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30–438 2006

NEW RESEARCH ON 

UNEMPLOYMENT BENEFIT RECIPIENTS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HUMAN RESOURCES 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

SECOND SESSION 

MARCH 15, 2006 

Serial No. 109–67 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER, Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HUMAN RESOURCES 

WALLY HERGER, California, Chairman 

NANCY L. JOHNSON, Connecticut 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

PHIL ENGLISH, Pennsylvania 

DEVIN NUNES, California 

JIM MCDERMOTT, Washington 

BENJAMIN L. CARDIN, Maryland 

FORTNEY PETE STARK, California 

XAVIER BECERRA, California 

RAHM EMANUEL, Illinois 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of March 8, 2006, and revised advisory of March 13, 2006 announcing the hearing ..................................................................................................... 2 

WITNESS 

U.S. Government Accountability Office, Sigurd Nilsen, Ph.D., Director, Education, Workforce, and Income Security Issues ................................................. 7 

(1) 

NEW RESEARCH ON 

UNEMPLOYMENT BENEFIT RECIPIENTS 

WEDNESDAY, MARCH 15, 2006 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HUMAN RESOURCES, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:34 a.m., in 

room B–318, Rayburn House Office Building, Hon. Wally Herger 

(Chairman of the Subcommittee) presiding. 

[The advisory and revised advisory announcing the hearing follow:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HUMAN RESOURCES 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025 

March 15, 2006 

No. HR–6 

Herger Announces Hearing 

Regarding New Research on 

Unemployment Benefit Recipients 

Congressman Wally Herger (R–CA), Chairman, Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing regarding new research on unemployment benefit recipients. The hearing will take place on Wednesday, March 15, 2006, in room 

B–318 Rayburn House Office Building, beginning at 2:00 p.m. 

Oral testimony at this hearing will be from the U.S. Government Accountability 

Office (GAO). However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Subcommittee 

and for inclusion in the printed record of the hearing. 

BACKGROUND: 

Unemployment Compensation (UC, sometimes also referred to as Unemployment 

Insurance or UI) is a State-Federal program under which benefits are paid to eligible laid-off workers who have a history of attachment to the workforce and have become unemployed through no fault of their own. Unemployment benefits are meant 

to provide partial, temporary wage replacement while the laid-off worker looks for 

a new job or awaits recall to his or her former position. United States Department 

of Labor (DOL) information indicates over $33 billion in unemployment benefits was 

paid to nearly 8 million eligible workers in 2005. 

Employment-related information collected by the DOL and the Bureau of Labor 

Statistics (BLS) include data on national and State unemployment rates, initial 

claims for unemployment benefits, average benefit amounts, and unemployment 

trust fund balances, among other program data. Despite the operation of UC dating 

back to the 1930s, however, far less information is available regarding the characteristics of individuals who receive UC benefits. A March 2005 GAO report, Unemployment Insurance: Information on Benefit Receipt, provided some information 

about individuals who receive unemployment benefits. Subsequently, the GAO completed additional analysis of data from the BLS National Longitudinal Survey of 

Youth, concentrating on factors associated with unemployment benefit receipt. The 

Subcommittee will review the GAO’s latest findings about unemployment benefit recipients, which will be released at the hearing. 

In announcing the hearing, Chairman Herger stated, ‘‘Although unemployment 

benefits have been paid since the Great Depression, surprisingly little is known 

about who collects benefits, how often, and for how long. This hearing will provide 

important data that will inform efforts to better serve all workers—especially those 

who have been laid off—as well as protect taxpayers and strengthen the economy 

for the long run.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on factors associated with unemployment benefit receipt, 

and specifically data provided in a new GAO report on this topic. 

3 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

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the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

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FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

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Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

4 

* * * CHANGE IN TIME * * * 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HUMAN RESOURCES 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–1025 

March 13, 2006 

No. HR–6 Revised 

Change in Time for Hearing 

Regarding New Research on 

Unemployment Benefit Recipients 

Congressman Wally Herger (R–CA), Chairman, Subcommittee on Human Resources of the Committee on Ways and Means, today announced that the Subcommittee hearing regarding new research on unemployment benefit recipients, previously scheduled for 2:00 p.m. on Wednesday, March 15, 2006, in room B–318 Rayburn House Office Building, will now be held at 10:30 a.m. 

