
                                   offered through the Unemployment Insurance (UI) program. 1 UI is a $156
                                   billion federal-state program that temporarily and partially replaces the
                                   lost earnings of those who become unemployed through no fault of their
                                   own. 2 Typically, states provide UI benefits for up to 26 weeks. Since mid-
                                   2008, Congress and the states have temporarily extended the period of
                                   time that displaced workers can receive UI benefits to up to 99 weeks,
                                   though the maximum number of weeks of available benefits varies among
                                   the states.

                                   However, despite the UI benefit extensions, the slow economic recovery
                                   may result in some displaced workers exhausting UI benefits without
                                   finding a new job. This raises questions about how the Temporary


                                   1
                                    The Bureau of Labor Statistics defines displaced workers as persons 20 years of age or
                                   older who lost or left jobs because their plant or company closed or moved, there was
                                   insufficient work for them to do, or their position or shift was abolished. Displaced workers
                                   are a distinct population from unemployed workers, since they may be employed,
                                   unemployed, or no longer in the labor force at a given point in time. The Bureau of Labor
                                   Statistics defines unemployed workers as persons who do not have a job, have actively
                                   looked for a job in the past 4 weeks, and are currently available for work. Unemployed
                                   workers includes several groups of workers who would not be considered displaced
                                   workers, including new entrants to the labor force and those who left jobs for reasons
                                   other than displacement, such as voluntary quits or firings.
                                   2
                                    The $156 billion is as of fiscal year 2010.




                                   Page 1                                                 GAO-12-408 Unemployment Insurance
Assistance for Needy Families (TANF) program, one of the nation’s
primary income support programs for low-income families, is aiding UI
exhaustees. TANF is a $16.5 billion federal block grant program that
provides cash assistance and other services to low-income families with
children.

You asked us to provide information about displaced workers’ receipt and
exhaustion of UI. In response to your request, we answered the following
questions: (1) Among workers who lost jobs during the recession, how
many received and exhausted UI benefits? (2) What are the economic
circumstances of those who exhausted UI, and how many received
assistance from TANF and other support programs? (3) To what extent
do state UI agencies refer exhaustees to support programs?

To address these questions we used several different research methods.
To identify the number of displaced workers who received and exhausted
UI, referred to as “exhaustees” in this report, we analyzed data from the
2010 Displaced Worker Supplement to the January 2010 Current
Population Survey (CPS) conducted by the Census Bureau, which
surveyed individuals who lost jobs from 2007 to 2009. 3 We also
compared some results from the 2010 Displaced Worker Supplement to
data from the 2008 supplement, which surveyed individuals who lost jobs
prior to the recession, from 2005 to 2007. Using data from the Displaced
Worker Supplements allowed us to examine the experiences of a cohort
of workers who lost jobs in the recession years and compare them to
workers who lost jobs before the recession, but our results are as of
January 2010 when the 2010 Displaced Worker Supplement was
conducted. To examine UI exhaustees’ economic circumstances and
determine how many exhaustees received supports from TANF and other
federal income support programs, we analyzed data from the 2010
Displaced Worker Supplement, merged with data from the Annual Social




3
 The term exhaustee is used by the UI program. For the purposes of this report, we define
a UI exhaustee as a displaced worker with “yes” responses to the following two questions
in the Displaced Worker Supplement: (1) “Did you receive unemployment insurance after
that job (the job from which the worker was displaced) ended?,” and (2) “Did you exhaust
your eligibility for unemployment benefits?” As used in this report, the term includes all
exhaustees, regardless of whether they were employed, unemployed, or not in the labor
force at the time of the survey.




Page 2                                               GAO-12-408 Unemployment Insurance
                         and Economic Supplement of the 2010 CPS. 4 Merging these two data
                         sets allowed us to identify UI exhaustees as of January 2010 (using data
                         from the Displaced Worker Supplement) and examine their household
                         incomes in 2009 (using data from the Annual Social and Economic
                         Supplement). We also interviewed officials from 16 state TANF agencies,
                         selected to reflect a range of changes in unemployment rates in recent
                         years, and we analyzed data on the UI and TANF programs from the
                         Department of Labor (Labor) and the Department of Health and Human
                         Services (HHS). To determine the extent to which UI agencies refer
                         exhaustees to other programs, we conducted a web-based survey with UI
                         agencies in 50 states and the District of Columbia, obtaining responses
                         from all 51. 5 For all research questions, we spoke with officials at Labor
                         who oversee the UI program and officials at HHS who oversee TANF. We
                         also reviewed applicable federal laws and regulations, studies, and policy
                         documents. We conducted this performance audit from March 2011 to
                         February 2012, in accordance with generally accepted government
                         auditing standards. Those standards require that we plan and perform the
                         audit to obtain sufficient, appropriate evidence to provide a reasonable
                         basis for our findings and conclusions based on our audit objectives. We
                         believe that the evidence obtained provides a reasonable basis for our
                         findings and conclusions based on our audit objectives (see appendix I
                         for further information on our scope and methodology).



Background

Unemployment Insurance   The UI program, established under Title III of the Social Security Act in
Program                  1935, was intended to, among other things, help those who become
                         unemployed through no fault of their own, and help stabilize the economy
                         during recessions. The program is generally financed by federal and state
                         payroll taxes levied on employers. Within the guidelines of federal law,
                         states administer the program and can specify who is eligible to receive



                         4
                          Specifically, we merged data of individuals who were surveyed by the Census Bureau
                         both in January 2010 for the Displaced Worker Supplement and in March 2010 for the
                         Annual Social and Economic Supplement. Approximately 50 percent of the respondents in
                         the Displaced Worker Supplement were also surveyed for the Annual Social and
                         Economic Supplement.
                         5
                         We include the District of Columbia in our discussion of states.




                         Page 3                                               GAO-12-408 Unemployment Insurance
UI benefits and how much they receive. Nationwide, UI benefit payments
replaced 46 percent of a worker’s previous wages in 2010 on average. 6
Applicants must have earned at least a certain amount in wages and/or
have worked a certain number of weeks over a period of time to be
eligible for benefits. 7 In addition, they must be available for and able to
work. For their part, UI agencies must identify recipients who are likely to
exhaust their benefits and refer them to re-employment services, such as
those available through state run-employment centers, known as “one-
stops.” At these one-stops, states and localities are required to provide
services for many federally funded employment and training programs,
and they have the option of including additional programs, such as TANF.

Typically, eligible unemployed workers can receive UI benefits for up to
26 weeks in most states, though individuals may be eligible for fewer
weeks. 8 During periods of high unemployment, states may provide up to
13 or 20 additional weeks of benefits through the Extended Benefits
program, funded jointly by states and the federal government. In 2009,
Congress temporarily authorized full federal financing of the Extended
Benefits program 9 and later extended the authorization several times,
most recently in 2011. 10 In 2008, Congress made additional weeks of
benefits available through the Emergency Unemployment Compensation
program, which are federally funded. 11 The Emergency Unemployment
Compensation program has four tiers of benefits, the first two of which
are available in all states and enable eligible UI recipients to obtain
benefits for up to an additional 34 weeks. The second two tiers are only


6
 The proportion of workers’ wages replaced by UI benefits is known as the replacement
rate. According to Labor’s data, the average replacement rates in 2010 ranged from 33
percent to 57 percent among the states.
7
 Congressional Research Service, Unemployment Insurance: Available Benefits and
Legislative Activity (Washington, D.C.: Dec 21, 2010).
8
 Department of Labor, Significant Provisions of State Unemployment Insurance Laws,
Effective July 2011.
9
Pub. L. No. 111-5, § 2005(a), 123 Stat. 115, 444.
10
    Pub. L. No. 112-78, § 201(a)(2), 125 Stat. 1280, 1282.
11
  Pub. L. No. 110-449, § 2, 122 Stat. 5014. Congress created the current temporary
Emergency Unemployment Compensation program in the Supplemental Appropriations
Act, 2008. Pub. L. No. 110-252, Title IV, 122 Stat. 2323, 2353. Congress extended this
program several times, most recently in the Temporary Payroll Tax Cut Continuation Act
of 2011 (Pub. L. No. 112-78, § 201(a)(1), 125 Stat. 1280, 1282).




Page 4                                                 GAO-12-408 Unemployment Insurance
available in states with high unemployment and provide up to 19 weeks of
additional benefits. In states that provide at most 26 weeks of regular UI
benefits, that offer the maximum 20 weeks of Extended Benefits
payments, and that are on all four tiers of Emergency Unemployment
Compensation, some eligible unemployed workers may receive up to 99
weeks of UI benefits (see fig. 1). As of January 8, 2012, eligible
unemployed workers could potentially receive the maximum 99 weeks of
benefits in 17 states, according to Labor’s data, though some individuals
may be eligible for fewer weeks in these states. The Emergency
Unemployment Compensation program and full federal financing of the
Extended Benefits program are scheduled to expire in March 2012.

Figure 1: Typical Potential Maximum Duration of UI Benefits, as of January 2012




Notes: The actual duration varies by state and by individual, based on how they meet states’ eligibility
criteria. As of January 8, 2012, eligible unemployed workers could potentially receive the maximum
99 weeks of benefits in 17 states, based on Labor’s data.