All other details for the hearing remain the same. (See Human Resources Advisory No. HR–6, dated March 8, 2006). 

f 

Chairman HERGER. Good morning and welcome to today’s hearing, where we will review findings in a new report by the U.S. Government Accountability Office, or the GAO. We welcome Dr. Sigurd 

Nilsen of the GAO, who will describe data uncovered about the individuals who collect unemployment benefits. As we all know, unemployment benefits provide assistance to workers laid off through 

no fault of their own. This is an important Government function, 

and this Committee has a long track record of providing needed assistance to workers, and thus, the U.S. economy. 

In recent years this Committee has acted to provide needed 

emergency unemployment assistance. For example, following the 

2001 recession and terrorist attacks, we created a special temporary extension benefits program that provided more than $20 billion in Federal benefits to 8 million long-term unemployed workers. 

We also provided States with an unprecedented 8 billion in Federal 

funds to assist unemployed workers, which prevented tax hikes in 

30 States, according to the GAO. Last fall, in the wake of Hurricane Katrina, we provided the Gulf States with 500 million to assist those laid off following that storm. Just 2 weeks ago, Congress 

acted to extend disaster unemployment benefits for another 3 

months for those displaced by Hurricane Katrina and Rita. 

Today’s hearing takes a step back and examines unemployment 

benefits provided during the past generation to a broad swath of 

labor force. Many of the findings are surprising and will provide 

important background for future efforts to provide better services 

to unemployed workers. Perhaps the first thing we should find surprising is that we are learning about much of this data for the first 

time. Unemployment assistance has operated in every State since 

5 

the thirties, and in all that time, too little has been known about 

who actually collects unemployment benefits. That is why I asked 

GAO to assemble data about who collects unemployment benefits, 

for how long and why. Here are some of the key findings. First, 

laid-off workers who collect unemployment benefits are unemployed 

more than twice as long as their laid-off peers who do not collect 

unemployment benefits. Second, the strongest predictor of whether 

a laid-off worker will collect unemployment benefits is whether 

they collected those benefits in the past. Third, more eligible unemployed workers turn down unemployment benefits than collect 

them. Finally, we know very little about the effectiveness of job 

search, training and other reemployment services available to assist unemployment beneficiaries get back on the job. 

Today we will explore this rich data set provided by the GAO, 

and pose a number of questions. This data is important because it 

offers a road map for designing a more pro-work and pro-worker reemployment system, and that is ultimately what unemployment 

benefits should be about, helping laid-off workers return to good 

jobs. 

I want to thank Dr. Nilsen and his staff for their excellent work 

on this report, and I look forward to your testimony. 

Without objection, each Member will have the opportunity to 

submit a written statement and have it included in the record at 

this point. Mr. McDermott, would you care to make a statement? 

Mr. MCDERMOTT. Thank you, Mr. Chairman. You and I have 

served together and worked together for a long time, and I have 

no doubt about your character or what is in your thoughts. After 

listening to those opening remarks, I do have to express some serious doubts about the content of the agenda for this Committee, because it is really a question about whether we are going to show 

up and work for the working people of this country, all of the 

American people, especially those who have fallen on hard times 

through no fault of their own. 

We let down every living American in the Gulf Coast with our 

response to Katrina and Rita. That is a fact. There is no doubt 

about it. We let them down the first day, the first week, the first 

month, and the first 6 months, and we are still letting them down. 

We have hotel evictions going on one hand, and empty FEMA trailers on another. We have Americans wondering if they will ever return to the place that they call home. We went down a couple 

weeks ago and saw the empty trailers lined up in nice, neat shiny 

rows, and not doing much except sitting there, sort of like the Congress. Despite my pleas, and the please of Mr. Rangel and Ms. 

Pelosi, the Republican leadership has decided months ago to watch 

it on television. When the Republicans could not deny it any longer, 

the response was pure PR, not good public policy. One political appointee was hung out to dry, Mr. Brown, in the middle of a flood. 

It seems a little bit ironic to hang out to dry in a flood. 