Page 5                                                       GAO-12-408 Unemployment Insurance
TANF Block Grant   The Personal Responsibility and Work Opportunity Reconciliation Act of
                   1996 created the TANF block grant, a $16.5 billion fixed federal funding
                   stream allocated to states to provide a wide range of services to low-
                   income families who have children. 12 States must maintain a specified
                   level of spending, referred to as maintenance of effort, to get their federal
                   TANF funds. The most recent data available show that in fiscal year
                   2010, states spent approximately $35.8 billion in federal and state TANF
                   funds, with 70 percent used for programs and services other than ongoing
                   cash assistance.

                   As established in federal law, the goals of the TANF program are to
                   provide assistance to needy families so that children may be cared for in
                   their own homes or in the homes of relatives, end needy families’
                   dependence on government benefits, reduce out-of-wedlock pregnancies,
                   and encourage two-parent families. In line with these goals, TANF funds
                   may be used in a variety of ways, including monthly cash assistance to
                   low-income families, child care, employment and training, subsidized
                   employment, transportation, and single or short-term payments for one-
                   time urgent needs, such as for rent or utilities. States have flexibility to set
                   eligibility requirements for TANF benefits and services and to determine
                   the type of assistance they provide. However, federal law requires states
                   to involve at least a specified percentage of TANF cash assistance
                   recipients in work activities, such as participating in job training or
                   subsidized employment. 13 States face financial penalties if they do not




                   12
                    Pub. L. No. 104-193, § 103, 110 Stat. 2105, 2112.
                   13
                     To be counted as engaging in work activities for a month, most families receiving TANF
                   cash assistance are required to participate in work activities for an average of 30 hours
                   per week in that month. There are 12 work activities that may count toward meeting the
                   specified work participation rate: unsubsidized employment, subsidized private sector
                   employment, subsidized public sector employment, work experience (if sufficient private
                   sector employment is not available), on-the-job training, job search and job readiness
                   assistance, community service programs, vocational education training, job skills training
                   directly related to employment, education directly related to employment (if the recipient
                   has not received a high school diploma or certificate of high school equivalence),
                   satisfactory secondary school attendance or in a course of study leading to a certificate of
                   general equivalence, and providing child care services to others in community service.




                   Page 6                                                GAO-12-408 Unemployment Insurance
meet these specified rates. 14 Additionally, certain individuals who do not
cooperate in establishing or enforcing child support orders face reduced
levels of TANF assistance, and possible denial of all TANF benefits.

In the period of the recession, states were able to draw upon two
additional TANF-related funding sources. The Personal Responsibility
and Work Opportunity Reconciliation Act of 1996 had created a TANF
Contingency Fund of up to $2 billion that states could access in times of
economic distress. Only a portion of this fund had been drawn down by
the states at the start of the recession, but the fund was depleted by the
end of 2009. Congress has appropriated up to $612 million for the
Contingency Fund for fiscal year 2012. In 2009, Congress also created a
$5 billion TANF Emergency Contingency Fund in the American Recovery
and Reinvestment Act of 2009 (Recovery Act), which was made available
to states that had certain increases either in their cash assistance
caseloads or in their expenditures for nonrecurrent short-term benefits or
subsidized employment. 15




14
  Generally speaking, states are required to have 50 percent of all families receiving
ongoing cash assistance participate in work activities and 90 percent of two-parent
families. However, states can reduce the rates they are required to meet by reducing their
cash assistance caseloads or by using more state funds than required to provide
assistance to some families. Some families are excluded from these work requirements,
such as those in which children alone receive the cash assistance benefits. States may
also disregard certain other families from the work participation rate, such as families in
which a single custodial parent is caring for a child under age one (for not more than 12
months over a person’s lifetime). For further information on work participation rates, see
GAO, Temporary Assistance for Needy Families, Implications of Recent Legislative and
Economic Changes for State Programs and Work Participation Rates, GAO-10-525
(Washington, D.C.: May 28, 2010).
15
  Pub. L. No. 111-5, § 2101, 123 Stat. 115, 446. For information on subsidized
employment programs supported by TANF Recovery Act funds, see Mary Farrell, Sam
Elkin, Joseph Broadus, and Dan Bloom, Subsidized Employment Opportunities for Low-
Income Families: A Review of State Employment Programs Created Through the TANF
Emergency Fund, OPRE Report 2011-38, Washington, DC: Office of Planning, Research
and Evaluation, Administration for Children and Families, U.S. Department of Health and
Human Services, 2011.




Page 7                                                GAO-12-408 Unemployment Insurance
2 Million of Those
Who Lost Jobs in the
Recession Years
Exhausted UI
Benefits by Early 2010

Half of Workers Who Lost    The number of displaced workers increased substantially during the
Jobs in the Recession       recession years, and proportionately more of them received UI than in the
Years Received UI, an       3 years prior to the recession. Specifically, from 2007 to 2009, 49 percent
                            of the 15.4 million people who lost jobs received UI. In contrast, 36
Increase from Prior Years   percent of the 8.3 million people who lost jobs from 2005 to 2007 received
                            UI (see fig. 2). 16 The UI safety net expanded during a recession that
                            affected so many workers, as it is designed to do.




                            16
                              Specifically, based on the Bureau of Labor Statistics’ definition, these displaced workers
                            are persons 20 years of age and older who lost or left jobs within the 3 years prior to the
                            survey because their plant or company closed or moved, there was insufficient work for
                            them to do, or their position or shift was abolished.




                            Page 8                                                GAO-12-408 Unemployment Insurance
Figure 2: UI Receipt among Displaced Workers




Notes: The top bar represents data from the 2008 Displaced Worker Supplement, which was
conducted in January 2008 with people ages 20 and older who experienced a job loss from 2005 to
2007. The bottom bar represents data from the 2010 Displaced Worker Supplement, which was
conducted in January 2010 with people ages 20 and older who experienced a job loss from 2007 to
2009. Estimates presented in this figure have margins of error that are within plus or minus 2
percentage points. The difference in the percentages of displaced workers receiving UI between the
time periods is statistically significant at the 95 percent confidence level. Percentages may not total
100 due to rounding.


One reason for the higher rate of UI receipt during the recession is that
fewer displaced workers became re-employed quickly. Displaced workers
have diverse labor market experiences following a job loss, with some
finding new work soon afterwards, while others take longer to become re-
employed. For workers displaced during the recession years, however,
comparatively fewer of them found new jobs quickly. Prior to the
recession, 30 percent of displaced workers did not receive UI and were
working again within 5 weeks of losing their job, compared to 18 percent
of workers who lost jobs in the recession years.




Page 9                                                       GAO-12-408 Unemployment Insurance
Lower-Wage Workers Were     In both recessionary and nonrecessionary times, not all people who lose
Less Likely to Receive UI   jobs receive UI, an issue of interest to policymakers for many years. Our
                            previous work found that lower-wage workers were less likely to receive
                            UI than higher-wage workers in the 1990s and early 2000s. 17 This trend
                            continued in the recent recession. Among workers who lost jobs from
                            2007 to 2009, those in the bottom 30 percent in earnings were half as
                            likely to receive UI benefits as displaced workers in the top 70 percent.
                            However, both groups received UI at a higher rate during the recession
                            than in the period before the recession (see fig. 3). We and others
                            previously identified several possible reasons for the historically lower
                            rate of UI receipt among lower-wage workers. For example, they are less
                            likely to have met the minimum earnings required for UI eligibility,
                            particularly if their work was intermittent or part-time. Family crises can
                            also cause some in marginal financial situations to quit a job (for example,
                            to care for a sick child), potentially making them ineligible for UI. 18




                            17
                              See GAO, Unemployment Insurance: Low-Wage and Part-Time Workers Continue to
                            Experience Low Rates of Receipt, GAO-07-1147 (Washington, D.C.: Sept. 7, 2007) and
                            Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is Limited,
                            GAO-01-181 (Washington, D.C.: Dec. 29, 2000), which examined selected years in the
                            1990s and 2003. Another GAO study examining a cohort of individuals born between
                            1957 and 1964 and their labor market experiences from 1979 to 2002 also found that
                            unemployed workers with higher earnings were more likely to receive UI benefits. See
                            GAO, Unemployment Insurance: Factors Associated with Benefit Receipt, GAO-06-341
                            (Washington, D.C.: Mar. 7, 2006).
                            18
                              In our prior work, we noted that individuals generally must have become unemployed
                            involuntarily or for “good cause” to be eligible for UI. We and others found variation among
                            states in the circumstances which constitute “good cause.” For example, some states had
                            policies allowing individuals to be eligible for UI if they left a job to care for a sick child or
                            due to domestic violence, while others did not. See GAO-01-181 and GAO-07-1174;
                            Wayne Vroman, Low Benefit Recipiency in State Unemployment Insurance Programs
                            (June 2001); and Lewin Group, Unemployment Insurance Non-Monetary Policies and
                            Practices: How Do They Affect Program Participation? A Study of 8 States (Jan. 31,
                            2003).




                            Page 10                                                  GAO-12-408 Unemployment Insurance
Figure 3: Percentage of Displaced Workers Receiving UI, Comparing Workers in the
Bottom 30 Percent and Top 70 Percent in Average Weekly Earnings




Notes: This figure represents data on all displaced workers with information on average weekly
wages. Estimates presented in the figure have margins of error that are within plus or minus 4
percentage points. Differences in UI receipt between displaced workers in the bottom 30 percent and
top 70 percent in average weekly wages are statistically significant at the 95 percent confidence level
in all four comparisons presented above. In this analysis, among all displaced workers, those in the
bottom 30 percent had wages of $380 per week or less in the 2005-2007 time frame and wages of
$418 per week or less in the 2007-2009 time frame. We also conducted the analysis using the same
cut-off points ($380, adjusting for inflation) for defining the lower-wage group in both time periods and
obtained similar results. See appendix I for further information.