The Americans living on the Gulf Coast wonder whether the Federal Government will show up and not just show off. Americans 

live in vulnerable cities across the country, including my Earthquake prone city of Seattle, and they stopped wondering, and now 

they are really worrying about what they are going to get from this 

country. If you cannot get it right in New Orleans, when you have 

6 

6 or 7 or 8 days warning, what on Earth will the bunch do when 

the next Earthquake strikes in Seattle, or San Francisco, or when 

the next hurricane hits the Gulf Coast in about 90 days? 

Here we are today. Republicans claim they want to improve the 

unemployment insurance system. I hope that is valid. I hope they 

really mean that. We should all respect and value the work of the 

GAO, and I look forward to hearing the details of their report 

today. Let’s try something new, yet old. Let’s tell it like it is. We 

already have a wealth of information to guide us in this matter. 

For instance, we know from the most current data that only 35 percent of unemployed Americans actually receive unemployment benefits, only 35 percent. In other words, two out of three. Americans 

who are unemployed don’t get a nickel or a dime or even a penny. 

They get nothing. Why? Well, the GAO has looked at this in the 

past, and the answer might be for the simple reason many Americans are shut out of getting unemployment benefits because the 

system is designed that way. 

For example, some States do not count a laid-off worker’s most 

recent wages when determining eligibility. Some States prevent an 

individual from getting any benefit when they try to get a new 

part-time job to replace the one that they have lost, and others prohibit a person from receiving benefits if they voluntarily quit a job 

to care for a sick child. These are systemic problems that we really 

need to address. My colleagues and I have suggested reforms. 

When they come from the Democratic side, they address an American problem, but the Republicans just refuse to join in on that 

kind of reform of the system. We also know these benefits are a 

lifeline, nothing more. Anybody who asserts that this is something 

people get on and stay because they don’t have anything better to 

do, simply is not paying attention. On average, unemployment benefits replace less than one-half of workers’ prior wages. At best, you 

are doubled over financially, but you are not on your knees. 

In the best case, modest benefits help a family survive with the 

bare essentials while they get back on their feet, but in some 

States the benefits are too low to provide even a minimum level of 

assistance. That is true in the States most affected by Hurricane 

Katrina, Louisiana, Mississippi and Alabama. In these States the 

average unemployment benefit is less than $200 a week. For a family of four, that is not even half the poverty level. The Democrats 

proposed a temporary increase in unemployment benefits for the 

disaster victims who lost their jobs and their homes and their belongings. Again, this Committee was quiet. Last but not least, we 

know that Americans hit by hurricanes are being hit by Federal 

funding cuts that will curtail access to reemployment services. People who lost their jobs, their homes and their belongings now can 

lose their hope as well, because the President’s proposed budget 

continues the downward spiral. If Congress enacts the President’s 

2007 budget request, unemployment services will be cut again. 

These cuts will total $2.2 billion since 2002. 

Mr. Chairman, as I said, I don’t question you. I do question the 

majority’s commitment to the American people in a time of crisis. 

Americans who saw their jobs destroyed by a national disaster of 

ferocious winds deserve more than to see their recovery destroyed 

by a manmade political disaster of dead calm in the Congress. We 

7 

have the power to do good. It is our choice, Mr. Chairman. I urge 

you to make the Committee a force for good that no storm can impair, and with that, I thank you. 

Chairman HERGER. I thank the gentleman, and our goal here 

in this Committee is certainly to help assist that are in need of it. 

I might, just in a short comment, brief comment: on October 2005 

we did provide, through our Committee and through the Congress, 

$500 million in Federal funds to help States pay regular and extended unemployment. Also, Congress has provided about $100 billion for Katrina relief. Certainly there are some major problems 

there that we need to work and try to crack both for those that 

have been so devastated, and also to prepare ourselves, God forbid, 

for another great catastrophe should it happen. With that, before 

we move on to our testimony today, I want to remind our witness 

to limit our oral statements to 5 minutes. However, without objection, all the written testimony will be made a part of the permanent record. Our witness this morning is Dr. Sigurd Nilsen, Director of Education, Workforce and Income Security Issues at the U.S. 

Government Accountability Office. Dr. Nilsen, it is good to see you 

again. Please proceed with your testimony. 