Page 11                                                       GAO-12-408 Unemployment Insurance
                                             In the Recovery Act, Congress provided for incentive payments for states
                                             that have certain UI laws in place, 19 and low-wage workers may benefit
                                             from such laws. As of September 2011, 39 states have been approved for
                                             Recovery Act incentive payments totaling $4.4 billion (see table 1). Labor
                                             has contracted with a research organization to examine the effects of
                                             these incentive payments. The final evaluation report is due in 2013.

Table 1: Number of States Receiving Recovery Act Incentive Funds

                                                                                   States that received   States that received
                                                                                           funds for an    funds for changing Total number
                                                                                                      a
                                                                                          existing law       law or regulation    of states
States must have in place the following to receive one-third of their
                   b
incentive payment
A base period that includes recent wages                                                            19                          20                  39
States must have in place at least two of the following four to
                                               c
receive two-thirds of their incentive payments
No denial of benefits for seeking part-time work                                                     8                          18                  26
No disqualification for separations from employment for compelling                                   1                          18                  19
family reasons
Provide extended compensation to UI recipients in qualifying                                         0                          16                  16
training programs
Provide dependents’ allowances to UI recipients with dependents                                      4                            3                  7
Number of states that have been approved for 1/3 of their payment                                                                                   39
Number of states that have been approved for all of their payments                                                                                  34
                                             Source: GAO analysis of Labor data.

                                             Note: Puerto Rico and the Virgin Islands, which both received Recovery Act incentive funds, are not
                                             included in this table.
                                             a
                                              Incentive funds were also provided to states that already had the specific policies in place. This also
                                             includes states that clarified procedures to ensure that current law is interpreted in a way that meets
                                             the requirements for approval.
                                             b
                                              To obtain the first one-third of incentive payments, the state must generally use a base period that
                                             includes the most recent quarter before the start of the benefit year. The base period is the time
                                             period during which wages earned or hours/weeks worked are examined to determine a worker’s
                                             monetary entitlement to UI.
                                             c
                                              States that qualify for the first one-third can obtain the remaining two-thirds if their state meets 2 of
                                             the following 4 requirements: (1) the state generally cannot deny UI payments to an individual solely
                                             because that person is seeking only part-time work, (2) the state shall not disqualify a person from
                                             receiving UI payments for separating from employment if that separation is for a compelling family
                                             reason, (3) UI payments must generally be available for individuals who have exhausted their regular
                                             UI payment and are making progress in certain training programs, and (4) the state must generally
                                             provide dependents’ allowances to individuals entitled to regular UI payments and who have any
                                             dependents.




                                             19
                                                 Pub. L. No. 111-5, § 2003, 123 Stat. 115, 439.




                                             Page 12                                                       GAO-12-408 Unemployment Insurance
                          Most of the states that did not apply for incentive payments (8 states out
                          of 13) reported in our survey that they did not apply because of concerns
                          about costs, such as increased benefit payments or effects on state trust
                          funds or employers. 20 Additionally, in our survey, 11 states responded
                          that their state had enacted laws resulting in more stringent eligibility
                          requirements or decreased coverage, such as reducing the maximum
                          number of weeks UI benefits could be provided or increasing the wage
                          level needed to qualify for UI.


2 Million Displaced       Two million of the 7.5 million workers who lost jobs from 2007 to 2009
Workers Exhausted UI by   and received UI had exhausted their UI benefits by January 2010, based
January 2010, with More   on the 2010 Displaced Worker Supplement (see fig. 4). 21 While this
                          number is based on the most recent data available, it does not include
since Then
                          those who may have exhausted their benefits after the survey was
                          conducted. 22 Nevertheless, the 2007 to 2009 period numbers about
                          700,000 more who exhausted benefits than in the earlier period. Also, a
                          smaller percentage of those displaced in the 2007 to 2009 period
                          exhausted UI (27 percent) than in the earlier period (44 percent), likely
                          reflecting to some extent the availability of additional weeks of UI benefits
                          (see fig. 5).




                          20
                            We previously reported that the severity and length of the recent recession, and the slow
                          pace of recovery, have placed a heavy demand on state UI trust funds, and many states
                          have needed loans from the federal government to continue to pay benefits. See GAO,
                          Unemployment Insurance Trust Funds: Long-standing State Financing Policies Have
                          Increased Risk of Insolvency, GAO-10-440 (Washington, D.C.: Apr. 14, 2010).
                          21
                            For purposes of this report, we define a UI exhaustee as a displaced worker with a
                          “yes” response to the following two questions in the Displaced Worker Supplement: (1)
                          “Did you receive unemployment insurance after that job (the job from which the worker
                          was displaced) ended?” and (2) “Did you exhaust your eligibility for unemployment
                          benefits?”
                          22
                            Given the structure of the Displaced Worker Supplement, workers who lose jobs earlier
                          in the 3-year period of the survey would be more likely to have exhausted UI benefits by
                          the time of the survey, since more time would have elapsed between when they lost their
                          job and when the survey was conducted. Among those surveyed in the 2010 Displaced
                          Worker Supplement, 46 percent of those who lost jobs in 2007 exhausted their UI benefits
                          by January 2010, 32 percent of those who lost jobs in 2008 exhausted their UI benefits,
                          and 18 percent of those who lost jobs in 2009 exhausted their UI benefits. For the 2008
                          Displaced Worker Supplement, UI exhaustion rates were 50 percent for those who lost
                          jobs in 2005 and received UI, 55 percent for 2006, and 33 percent for 2007.




                          Page 13                                              GAO-12-408 Unemployment Insurance
Figure 4: Benefit Exhaustion among Displaced Workers Who Received UI




Notes: Estimates presented in this figure have margins of error that are within plus or minus 3
percentage points. The difference in the exhaustion rate between the two time periods is statistically
significant at the 95 percent confidence level.




Page 14                                                      GAO-12-408 Unemployment Insurance
Figure 5: Weekly UI Claims, by UI Program




                                        Notes: A small number (about 2 percent) of UI claimants received UI benefits from other programs,
                                        including those for federal government employees, ex-service members, individuals affected by
                                        disasters, participants in the Trade Adjustment Assistance program, and individuals receiving UI
                                        benefits for reduced work hours. Claimants in these programs are not shown in the figure above.


                                        Other data show that significant numbers of people have continued to
                                        receive and exhaust UI benefits in 2010 and 2011. For example, the
                                        number of people claiming the benefit extensions from the Emergency
                                        Unemployment Compensation and Extended Benefits programs
                                        continued to be substantial in both these years, beyond the official end of
                                        the recession in June 2009 (see fig. 5). In addition, Labor’s Employment
                                        and Training Administration, which oversees state unemployment
                                        programs, provided us with estimates that there were 1.6 million
                                        exhaustees in calendar year 2010 and 2.0 million in 2011. 23



                                        23
                                          The estimates from Labor are of all UI claimants who exhausted UI, and therefore may
                                        not be comparable to the estimate of the number of UI exhaustees from the Displaced
                                        Worker Supplement, which are of displaced workers who received and exhausted UI.




                                        Page 15                                                   GAO-12-408 Unemployment Insurance
                                      The relatively large numbers of UI exhaustees and UI beneficiaries must
                                      be seen in the context of the extremely poor labor market conditions in
                                      recent years, when job seekers have faced bleak job prospects. Data
                                      from the Bureau of Labor Statistics show that the number of unemployed
                                      persons per job opening increased from 1.8 when the recession began in
                                      December 2007 to 6.1 when the recession officially ended in June 2009
                                      (see figure 6). This ratio has declined to 4.2 unemployed persons per job
                                      opening in November 2011, the most recent data available, remaining
                                      above prerecession levels.

Figure 6: Unemployed Persons per Job Opening




                                      Page 16                                    GAO-12-408 Unemployment Insurance
Many UI Exhaustees
Faced Difficult
Economic
Circumstances, but
Few Were Likely to
Qualify for TANF

18 Percent of Exhaustees   For those who lost jobs from 2007 to 2009 and exhausted UI, the CPS
Were in Poverty in 2009    data suggest that many faced difficult economic circumstances. Many
                           were still not employed in January 2010 and those with employment often
                           had reduced earnings. It is unknown whether the situations of these
                           exhaustees have improved or worsened since then because more current
                           data are not available.

                           More specifically, an estimated 46 percent of UI exhaustees who lost jobs
                           in the recession years were unemployed at the time they were surveyed
                           in January 2010 (see fig. 7). About a third (35 percent) of the exhaustees
                           were re-employed in January, a smaller proportion than in the period
                           before the recession (57 percent).

                           Figure 7: Employment Status of Displaced Workers Who Exhausted UI




                           Notes: Estimates presented in this figure have margins of error within plus or minus 5 percentage
                           points. Differences in the percentages of exhaustees who were employed and unemployed between
                           the two time frames are statistically significant at the 95 percent confidence level. Percentages may
                           not total 100 due to rounding.




                           Page 17                                                     GAO-12-408 Unemployment Insurance
Among the exhaustees who were unemployed in January 2010, about
half appeared to have worked at some point in the previous year. An
estimated 50 percent had some earnings in 2009. These workers might
have done temporary work at some point in 2009, worked in a short-term
or a seasonal job, or found a new job but then were laid-off again.

Among those UI exhaustees who lost jobs in the recession years and
were re-employed, 71 percent experienced a reduction in earnings. 24 The
median earnings replacement ratio was 0.74, meaning that half of re-
employed exhaustees experienced a reduction in earnings greater than
26 percent, while the other half experienced a reduction of less than 26
percent or an earnings increase.

In addition to data on exhaustees’ employment and earnings, information
on household income provides a broader perspective on how exhaustees
have fared. These data suggest that some exhaustees may have been
helped by other sources of income, such as a household member who
was earning income in 2009, or income from assets, such as interest or
dividends. About two-thirds of exhaustees had a household member with
some wage or salary earnings in 2009. About 40 percent of exhaustees’
households had some income from assets, namely interest, dividends,
retirement, or rental income. In total, about 90 percent of UI exhaustees
had some private income sources within their household during calendar
year 2009 (table 2).




24
  The high percentage of re-employed exhaustees experiencing earnings reduction likely
reflects the fact that UI exhaustees were unemployed for long durations. Research has
found that longer durations of unemployment are associated with reduced earnings levels
at the workers’ new jobs. There are many possible reasons for this, such as diminished
job prospects as workers lose job skills or networks during the period of unemployment, a
possible stigma associated with long-term unemployment, and greater willingness to take
jobs at reduced wages the longer a worker searches for a job. See Congressional Budget
Office, Long-Term Unemployment (Washington, D.C.: October 2007); and John T.
Addison and Pedro Portugal, “Job Displacement, Relative Wage Changes, and Duration
of Unemployment,” Journal of Labor Economics, 7:3 (July 1989).




Page 18                                             GAO-12-408 Unemployment Insurance
Table 2: Percentage of UI Exhaustees’ Households with Private Income Sources,
2009

                                                                                                          Estimated
                                                                                                       percentage of
                                                                                                      UI exhaustees
                                                                                                        with income
    Private income source                                                                             source in 2009
    UI exhaustee’s own wages, salaries, or self-employment income                                                     63%
    Wages, salaries, or self-employment income from other household                                                     65
    members
    Any earnings, from UI exhaustee or household members                                                                87
                         a
    Interest income                                                                                                     34
              b
    Dividends                                                                                                           16
                             c
    Retirement income                                                                                                  <11
                     d
    Rental income                                                                                                       <9
    Any income from interest, retirement, dividends, rental                                                             43
    Child support                                                                                                       <7
    Alimony                                                                                                               0
    Any of the above income sources in the household                                                                    91
Source: GAO analysis of the CPS, 2010 Displaced Worker Supplement merged with data from the 2010 Annual Social and Economic
Supplement.

Notes: This table presents data on the income sources in 2009 of the 2 million people ages 20 and
older who lost a job from 2007 to 2009, received UI, and exhausted it as of January 2010, and as
such, may not reflect the circumstances of individuals directly after exhausting UI. Estimates
presented in this table have margin of errors within plus or minus 5 percentage points. Point
estimates are suppressed where the margin of error of the estimate exceeds 30 percent of the point
estimate. For these estimates, we are reporting the upper bound of the 95 percent confidence
interval. All estimates in the table are significantly different from zero, with the exception of alimony.
There were no households who received alimony in the sample.
a
 Includes payments received (or have credited to accounts) from bonds, treasury notes, IRAs,
certificates of deposit, interest-bearing savings and checking accounts, and all other investments that
pay interest.
b
 Includes payments received from stock holdings and mutual fund shares. The CPS does not include
capital gains from the sale of stock holdings as income.
c
 Includes pension or retirement income received from companies or unions, federal government (civil
service), military, state or local governments, railroad retirement, annuities or paid-up insurance
policies, individual retirement accounts, Keogh, or 401(k) payments, or other retirement income.
d
 Includes net income people received from the rental of a house, store, or other property, receipts
from boarders or lodgers, net royalty income, and periodic payments from estate or trust funds.




Page 19                                                                  GAO-12-408 Unemployment Insurance
Nevertheless, while the annual income levels of UI exhaustees varied in
2009, their poverty rate was higher than that of other working-age adults
(ages 18 to 64). 25 Specifically, 18 percent of UI exhaustees were in
poverty, in contrast to 13 percent of working-age adults (see fig. 8).
Furthermore, about 40 percent of UI exhaustees had incomes under 200
percent of the federal poverty threshold, compared to about 30 percent of
working-age adults.

Figure 8: Income-to-Poverty Ratios of UI Exhaustees Compared to Working-Age
Civilian Adults, Based on 2009 Annual Family Incomes




Notes: Percentages may not total 100 percent due to rounding. The top bar on UI exhaustees
presents 2009 data on the 2.0 million people, ages 20 and older, who lost jobs from 2007 to 2009,
received UI, and exhausted UI by January 2010. It may not reflect the circumstances of individuals
directly after exhausting UI. Estimates presented in this figure have margins of error that are within
plus or minus 6 percentage points. Differences between UI exhaustees and the civilian population
age 18-64 in the percentage below poverty and the percentage below 200 percent of the federal
poverty threshold are statistically significant at the 95 percent confidence level.




25
  The data we present on poverty rates and income-to-poverty ratios are based on
Census computations of income-to-poverty ratios in the Annual Social and Economic
Supplement. The federal poverty threshold varies by family size. For example, in 2009, a
family of one person under the age of 65 with total income below $11,161 was considered
to be in poverty, while a family of four (two adults and two children under age 18) with total
income below $21,756 was in poverty. With regard to the percentage of UI exhaustees in
poverty, annual income data may not capture families who were in poverty for only part of
the year.




Page 20                                                       GAO-12-408 Unemployment Insurance
Few UI Exhaustees        In 2009, few UI exhaustees were likely to have received TANF support,
Received Aid from TANF   which is targeted to very low-income families with children. The majority
                         of UI exhaustees would not have qualified because they did not have a
                         minor child—55 percent of exhaustees did not have a child age 18 or
                         younger in their household. 26 Among the 18 percent of exhaustees in
                         poverty, less than half (48 percent) had minor children. Overall, only 9
                         percent of exhaustees had a child age 18 or under, as well as income
                         below the federal poverty threshold, two general criteria for TANF
                         eligibility though the specific criteria vary by state. 27

                         Data derived from the CPS show that less than 3 percent of UI
                         exhaustees’ households received financial assistance from TANF or other
                         welfare programs in 2009 (see table 3). 28 Overall, about one-third of
                         exhaustees’ households received at least one government support in that
                         year. Significantly more of the households of UI exhaustees received
                         benefits from Social Security programs (18 percent for retirement,



                         26
                           Nationally, 47 percent of working-age civilian adults (age 18-64) had a child age 18 or
                         under in their household.
                         27
                           Urban Institute, Welfare Rules Databook: State TANF Policies as of July 2009 (August
                         2010). Not all households with income below the federal poverty threshold and minor
                         children are eligible for TANF. In some states, families with children must have income
                         below the federal poverty level to be initially eligible for ongoing TANF cash assistance,
                         and in other states, their income must be well below the federal poverty level. There are
                         other factors considered in determining a families’ eligibility for TANF benefits, which vary
                         by state, such as the family’s assets, immigration status, and whether a family previously
                         received TANF cash assistance and reached the time limit on benefits. Different eligibility
                         criteria may apply to one-time benefits. In addition, TANF eligibility is established on a
                         monthly basis, while the CPS provides data on annual income. As such, families who
                         were in poverty for part of 2009 might have been eligible for TANF in some months of
                         2009, even though their annual income was above the federal poverty threshold in 2009.
                         28
                           These data are derived from a question in the 2010 Annual Social and Economic
                         Supplement to the CPS, which asked respondents the following: “At any time during 2009,
                         even for one month, did (you/anyone in the household) receive any cash assistance from
                         a state or county welfare program such as (name of the program in respondent’s state).
                         Include cash payments from: welfare or welfare-to-work programs, state program name
                         and/or acronyms, Temporary Assistance for Needy Families (TANF), Aid to Families with
                         Dependent Children (AFDC), General Assistance/Emergency Assistance program,
                         Diversion Payments, Refugee Cash and Medical Assistance program, General Assistance
                         from Bureau of Indian Affairs, or Tribal Administered General Assistance.” Many of these
                         welfare programs, including Diversion Payments, welfare or welfare-to-work programs,
                         and state programs, are within the TANF program. AFDC is the name of the former
                         welfare program, which was replaced by TANF in 1996. The CPS data provide information
                         on households’ receipt of financial assistance from TANF but do not provide information
                         on receipt of non-cash assistance or services from TANF.




                         Page 21                                                GAO-12-408 Unemployment Insurance
Disability Insurance, and survivors programs) or Supplemental Nutrition
Assistance Program (SNAP, formerly known as the Food Stamp
Program)(15 percent) than from TANF.

Table 3: Receipt of Benefits from Government Programs within UI Exhaustee
Households, 2009

                                                                                            Estimated percentage
    Support programs                                                                             receiving benefit
    Social Security retirement, Disability Insurance, or survivors                                                     18%
    SNAP                                                                                                                  15
    Supplemental Security Income                                                                                          <6
                                                               a
    Disability benefits, other than Social Security                                                                       <4
                                b
    TANF or other welfare                                                                                                 <3
    Workers’ compensation                                                                                                 <3
    Veterans benefits                                                                                                     <2
                                                        c
    Any of the above government programs                                                                                  34
Source: GAO analysis of the CPS, 2010 Displaced Worker Supplement, merged with data from the 2010 Annual Social and Economic
Supplement.