STATEMENT OF SIGURD R. NILSEN, Ph.D., DIRECTOR, EDUCATION, WORKFORCE AND INCOME SECURITY, UNITED 

STATES GOVERNMENT ACCOUNTABILITY OFFICE 

Dr. NILSEN. Thank you, Chairman Herger, other Members of 

the Subcommittee. Thank you for the opportunity to discuss GAO’s 

recent work on the Unemployment Insurance (UI) program. Today, 

I will discuss the results of three recent reports conducted at the 

request of Chairman Herger to assess first, the extent to which individual workers ever receive UI benefits, including the extent to 

which they receive benefits multiple times; Next, the types of workers who are more likely to receive UI benefits; and last, what is 

known about the extent to which beneficiaries receive reemployment services and their reemployment outcomes. 

Much of what I will cover today is based on a unique analysis 

of 24 years worth of data on individuals’ employment and unemployment experience. These individuals are now 37- to 45-years-old, 

so you can think of these people as younger baby-boomers, that are 

born between 1957 and 1964, and roughly speaking, we have information on the first half of their work lives. First, if I can point you 

to a pie chart we will put up here in a second. This shows that 85 

percent, if you take the 39 percent, the 38 percent and the 9 percent, 85 percent of these workers that we are talking about experienced unemployment at least once between 1979 and 2002. Most 

of them, about three-quarters, the 39 percent plus the 38 percent, 

were eligible for UI benefits, but only about half of them, 38 percent, had ever received Unemployment Insurance benefits, and less 

than half of these, 17 percent, received it more than once. I might 

add that there is about 5 percent who received UI benefits over 

this 24-year period five times or more. 

Next, we wanted to know how those who received UI were different from those who didn’t receive UI, even though they were all 

eligible. What we found was that a range of characteristics are associated with the likelihood of receiving UI benefits. Those more 

8 

likely to get Unemployment Insurance benefits were workers with 

higher earnings before they became unemployed. They were younger workers, more educated workers, women, married workers, 

workers with longer job tenure before they were laid off, and those 

living in areas with higher unemployment. In contrast to these 

findings, we found that a key UI program element, the weekly benefit amount, is not associated with the greater likelihood of receiving UI benefits. 

Now for those who experienced multiple spells of unemployment. 

I have another graphic here we will put underneath that one that 

shows that prior UI receipt—I hope you can all see that—had a 

particularly strong effect on whether or not people were likely to 

receive UI benefits in subsequent periods of unemployment. For example, when workers experienced their first UI eligible period of 

unemployment, their likelihood of receiving UI is 33 percent. During a second UI eligible period of unemployment, the likelihood of 

receiving UI goes up to 48 percent for those who received UI the 

first time, but it drops to about 30 percent for those who did not 

receive UI in their first period of unemployment. Furthermore, as 

you can see, the likelihood that those UI eligible workers will receive UI benefits during successive periods of unemployment increases each time that they receive UI benefits and decreases each 

time they do not. Now, looking at the duration of unemployment, 

we found that unemployed workers, eligible for UI, but who did not 

receive it, were unemployed, as the Chairman said, for an average 

of 8 weeks, while an unemployed worker receiving UI was unemployed for an average of 21 weeks. In addition, longer periods of 

unemployment are associated with workers who are less educated, 

have lower earnings before they became unemployed, are women, 

are African-American workers, and are not union members. 

Next, in light of the strong association we found between UI receipt and unemployment duration, it is important that unemployed 

workers who become UI claimants have access to reemployment 

services that will help facilitate their quick return to work. While 

almost all States now take UI claims remotely, that is, either over 

the telephone or over the Internet, many State UI directors told us 

that they felt the linkage between UI recipients and reemployment 

services has been strengthened recently. However, we don’t have 

any national data to assess the success of these links. States engage some claimants in reemployment services directly through 

programs that identify certain groups who are targeted for assistance and particular States are required to target reemployment 

services to claimants who are likely to exhaust benefits. Such 

claimants are referred to reemployment services while they were 

still early in their claim. Despite States’ efforts to design systems 

that link UI claimants to reemployment services, little is known 

about the extent to which claimants receive reemployment services 

or about the outcomes they achieve. Having data that show the degree to which reemployment services are reaching UI claimants is 

key to good program management and provides a first step toward 

understanding the impact of these programs. Yet we found that 

only 14 States routinely track the extent to which claimants received services from the broad array of federally funded programs 

that are designed to assist them, and even fewer, only six States, 

9 

1The three reports discussed in this testimony are Unemployment Insurance: Better Data 

Needed to Assess Reemployment Services to Claimants, GAO–05–413 (Washington, D.C.: June 

24, 2005); Unemployment Insurance: Information on Benefit Receipt, GAO–05–291 (Washington, 

D.C.: Mar. 17, 2005); and Unemployment Insurance: Factors Associated with Benefit Receipt, 

GAO–06–341 (Washington, D.C.: Mar. 7, 2006). 

track outcomes such as reemployment rate, average benefit duration and UI exhaustion rate. 