Notes: This table presents data on government benefits received in 2009 by any household member
of a UI exhaustee (the 2.0 million people ages 20 and older who lost a job from 2007 to 2009,
received UI, and exhausted it as of January 2010). For example, a household would be counted as
receiving Social Security benefits if the spouse of a UI exhaustee received Social Security benefits
and not the exhaustee himself. The data shown includes all exhaustees, regardless of whether they
were employed, unemployed, or not in the labor force at the time of the January 2010 survey. The
data may not reflect the circumstances of individuals directly after exhausting UI. Point estimates are
suppressed where the margin of error of the estimate exceeds 30 percent of the point estimate. For
these estimates, we are reporting the upper bound of the 95 percent confidence interval. All estimates
in the table are significantly different from zero. For point estimates that we present in the table, the
95 percent confidence intervals are: 14 to 22 percent for Social Security retirement, Disability
Insurance, or survivors benefits; 11 to 18 percent for SNAP; and 29 to 39 percent for receipt of any of
the government programs we included in our analysis.
a
 Includes disability benefits provided by workers’ compensation, companies or unions, federal
government (civil service), military, state or local governments, railroad retirement, accident or
disability insurance, Black lung payments, state temporary sickness, or other disability payments.
b
 Includes any cash assistance, even for one month, from a state or county welfare program including
welfare or welfare-to-work programs, TANF, Aid to Families with Dependent Children (the name of
the federal welfare program that was replaced by TANF in 1996), General Assistance/Emergency
Assistance program, Diversion Payments, Refugee Cash and Medical Assistance program, General
Assistance from Bureau of Indian Affairs, or Tribal Administered General Assistance.
c
 Includes programs listed in the table, as well as survivors benefits other than Social Security (from
pensions, estates, trusts, or annuities, private companies or unions; federal government (civil
service), military, state or local governments, railroad retirement, workers’ compensation, Black lung
payments, and other survivor payments). The sample size for survivors benefits other than Social
Security was too small to present the estimate.




Page 22                                                                  GAO-12-408 Unemployment Insurance
With regard to Social Security, 21 percent of UI exhaustees’ households
received benefits from the retirement, Disability Insurance, survivors, or
Supplemental Security Income programs. 29 Other than Supplemental
Security Income, the CPS data do not distinguish among the types of
Social Security benefits a household received, but 7 percent of
exhaustees were age 62 or older in January 2010 and therefore
potentially eligible for Social Security retirement benefits (see fig. 9). 30
Some exhaustees may have received the other types of Social Security
benefits, or they may have been residing with a household member who
received Social Security benefits.

Figure 9: Ages of UI Exhaustees, January 2010




Notes: This figure presents the ages in January 2010 of the 2.0 million people ages 20 and over who
lost a job from 2007 to 2009, received UI, and exhausted it as of January 2010. Estimates presented
in this figure have margins of error that are within plus or minus 4 percentage points.




29
  The Supplemental Security Income program provides benefits to people with low
incomes who are blind, disabled, or are age 65 and older.
30
  The earliest age at which an individual can begin receiving Social Security retirement
benefits is age 62, though benefits are reduced for those who draw them prior to the full
retirement age. The full retirement age ranges from 65 to 67, depending upon a person’s
year of birth.




Page 23                                                    GAO-12-408 Unemployment Insurance
The estimated percentage of exhaustee households receiving TANF may
be slightly higher among those households more closely aligned with the
TANF target population. Among the households of UI exhaustees that
had minor children and income below 200 percent of the federal poverty
threshold, less than 10 percent received TANF or other welfare benefits in
2009 (see table 4). 31 More than one-third of these households received
SNAP benefits.

Table 4: Receipt of Benefits from Government Programs within Households of UI
Exhaustees with Minor Children and Annual Incomes Below 200 Percent of the
Federal Poverty Threshold, 2009

                                                                                            Estimated percentage
 Support programs                                                                                receiving benefit
 SNAP                                                                                                                 38%
 Social Security retirement, Disability Insurance, or                                                                  <25
 survivors
                                a
 TANF or other welfare                                                                                                 <10
 Supplemental Security Income                                                                                          <10
                                                        b
 Any of the above government programs                                                                                    49
Source: GAO analysis of the CPS, 2010 Displaced Worker Supplement, merged with data from the 2010 Annual Social and Economic
Supplement.




31
  This is meant to illustrate receipt of TANF and other government benefits among
relatively low-income families of UI exhaustees with minor children. Not all families with
children and incomes below 200 percent of the federal poverty threshold are eligible for
TANF benefits. While families generally must have income below the federal poverty
threshold to be initially eligible for ongoing TANF cash assistance, in many states, once a
family has been receiving TANF benefits, income earned from employment may be
disregarded for some time to compensate for work-related expenses or to serve as an
incentive to work. This means that a family with income greater than the level for initial
eligibility may continue to receive TANF. Urban Institute, Welfare Rules Databook. See
footnote 27 for further information on TANF eligibility criteria.




Page 24                                                                  GAO-12-408 Unemployment Insurance
Notes: This table presents data on sources of household income in 2009 for the approximately
460,000 of UI exhaustees with children age 18 or under in the household and incomes below 200
percent of the federal poverty threshold. UI exhaustees are people ages 20 and older who lost a job
from 2007 to 2009, received UI, and exhausted it as of January 2010. This includes exhaustees
regardless of whether they were employed, unemployed, or not in the labor force at the time of the
survey. The data may not reflect the circumstances of individuals directly after exhausting UI. A
household is counted as receiving a government benefit if any household member received the
benefit. For example, a household would be counted as receiving Social Security benefits if the
spouse of a UI exhaustee received Social Security benefits and not the exhaustee himself. Point
estimates are suppressed where the margin of error of the estimate exceeds 30 percent of the point
estimate. For these estimates, we are reporting the upper bound of the 95 percent confidence
interval. All estimates in the table are significantly different from zero. For point estimates that we
present in the table, the 95 percent confidence intervals are: 28 to 49 percent for SNAP, and 38 to 60
percent for receipt of any of the government programs we included in our analysis. The confidence
interval for Social Security retirement, Disability Insurance, or survivors benefits is 9 to 25 percent.
a
 Includes any cash assistance, even for one month, from a state or county welfare program including
welfare or welfare-to-work programs, TANF, Aid to Families with Dependent Children (the name of
the federal welfare program that was replaced by TANF in 1996), General Assistance/Emergency
Assistance program, Diversion Payments, Refugee Cash and Medical Assistance program, General
Assistance from Bureau of Indian Affairs, or Tribal Administered General Assistance.
b
 Includes programs listed in the table, as well as veterans’ benefits, disability and survivors benefits
other than Social Security, and workers’ compensation. Sample sizes for these programs were too
small to present individual estimates.


Regarding the use of TANF benefits by UI exhaustees or others who
have lost jobs, state TANF officials we spoke with offered several reasons
why they may not have sought or received such assistance. One official
noted that some may not have sought TANF because they may still have
some resources or assets that they can rely on. Such assets may also
make a person ineligible for TANF since nearly all states consider the
value of a family’s assets when determining their eligibility for ongoing
TANF cash assistance. 32 Other state officials said that some workers who
recently lost jobs may be reluctant to seek TANF due to its work activity
or child support requirements, particularly given the fact that the TANF
benefit is low. 33 Some officials also noted that the restrictions on work
activities that limit the amount of time that can be spent on education and
training may not match the needs of displaced workers, who may require




32
  Urban Institute, Welfare Rules Databook: State TANF Policies as of July 2009. In 2009,
most states had asset limits ranging from $1,000 to $3,000, with the value of a home and
the value of at least one vehicle exempted.
33
  TANF cash assistance benefit levels vary by state. In 2009, maximum monthly benefits
across the states ranged from $170 to $923 for a family of three, with a median benefit of
$429. Congressional Research Service, The Temporary Assistance for Needy Families
(TANF) Block Grant: Responses to Frequently Asked Questions (Washington, D.C.: Dec.
27, 2011).




Page 25                                                       GAO-12-408 Unemployment Insurance
more education or retraining to find a new job. 34 Finally, several state
officials told us that some people who recently lost jobs may not apply for
TANF because they perceive a stigma attached to being a welfare
recipient. 35

In addition, with many states facing budget deficits related to the
economic recession, several of the state officials discussed with us
challenges in serving those affected by the recession. Officials we
interviewed in 7 of the 16 states said that their states have decreased
funding for the TANF program since the recession began. With regard to
federal funds, as a block grant, the TANF allocations that states receive
are not adjusted for caseload size, and the amounts have not been
adjusted for inflation since 1996. Collectively, states in economic distress
can access up to $612 million in the TANF Contingency Fund in fiscal
year 2012, but they must spend more than a specified amount of state
funds to do so. Other TANF funding sources that states had access to
during the recession have expired. For example, nearly all 51 states
accessed TANF Emergency Contingency Funds provided in the Recovery
Act, but these funds expired at the end of fiscal year 2010. In addition,
TANF supplemental funds, which had been awarded to 17 states with
historically low welfare spending per person and high population growth,
expired in June 2011. In our interviews, officials said that budgetary
constraints have led to decreased spending on work supports, such as
employment and training services and childcare, hiring freezes, and, also
greater enforcement of time limits. States must restrict most families to a
lifetime limit of 60 months of federally funded TANF cash assistance, but
they may use state funds to continue benefits for families reaching the


34
   Federal law limits the number of weekly hours that TANF families can participate in
three activities and have them count toward their work requirements: education directly
related to employment (for recipients who have not received a high school diploma or a
high school equivalency), job skills training directly related to employment, and
satisfactory attendance at secondary school or in a course of study leading to a certificate
of general equivalency. There are also limits on the amount of time states can count each
family’s participation in two other work activities—job search and job readiness
assistance, and vocational education. The time limit on job search and job readiness
assistance is generally 6 weeks, but states can extend this limit to 12 weeks during times
of economic distress. The time limit on vocational education is 12 months over a person’s
lifetime.
35
  For more information on receipt of TANF among eligible families, see GAO, Temporary
Assistance for Needy Families: Fewer Eligible Families Have Received Cash Assistance
Since the 1990s, and the Recession’s Impact on Caseloads Varies by State, GAO-10-164
(Washington, D.C.: Feb. 23, 2010).