Eleven States said that it was not possible to track claimants 

outcomes, and most States, 35 of them, said that it would be difficult to match this data because they are maintained in different 

data systems that were incompatible or hard to link. Last year we 

recommended that U.S. Department of Labor (DOL) consider the 

feasibility of collecting more comprehensive information on claimant services and outcomes. Labor has some new initiatives that will 

provide valuable information on the reemployment services of some 

UI claimants, but these efforts don’t go far enough. None will allow 

for a comprehensive understanding of claimants’ use of services, 

and the efforts will not move States closer to having the data they 

need to better manage their systems. Mr. Chairman, this completes 

my prepared statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have at this 

time. 

[The prepared statement of Mr. Nilsen follows:] 

Statement of Sigurd Nilsen, Ph.D., Director, Education, Workforce, and 

Income Security Issues, U.S. Government Accountability Office 

Mr. Chairman and Members of the Subcommittee: 

Thank you for the opportunity to discuss GAO’s recent work related to the Department of Labor’s (Labor) Unemployment Insurance (UI) program, which has been 

a key component in ensuring the financial security of America’s workforce for over 

70 years. The UI program is a federal-state partnership designed to partially replace 

lost earnings of individuals who become unemployed through no fault of their own 

and to stabilize the economy in times of economic downturn. In fiscal year 2004, the 

UI program covered about 129 million wage and salary workers and paid about $41 

billion in benefits to nearly 9 million workers who lost their jobs. Despite the size 

and scope of this program, there has been only limited information about how often 

the program is accessed by individual workers over time, the types of workers who 

are most likely to receive benefits, or the extent to which claimants are receiving 

services that help them to become reemployed. 

Today, I will draw upon the results of three recent reports we have completed 

that provide new information about the extent to which individual workers are 

being served by the UI program. In particular, I will discuss (1) the extent to which 

individual workers ever receive UI benefits, including the extent to which they receive benefits multiple times, (2) the types of workers who are more likely to receive 

UI benefits, and (3) what is known about the extent to which UI beneficiaries receive reemployment services and their reemployment outcomes.1

To address the first and second questions, we analyzed data from the Bureau of 

Labor Statistics’ (BLS) National Longitudinal Survey of Youth 1979 (NLSY79). The 

dataset contains very detailed information about the work and life experiences of 

a nationally representative sample of individuals who were born between 1957 and 

1964. At the time of our analysis, the database contained over two decades’ worth 

of information gathered from interviews conducted between 1979 and 2002, and covered a range of experiences, such as individuals’ work histories, incomes, family 

composition, and education. To address the third question, we conducted telephone 

interviews with UI and workforce development officials in 50 states, sent a followup questionnaire to gather information on the strategies states use to collect data 

on UI claimants who receive reemployment services, interviewed state and local program officials in Georgia, Maryland, Michigan, and Washington, and interviewed 

Labor officials and other experts in the area of UI and reemployment services. 

In summary, we estimate that while 76 percent of workers born between 1957 and 

1964 experienced at least one period of unemployment during the first half of their 

working lives in which they would likely have been eligible for UI benefits, about 

10 

38 percent actually received UI. Of those who received UI benefits, 44 percent received them more than once. Among workers who are eligible to receive UI benefits, 

those who are more likely to actually receive these benefits are younger, have higher earnings before becoming unemployed, have completed more years of education, 

or have already received UI benefits in the past than otherwise similar workers. 

The last factor—past experience with the UI program—has a particularly strong effect on the likelihood of receiving UI benefits. In addition, we found that unemployed workers tend to have longer periods of unemployment if they receive UI benefits, have completed fewer years of education, have lower earnings before they become unemployed, or if they do not belong to unions than otherwise similar workers. 