Page 26                                               GAO-12-408 Unemployment Insurance
                        limit. In our interviews, some state officials said that budgetary constraints
                        had led their states to discontinue these payments.


                        While there are no federal requirements to refer UI exhaustees to other
Most State UI           support programs, most (45) of the state UI agencies we surveyed reported
Agencies Reported       providing information or connections to support programs for exhaustees. 36
Efforts to Provide UI   These connections are made in a number of ways, such as through
                        websites, mail, staff referrals, and interagency coordination (see table 5).
Exhaustees with
Information about       Table 5: Methods Reported by State UI Agencies to Provide Information and/or
                        Connect UI Exhaustees with Support Programs
Other Support
Programs                 State UI agency responses by category
                                                                                                                Number of
                                                                                                                   states
                         Provides information
                         Provides information on website                                                               13
                         Mails information specifically to exhaustees                                                  13
                         Sends emails to UI exhaustees                                                                  3
                         Automated phone recordings/messages provide information specifically                           3
                         to UI exhaustees
                                a
                         Other                                                                                         16
                         UI agency refers exhaustees
                         Agency staff refer UI exhaustees to other support agencies                                    32
                         Automated technology refers UI exhaustees to other support agencies                            7
                         Coordinates with other agencies
                         Coordinates with one-stops to provide information or connect UI                               34
                         exhaustees to other support programs
                         Coordinates with other support program agencies to provide information                        20
                         or connect UI exhaustees to other support programs
                         UI agency and other support agencies share data for purposes of                               13
                         facilitating enrollments of UI exhaustees in support programs
                         Agencies that do any of the above                                                             45
                        Source: GAO analysis of survey data
                        a
                         Other may include UI staff responding to specific inquiries from exhaustees and local 2-1-1
                        telephone numbers to connect people to services.




                        36
                          For the purposes of our survey of the 51 state UI agencies, the UI agencies were
                        instructed that support programs included TANF, SNAP, disability benefits (e.g.,
                        Supplemental Security Income, and Social Security Disability Insurance), state and county
                        income support programs, food banks, and other assistance programs. We generally
                        asked about groups of programs and not about each program individually.




                        Page 27                                                     GAO-12-408 Unemployment Insurance
States’ efforts to provide information or connect exhaustees to other
resources varied. For example:

•     Colorado’s UI website contains a list of resources for people who are
      exhausting benefits, including TANF and programs that provide
      assistance with foreclosure prevention, health insurance, and food
      aid.

•     In Ohio, the UI agency mails letters to people who may be nearing the
      exhaustion of their UI benefits. The letter provides websites and
      phone numbers for programs that provide food assistance, cash
      assistance, Medicaid, and help with foreclosure prevention, child
      support payments, and job search.

•     In Washington state, a multiagency working group created a detailed
      demographic analysis of potential exhaustees, shared data on
      exhaustees across agencies, developed a resource guide that was
      mailed to exhaustees and posted online, and established a new unit
      of employees and a phone number to handle questions from
      individuals about to exhaust UI. This working group includes
      representatives from social and health services, veterans, commerce,
      higher education, and workforce agencies. These stakeholders
      continue to meet and share ideas regarding the coordination of
      outreach activities to the growing population of exhaustees, according
      to Washington officials.

•     According to Pennsylvania officials, UI exhaustees were one of the
      populations Pennsylvania targeted for its subsidized employment
      program that was funded by TANF Recovery Act funds. Using data
      from the UI program, the workforce agency mailed UI exhaustees
      information on the subsidized employment program.

State UI agencies we surveyed reported limitations associated with any
efforts to connect UI exhaustees with TANF, SNAP, and other support
programs. State UI agencies’ greatest barriers were limited UI agency
resources or staff, along with a restriction on spending UI administrative
funds (see fig. 10). 37 These funds are provided by the federal government
and can only be used for administering the UI program. Other limitations
cited by state UI agencies include the lack of requirement for UI agencies


37
    42 U.S.C. § 502(a).




Page 28                                       GAO-12-408 Unemployment Insurance
              to refer exhaustees to support programs, confidentiality laws, and the
              knowledge and training needed for UI staff to provide referrals to specific
              programs. In addition, one state UI agency noted that automation has
              been beneficial for reducing costs, but the corresponding reduction in in-
              person contact reduced the ability of the UI agency to refer people to
              other programs. In many states, UI claims are filed remotely, primarily by
              telephone or the Internet.

              Figure 10: Most Commonly Reported Limitations Associated with Connecting UI
              Exhaustees with TANF, SNAP, and Other Support Programs




              Note: Totals do not add to 51 states because some states responded “don’t know” or did not respond
              to this question.




              As the U.S. has faced the worst economic conditions since the 1930s, the
Conclusions   UI program has played a critical role in helping millions of displaced
              workers through job losses. Despite the temporary benefit extensions,
              however, some individuals have exhausted UI benefits without a job, and
              a significant percentage have low incomes. As for the programs UI
              exhaustees and their households have turned to for additional assistance,
              few have received TANF as of 2009 in part because most do not match
              the target population of TANF. As currently financed and structured at the
              federal and state levels TANF does not appear to provide many of those
              we studied income support to help them weather the bad economic times.
              Some households have also turned to SNAP, whose financing and design



              Page 29                                                   GAO-12-408 Unemployment Insurance
                     may have helped it to expand with the poor economic conditions. Those
                     eligible for Social Security retirement, disability, or survivors programs
                     appear to have turned to those programs. While most state UI agencies
                     already had efforts in place to help direct exhaustees to support
                     programs, continued attention to outreach may help ensure that eligible
                     people are connected to aid.


                     We provided a draft of this report to the Secretaries of Labor and Health
Agency Comments      and Human Services for review and comment. Labor provided written
and Our Evaluation   comments, which are reproduced in appendix II. Labor said that our
                     report will help policymakers understand the economic circumstances of a
                     large percentage of unemployed workers and that it highlights the role the
                     UI program has played in helping unemployed workers, as well as the
                     role states have played in referring UI exhaustees to other support
                     programs. Labor and HHS provided technical comments, which we
                     incorporated as appropriate. We also provided a draft of this report to
                     Census Bureau officials for a technical review; we incorporated their
                     comments as appropriate.


                     We are sending copies of this report to the appropriate congressional
                     committees, the Secretary of Labor, the Secretary of Health and Human
                     Services, and other interested parties. The report is also available at no
                     charge on the GAO website at www.gao.gov.

                     If you or your staff members have any questions about this report, please
                     contact me at (202) 512-7215 or at brownke@gao.gov. Contact points for
                     our Offices of Congressional Relations and Public Affairs may be found
                     on the last page of this report. Staff members who made key contributions
                     in this report are listed in appendix III.

                     Sincerely yours,




                     Kay E. Brown
                     Director, Education, Workforce,
                     and Income Security Issues




                     Page 30                                     GAO-12-408 Unemployment Insurance
Appendix I: Objectives, Scope, and
                         Appendix I: Objectives, Scope, and
                         Methodology



Methodology

                         To address the objectives of this request, we used a variety of methods.
                         Specifically, we

                         •   analyzed pertinent data from two supplements to the Current
                             Population Survey (CPS): the Displaced Worker Supplement and the
                             Annual Social and Economic Supplement;

                         •   conducted a web-based survey with Unemployment Insurance (UI)
                             agencies in 50 states and the District of Columbia;

                         •   conducted structured phone interviews with officials from 16 state
                             Temporary Assistance for Needy Families (TANF) agencies;

                         •   analyzed data on the UI program from the Department of Labor
                             (Labor), on the TANF program from the Department of Health and
                             Human Services (HHS), and on the Supplemental Nutrition
                             Assistance Program (SNAP) from the U.S. Department of Agriculture
                             (USDA); and

                         •   conducted interviews with officials from Labor and HHS, as well as
                             researchers, and reviewed applicable federal laws and regulations,
                             studies, and policy documents.


Analysis of Displaced    To identify the number of workers who received and exhausted UI, we
Worker Supplement Data   used data from the biennial Displaced Worker Supplement to the Census
                         Bureau’s CPS. The CPS is the nation’s source of official government
                         statistics on employment and unemployment, and it is conducted on a
                         monthly basis with about 60,000 households. Every 2 years with the
                         January CPS, Census asks respondents 20 years or older whether they
                         or someone in their household have experienced a job loss within the
                         previous three years due to a plant or company closing or moving,
                         insufficient work, or their position or shift being abolished. If a respondent
                         answers yes, he or she is asked the questions in the Displaced Worker
                         Supplement. 1 As such, for purposes of our review, a displaced worker is
                         defined as a person who has experienced a job loss within the previous 3



                         1
                          Respondents who said they or a household member were no longer working due to other
                         reasons, such as a seasonal job being completed or failure of a self-operated business,
                         are not classified as displaced workers and are not asked the questions in the Displaced
                         Worker Supplement.




                         Page 31                                             GAO-12-408 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology




years due to a plant or company closing or moving, insufficient work, or
their position or shift being abolished. A person of any current
employment status (employed, unemployed, or not in the labor force) may
be classified as a displaced worker. For this review, we used data from
the 2010 Displaced Worker Supplement (the most recent available),
conducted in January 2010 with households in which someone lost a job
from 2007 to 2009—the years of the recent recession. 2 For some of our
analyses, we also compared the 2010 data to data from the 2008
Displaced Worker Supplement, conducted with households in which
someone lost a job from 2005 to 2007, so that we could compare workers
displaced during the recession to those displaced prior to the recession.
Results of our review are as of January 2010 and January 2008, when
the Displaced Worker Supplements were conducted.

We chose to use the Displaced Worker Supplement over other possible
data sources, such as the Survey of Income and Program Participation,
because the Displaced Worker Supplement contains questions to identify
whether an individual who lost a job received and exhausted UI. For
purposes of our review, we defined a UI exhaustee as a displaced worker
with “yes” responses to the following two questions in the Displaced
Workers Survey:

•   “Did you receive unemployment insurance after that job (the job from
    which the worker was displaced) ended?” and

•   “Did you exhaust your eligibility for unemployment benefits?”

We analyzed data from the Displaced Worker Supplement to estimate the
percentage of displaced workers who received UI and the percentage
who exhausted UI. We also used the data to examine the characteristics
and labor force statuses of UI exhaustees specifically, in particular their
ages, employment status at the time they were surveyed, and for those
employed, their earnings at their new job compared to their previous job.
Given the structure of the Displaced Worker Supplement, the survey
captures the experiences of workers who lose jobs earlier in the 3-year
period of the survey more fully than those who lost jobs later in the period,
since more time would have elapsed between when they lost their job and


2
 The National Bureau of Economic Research Business Cycle Dating Committee
announced the official beginning of the recession as December 2007 and the official end
as June 2009.




Page 32                                             GAO-12-408 Unemployment Insurance
                         Appendix I: Objectives, Scope, and
                         Methodology




                         when the survey was conducted. More specifically, the estimate of the
                         number of displaced workers who exhausted UI does not include workers
                         who may have exhausted UI at some point after January 2010.

                         In comparing UI receipt among higher-wage and lower-wage workers in
                         the 2005-2007 and 2007-2009 time periods (using the 2008 and 2010
                         Displaced Worker Supplements, respectively), we conducted the analysis
                         in two different ways and obtained virtually identical results. In the first
                         approach, for each of the time periods, we compared displaced workers
                         in the bottom 30 percent in average weekly wages with displaced workers
                         in the top 70 percent, for the respondents with wage data available.
                         Conducting the analysis in this way, displaced workers in the bottom 30
                         percent had average wages of $380 per week or less in the 2005-2007
                         time frame and average wages of $418 per week or less in the 2007-2009
                         time frame. In our second approach, we used the same average weekly
                         wage as the cut-off point for defining the lower-wage worker group in the
                         two time frames, adjusting for inflation. Specifically, lower-wage workers
                         were still defined as those with average wages of $380 per week or less
                         in 2005-2007. However, for 2007-2009, we used the $380 value to define
                         the lower-wage group, but adjusted it for inflation. As such, displaced
                         workers in the 2007-2009 time period were in the lower-wage group if
                         they had average weekly wages of $400 or less. These two methods
                         yielded results that were nearly identical. We presented the results of the
                         first approach in figure 3.


Analysis of Displaced    To examine the incomes of UI exhaustees and their receipt of benefits
Worker Supplement        from government programs, we merged data from the Displaced Worker
Merged with the Annual   Supplement with data from the CPS’ Annual Social and Economic
                         Supplement (ASEC). Census conducts the ASEC annually to provide the
Social and Economic      usual monthly labor force data, as well as additional national data on work
Supplement               experience, income, and use of government benefits, among other topics.
                         Due to the rotation structure of the CPS, approximately half of the
                         households who were administered the Displaced Worker Supplement in




                         Page 33                                     GAO-12-408 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology




January 2010 were also interviewed for the ASEC in March 2010. 3
Merging data from the two surveys allowed us to identify UI exhaustees
(from the Displaced Worker Supplement) and examine their incomes
(from the ASEC). Specifically, we used the merged data to examine UI
exhaustees’ private income sources, their family incomes relative to the
federal poverty threshold, the presence of a child under the age of 18 in
the household, and the benefits received from government programs.
Data we report from the 2010 ASEC on the income status and receipt of
benefits of UI exhaustees is for calendar year 2009. As such, our results
may not necessarily reflect individuals’ circumstances directly after
exhausting their UI benefits, as we included all individuals who lost jobs
from 2007 to 2009 and who then received and exhausted UI during that
period and through January 2010, when the Displaced Worker
Supplement was conducted.

Because the merged sample contains approximately half the number of
observations as the full Displaced Worker Supplement sample, we
inflated the population weights so that the weighted population counts
from the merged sample would reflect the full displaced worker
population. In addition, following the guidance of staff at the Bureau of
Labor Statistics and the Census Bureau, we constructed raking factors to
rebalance the merged sample by the race and ethnicity of the
householder, the presence of children in the household, and the gender
of the displaced worker. 4



3
 Households interviewed for the CPS are administered the survey for 4 consecutive
months, then are not interviewed for 8 months, and then are interviewed for an additional
4 months. Each month, one-eighth of households are being surveyed for the first time,
one-eighth for the second time, one-eighth for the third time, etc. With this rotation,
approximately half of the households interviewed in January 2010 were also interviewed in
March 2010, and therefore were administered both the Displaced Worker Supplement if
they were eligible and the ASEC.
4
 Specifically, the ASEC oversamples a group referred to as the “Children’s Health
Insurance Program (CHIP) expansion sample.” This is defined as any households where
the householder is minority (either non-White or Hispanic), and/or any household that
contains at least one child (18 years or under). Because the merged sample included
members of the “CHIP expansion sample,” we raked the weights so observations in the
“CHIP expansion sample” are not over-represented in the data. A raking factor is a
number multiplied by the population weight to rebalance the sample. We also raked the
weights by gender of the displaced worker and race/ethnicity of the householder, to
control for any sample attrition along these variables. Following the guidance of the
Census Bureau, we restricted our raking factors to cells with a minimum of 30
observations, and to factors that met Census Bureau guidelines for size.




Page 34                                             GAO-12-408 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology




We used data in the ASEC to examine the incomes of UI exhaustees’
households from both private and government sources. For each person
in the sample 15 years old and over, the ASEC asks questions on the
amount of money income received in the preceding calendar year from
each of the following sources: earnings; unemployment compensation;
workers’ compensation; Social Security; Supplemental Security Income;
public assistance; veterans’ payments; survivors benefits; disability
benefits; pension or retirement income; interest; dividends; rents,
royalties, and estates and trusts; educational assistance; alimony; child
support; regular financial assistance from outside of the household; and
other periodic income. The income statistics in the ASEC refer to receipt
of income during the preceding calendar year, in contrast to the
demographic characteristics, such as age, labor force status, and family
or household composition, which are as of the survey date. The income of
the family/household does not include amounts received by people who
were members during all or part of the income year if these people no
longer resided in the family/household at the time of interview. However,
the ASEC collects income data for people who are current residents but
did not reside in the household during the income year.

Data on consumer income collected in the ASEC by the Census Bureau
cover money income received (exclusive of certain money receipts such
as capital gains) before payments for personal income taxes, Social
Security, union dues, Medicare deductions, etc. Therefore, money income
does not reflect the fact that some households receive part of their
income in the form of noncash benefits, such as food stamps, health
benefits, rent-free housing, and goods produced and consumed on the
farm. In addition, money income does not reflect the fact that noncash
benefits are also received by some nonfarm residents which often take
the form of the use of business transportation and facilities, full or partial
payments by business for retirement programs, medical and educational
expenses, etc. Moreover, readers should be aware that for many different
reasons there is a tendency in household surveys for respondents to
underreport their income. Based on an analysis of independently derived
income estimates, the Census Bureau determined that respondents
report income earned from wages or salaries much better than other
sources of income and that the reported wage and salary income is
nearly equal to independent estimates of aggregate income.

We determined exhaustees’ income-to-poverty ratios using Census
computations. The Census classifies the income-to-poverty ratio of each
family and unrelated individual using a poverty index adopted by the
Federal Interagency Committee. The index provides a range of income


Page 35                                      GAO-12-408 Unemployment Insurance
Appendix I: Objectives, Scope, and
Methodology




cutoffs or “poverty thresholds” adjusted to take into account family size,
number of children, and age of the family householder or unrelated
individual. If a family’s total money income is less than the applicable
threshold, then that family and every individual in it are considered in
poverty. The official poverty thresholds are updated annually for inflation
using the Consumer Price Index. The official poverty definition uses
money income before taxes and excludes capital gains and noncash
benefits (such as SNAP benefits and housing assistance). The thresholds
do not vary geographically.