UI-eligible workers from certain industries—such as mining and manufacturing— 

are more likely than other workers to receive UI benefits. In the area of helping 

UI claimants return to work, we found that across states, UI claimants have access 

to a variety of reemployment services, and although most states accept UI claims 

remotely by telephone or Internet, states make use of UI program requirements to 

connect claimants with available services at various points in their claim. However, 

federal reporting requirements for states’ UI programs and for federally funded employment and training programs do not provide a full picture of the services received or the outcomes obtained by all UI claimants, and few states monitor the extent to which claimants are receiving these services or outcomes for these claimants, 

in part because states’ information systems have limited capabilities. GAO recommended that Labor, working with the states, consider collecting more comprehensive information on UI claimants’ services and outcomes. 

Background 

The UI program was established by Title III of the Social Security Act in 1935 

and is a key component in ensuring the financial security of America’s workforce. 

The program serves two primary objectives: (1) to temporarily replace a portion of 

earnings for workers who become unemployed through no fault of their own and (2) 

to help stabilize the economy during recessions by providing an infusion of consumer 

dollars into the economy. UI is made up of 53 state-administered programs that are 

subject to broad federal guidelines and oversight. In fiscal year 2004, these programs covered about 129 million wage and salary workers and paid benefits totaling 

$41.3 billion to about 8.8 million workers. 

Federal law provides minimum guidelines for state programs and authorizes 

grants to states for program administration. States design their own programs, 

within the guidelines of federal law, and determine key elements of these programs, 

including who is eligible to receive state UI benefits, how much they receive, and 

the amount of taxes that employers must pay to help provide these benefits. State 

unemployment tax revenues are held in trust by Labor and are used by the states 

to pay for regular weekly UI benefits, which typically can be received for up to 26 

weeks. 

To receive UI benefits, an unemployed worker must file a claim and satisfy the 

eligibility requirements of the state in which the worker’s wages were paid. Generally, states require that workers must have a minimum amount of wages and employment over a defined base period, typically, about a year before becoming unemployed, and have not already exhausted the maximum amount of benefits or benefit 

weeks to which they would be entitled because of other recent unemployment. In 

addition workers must have become unemployed for reasons other than quitting a 

job or being fired for work-related misconduct, and be able and available to work. 

In order to demonstrate that they are able to work and available for work and are 

still unemployed, claimants must submit a certification of continuing eligibility—by 

mail, telephone, or Internet, depending on the state—throughout the benefit period. 

This practice is usually done weekly or biweekly. States may continue to monitor 

claimant eligibility through an eligibility review program, in which certain claimants are periodically contacted to review their eligibility for benefits, work search 

activities, and reemployment needs. 

Since UI was established, there have been two major changes in the nation’s 

workforce development system that have directly affected states’ UI programs. Specifically, in November 1993, Congress enacted legislation amending the Social Security Act to require that each state establish a Worker Profiling and Reemployment 

Services (WPRS) system and implement a process typically referred to as claimant 

profiling. The claimant profiling process uses a statistical model or characteristics 

screen to identify claimants who are likely to exhaust their UI benefits before finding work. Claimants identified through this process are then referred to reemployment services while they are still early in their claim. For profiled claimants, participation in designated reemployment services becomes an additional requirement 

for continuing eligibility for UI benefits. The second major change was the enactVerDate Aug 31 2005 01:50 Jan 05, 2007 Jkt 030438 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 E:\HR\OC\30438.XXX 30438
11 

ment of the Workforce Investment Act of 1998, which requires states and localities 

to bring together about 17 federally funded employment and training services into 

a single system—the one-stop system. State UI programs are mandatory partners 

in the one-stop system. Another mandatory partner is the federal Employment Service, established by the Wagner-Peyser Act in 1933 to link job seekers with job opportunities. The Employment Service has historically been colocated with state UI offices to facilitate UI claimants’ access to federally funded labor exchanges, job 

search assistance, job referral, placement assistance, assessment, counseling, and 

testing. 

Most Workers Experience Unemployment and Over a Third Receive UI at 

Least Once 

On the basis of our analysis of data from the Bureau of Labor Statistics’ National 

Longitudinal Survey of Youth 1979 (NLSY79), covering the 23-year period from 

1979 through 2002, we found that 85 percent of a nationally representative sample 

of late baby boom workers—workers born between 1957 and 1964—had experienced 

unemployment at least once between 1979 and 2002. Workers who experienced unemployment were unemployed an average of five times over this 23-year period. 

Moreover, we found that of the 76 percent who were eligible for UI benefits at least 

once, 38 percent had ever received UI. (See fig. 1.) Of those who received UI benefits, 44 percent received them more than once; this represents about 17 percent of 

all of the workers in this age group. 

Figure 1: UI Benefit Receipt and Estimated UI Eligibility among Workers 

Born between 1957 and 1964 (1979–2002) 

Note: Total does not equal 100 because of rounding. 

Some UI-Eligible Workers are More Likely to Receive UI Benefits than Others, or to Have Longer Periods of Unemployment 

When all other worker characteristics have been controlled for, unemployed workers who are eligible for UI benefits are more likely to receive UI if they had higher 

earnings before they became unemployed, are younger, have completed more years 

of education, or if they have a history of past UI benefit receipt. In addition, we 

found that unemployed workers tend to have longer periods of unemployment if they 

receive UI benefits, have completed fewer years of education, had lower earnings before they became unemployed, or if they do not belong to unions. We also found that 

UI-eligible workers from certain industries are more likely than other workers to 

receive UI benefits, and that the strength of the relationship between previous UI 

benefit receipt and current UI receipt also varies by industry. 


30438A.001
12 

2The average and maximum earnings for the unemployed workers in our sample are $15,524 and $597,950, respectively. 3For economic theory concerning the relationship between job search and unemployment insurance, see Dale T. Mortensen, ‘‘Unemployment Insurance and Job Search Decisions,’’ Industrial and Labor Relations Review, vol. 30, no. 4 (1977). 

Certain Characteristics of UI-Eligible Workers Are Associated with Greater 

Likelihood of UI Receipt 

We found that UI-eligible workers with certain characteristics are more likely to 

receive UI than otherwise similar UI-eligible workers. In particular, the likelihood 

of receiving UI tends to increase as the amount earned in the year before a worker 

became unemployed increases. (See fig. 2.) For example, a UI-eligible worker with 

earnings ranging from $10,000 to just under $12,000 in the year before becoming 

unemployed has a 36 percent likelihood of receiving UI, whereas a worker who 

earned roughly twice as much has a 45 percent likelihood of receiving UI.2 The relationship between higher earnings and a higher likelihood of receiving UI benefits 

is also consistent with economic theory that predicts that workers with higher earnings prior to becoming unemployed will be more reluctant to accept lower reemployment wages and are therefore more likely to take advantage of UI benefits as a way 

to subsidize their job search efforts.3

Figure 2: Simulated Likelihood of Receiving UI Benefits for UI-Eligible 

Workers, by Prior Year Earnings 

Note: Simulations are for the average likelihood of receiving UI during first-time unemployment at different levels of earnings. The overall average likelihood of receiving UI during first-time unemployment is 33 percent. See appendix I of GAO– 

06–341 for methodology and estimation results. 

We also found that the likelihood of receiving UI benefits among UI-eligible workers tends to be higher for younger workers, and lower for older workers. Specifically, 

simulations based on our analysis results show that the likelihood of receiving UI 

peaks at about age 25 and decreases thereafter. In fact, a 25-year-old unemployed 

worker who is eligible for UI is more than twice as likely to receive UI as an otherwise similar 40-year-old. This finding is contrary to previous studies that reported 


30438A.002
13 

4See Rebecca M. Blank and David E. Card, ‘‘Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?’’ The Quarterly Journal of Economics, vol. 106, no. 4 (1991) 

and Brian P. McCall, ‘‘Repeat Use of Unemployment Insurance,’’ in Laurie J. Bassi and Stephen 

A. Woodbury, editors, Long-Term Unemployment and Reemployment Policies (Stamford, Connecticut: JAI Press, 2000). 5See Jonathan Gruber, ‘‘The Wealth of the Unemployed,’’ October 2001, Industrial and Labor 

Relations Review, vol. 55, no. 1. 6The average number of years of schooling completed by UI-eligible workers, at the time when 

they became unemployed, is 12 years. 7See Blank and Card. 