We calculated standard errors for our estimates using the Census
generalized variance functions, as published in the CPS January 2010
Displaced Worker, Employee Tenure, and Occupational Mobility
Technical Documentation. However, we adjusted these standard error
calculations to take account of the larger sampling interval of the merged
sample, following guidance from staff at the Bureau of Labor Statistics
and the Census Bureau.

We assessed the reliability of the CPS generally and of data elements
that were critical to our analyses and determined that, despite the
limitations outlined below, they were sufficiently reliable for our analyses.
Specifically, we:

•   reviewed documentation on the general design and methods of the
    CPS Displaced Worker Supplement and the CPS ASEC, and on the
    specific elements of the CPS data that were used in our analysis;

•   interviewed Census Bureau and Bureau of Labor Statistics officials
    knowledgeable about the CPS data and consulted with these officials
    periodically throughout the course of our study; and

•   completed our own electronic data testing to assess the accuracy and
    completeness of the data used in our analyses. To the extent
    possible, we compared our estimates against published reports using
    the CPS.

As a result of these efforts, we identified the following limitations with the
data:

•   The Census Bureau determined that respondents report income
    earned from wages or salaries much better than other sources of
    income. Therefore, estimates of receipt of government assistance
    may be underestimated.



Page 36                                       GAO-12-408 Unemployment Insurance
                     Appendix I: Objectives, Scope, and
                     Methodology




                     •   Due to the small sample sizes in our merged sample, confidence
                         intervals around some of our estimates are wide. For these results,
                         we report the upper bound of the 95 percent confidence interval.


Survey of State UI   To determine the extent to which UI agencies refer exhaustees to other
Agencies             programs, we conducted a web-based survey of state UI administrators in
                     all 50 states and the District of Columbia. The survey was conducted from
                     August to November 2011, with administrators from every state and the
                     District of Columbia responding. The survey included questions about
                     providing information to UI exhaustees about other support programs,
                     coordinating or working with one-stops and/or workforce agencies, data
                     on UI exhaustees, and changes states are making that may affect UI
                     coverage.

                     Because this was not a sample survey, there are no sampling errors.
                     However, the practical difficulties of conducting any survey may introduce
                     nonsampling errors, such as variations in how respondents interpret
                     questions and their willingness to offer accurate responses. We took
                     steps to minimize nonsampling errors, including pretesting draft
                     instruments and using a Web-based administration system. Specifically,
                     during survey development, we pretested draft instruments with UI
                     administrators from three states (Alabama, Arizona, and Pennsylvania)
                     and a representative from the National Association of State Workforce
                     Agencies in July 2011. We selected the pretest states to provide variation
                     in selected state UI program characteristics and geographic location. In
                     the pretests, we were generally interested in the clarity, precision, and
                     objectivity of the questions, as well as the flow and layout of the survey.
                     For example, we wanted to ensure definitions used in the surveys were
                     clear and known to the respondents, categories provided in closed-ended
                     questions were complete and exclusive, and the ordering of survey
                     sections and the questions within each section was appropriate. We
                     revised the final survey based on pretest results. Another step we took to
                     minimize nonsampling errors was using a web-based survey. Allowing
                     respondents to enter their responses directly into an electronic instrument
                     created a record for each respondent in a data file and eliminated the
                     need for and the errors associated with a manual data entry process. To
                     further minimize errors, programs used to analyze the survey data and
                     make estimations were independently verified to ensure the accuracy of
                     this work.

                     While we did not fully validate specific information that states reported
                     through our survey, we took several steps to ensure that the information


                     Page 37                                     GAO-12-408 Unemployment Insurance
                          Appendix I: Objectives, Scope, and
                          Methodology




                          was sufficiently reliable for the purposes of this report. For example, we
                          reviewed the responses and identified those that required further
                          clarification and, subsequently, conducted follow-up research to ensure
                          the information they provided was reasonable and reliable. In our review
                          of the data, we also identified and logically fixed skip pattern errors for
                          questions that respondents should have skipped but did not. On the basis
                          of these checks, we believe our survey data are sufficiently reliable for
                          purposes of our work.


Interviews with State     To examine the role TANF played for individuals who lost jobs during the
TANF Officials            recession and its aftermath, we conducted semi-structured telephone
                          interviews with TANF officials in 16 states. We pretested our questions
                          with California and Pennsylvania. In our interviews we asked questions
                          about the types of people seeking TANF, the types of services being
                          provided, whether the state received TANF Emergency Contingency or
                          TANF Contingency funds, challenges they faced in providing assistance
                          to those in need, and their knowledge of whether a relationship exists
                          between their agency and the state’s UI program.

                          The 16 states we selected to interview were chosen to represent a range
                          of unemployment rates and TANF cash assistance caseloads and to
                          achieve geographic diversity. The 16 states included in our analysis were:
                          Alabama, Arkansas, California, Colorado, Florida, Illinois, Michigan,
                          Minnesota, Montana, New York, North Carolina, Ohio, Pennsylvania,
                          Rhode Island, Texas, and Washington state. Collectively these states
                          represent more than half the families receiving ongoing TANF cash
                          assistance nationally.


Analysis of Labor, HHS,   We analyzed relevant data from Labor to supplement our analysis of CPS
and USDA Data             data. Specifically, we analyzed Labor’s data on UI claims to determine the
                          number of people claiming UI benefits since 2007. We assessed the
                          reliability of the data by interviewing Labor officials knowledgeable about
                          the data, conducting electronic testing, and reviewing relevant
                          documents. We determined that the data were sufficiently reliable for our
                          purposes.

                          We also analyzed data on TANF and SNAP from HHS and USDA,
                          respectively, for our background sections and text boxes.




                          Page 38                                     GAO-12-408 Unemployment Insurance
                            Appendix I: Objectives, Scope, and
                            Methodology




Interviews with Agencies,   We interviewed officials from HHS and Labor about their UI and TANF
Researchers, and Others     programs and reviewed relevant federal laws and regulations, as well as
                            guidance and other agency documentation. Additionally, we interviewed
                            researchers and professionals from a variety of national organizations,
                            including workforce and unemployment organizations, and reviewed
                            available literature from these groups. These included the American
                            Public Human Services Association, National Employment Law Project,
                            National Association of State Workforce Agencies, and the Urban
                            Institute, among others.




                            Page 39                                   GAO-12-408 Unemployment Insurance
Appendix II: Comments from the Department
             Appendix II: Comments from the Department
             of Labor



of Labor




             Page 40                                     GAO-12-408 Unemployment Insurance
Appendix III: GAO Contact and Staff
                  Appendix III: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Kay E. Brown, (202) 512-7215 or brownke@gao.gov
GAO Contact
                  Gale Harris (Assistant Director), Yunsian Tai (Analyst-in-Charge), Keira
Staff             Dembowski, Rosemary Torres Lerma, Rhiannon Patterson, Stuart
Acknowledgments   Kaufman, Monique Williams, and Hiwotte Amare made significant
                  contributions to all aspects of this report. Also contributing to this report
                  were Susan Bernstein, Nancy Cosentino, Stanley Czerwinski, Julianne
                  Hartman Cutts, Alex Galuten, Thomas James, Sarah McGrath, Mimi
                  Nguyen, Jeremy Sebest, and Almeta Spencer.




                  Page 41                                        GAO-12-408 Unemployment Insurance
Related GAO Products
             Related GAO Products




             Temporary Assistance for Needy Families: Update on Families Served
             and Work Participation. GAO-11-880T. Washington, D.C.: September 8,
             2011.

             Temporary Assistance for Needy Families: Implications of Caseload and
             Program Changes for Families and Program Monitoring. GAO-10-815T.
             Washington, D.C.: September 21, 2010.

             Temporary Assistance for Needy Families: Implications of Recent
             Legislative and Economic Changes for State Programs and Work
             Participation Rates. GAO-10-525. Washington, D.C.: May 28, 2010.

             Unemployment Insurance Trust Funds: Long-standing State Financing
             Policies Have Increased Risk of Solvency. GAO-10-440. Washington,
             D.C.: April 14, 2010.

             Temporary Assistance for Needy Families: Fewer Eligible Families Have
             Received Cash Assistance Since the 1990s, and the Recession’s Impact
             on Caseloads Varies by State. GAO-10-164. Washington, D.C.: February
             23, 2010.

             Support for Low-Income Individuals and Families: A Review of Recent
             GAO Work. GAO-10-342R. Washington, D.C.: February 22, 2010.

             Unemployment Insurance: Low-Wage and Part-Time Workers Continue
             to Experience Low Rates of Receipt. GAO-07-1147. Washington, D.C.:
             September 7, 2007.

             Unemployment Insurance: More Guidance and Evaluation of Worker-
             Profiling Initiative Could Help Improve State Efforts. GAO-07-680.
             Washington, D.C.: June 14, 2007.

             Unemployment Insurance: Factors Associated with Benefit Receipt.
             GAO-06-341. Washington, D.C.: March 7, 2006.

             Unemployment Insurance: Better Data Needed to Assess Reemployment
             Services to Claimants. GAO-05-413. Washington, D.C.: June 24, 2005.

             Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is
             Limited. GAO-01-181. Washington, D.C.: December 29, 2000.




(131061)
             Page 42                                  GAO-12-408 Unemployment Insurance
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