8We specifically tested for the effect of spousal income on the likelihood of receiving UI to 

determine whether marital status was masking some underlying effect of additional family income, and found this not to be the case. 

that younger workers are less likely to receive UI benefits than older workers.4

However, these previous studies did not include as much information about workers’ 

past unemployment and UI benefit receipt histories as our analysis. Therefore, because older workers have more previous unemployment and UI benefit receipt experience than younger workers, it is possible that our analysis controlled for the effect 

of these experiences more completely than previous studies, resulting in a more precise estimate of the effect of age. Although we are unable to explain why younger 

workers are more likely to receive UI benefits, it is possible that older workers, who 

have had more time to accumulate financial assets, may have more private resources available to help them cope with unemployment than younger workers.5 Or 

it may simply be the case that younger workers are less optimistic than older workers about how long it will take for them to become reemployed. 

Another characteristic associated with a greater likelihood of receiving UI benefits 

is education. We found that UI-eligible workers who have completed more years of 

education are more likely to receive UI benefits than otherwise similar workers with 

fewer years of education. For example, a UI-eligible worker with the equivalent of 

a college education (16 years of schooling) when he or she becomes unemployed is 

almost one-fifth more likely to receive UI than a UI-eligible worker with a high 

school education (12 years of schooling).6 Although the effect of education on the 

likelihood of receiving UI benefits has been analyzed in other research, no significant education effect was found.7 Still, our result seems logical. That is, to the extent that workers with more education are also better able to obtain UI program 

information and to understand their states’ requirements for filing claims and remaining eligible for benefits, they are also more likely to have successful benefit 

claims. 

Other factors, including a worker’s gender, marital status, job tenure, and the 

local unemployment rate, are also associated with UI benefit receipt. Controlling for 

all other characteristics among UI-eligible workers, we found that 

• a woman is 29 percent more likely to receive UI benefits than a man, • a married worker is 13 percent more likely to receive UI than an unmarried 

worker, • a longer-tenured worker is more likely to receive UI—for example, a worker 

with 4 years of tenure at his or her most recent job is 12 percent more likely 

to receive UI than a worker with 1 year of job tenure, and • being in an area with high unemployment raises the likelihood that an unemployed worker will receive UI—for example, a worker living in an area with an 

unemployment rate of 9 percent is 10 percent more likely to receive UI than 

a worker living in an area with an unemployment rate of 5 percent. 

Our finding that women are more likely to receive UI benefits than otherwise 

similar men differs from the results of previous research, which generally found no 

statistically significant differences in the likelihood of receiving UI benefits for men 

and women. However, our analysis controls for more worker characteristics than 

these previous studies, and it is likely that we have more carefully isolated the effect of gender from that of other characteristics that are related to gender, such as 

workers’ occupations and industries. Still, it is not immediately clear why women 

are more likely to receive UI benefits than men who are similar with respect to 

other observed characteristics. We are also unable to explain why married workers 

are more likely to receive UI benefits than otherwise similar unmarried workers.8

Our finding that workers with longer job tenure are more likely to receive UI benefits is consistent with previous research. This result seems logical if we consider 

that workers with longer job tenures are more likely to have acquired more employer-specific skills than workers with shorter job tenures. Because such specialized skills are not as easy to transfer to a new employer as less specialized skills, 

workers with more job tenure may expect to take longer to find a job where these 

14 

9See David E. Card and Phillip B. Levine, ‘‘Unemployment Insurance Taxes and the Cyclical 

and Seasonal Properties of Unemployment,’’ Journal of Public Economics, vol. 53, no. 1 (1994); 

Patricia M. Anderson and Bruce D. Meyer, ‘‘The Effect of Unemployment Insurance Taxes and 

Benefits on Layoffs Using Firm and Individual Data,’’ NBER Working Paper No. 4960, National 

Bureau of Economic Research, Cambridge, Massachusetts (1994); and Robert H. Topel, ‘‘On Layoffs and Unemployment Insurance,’’ American Economic Review, vol. 73, no. 4 (1983). 10 As noted above, relatively few UI-eligible workers who receive UI benefits receive them multiple times. See GAO–05–291 for a more complete discussion of the incidence of repeat UI benefit receipt. 

skills would be needed than a worker who has more generalized skills. Finally, our 

finding that workers living in areas with higher unemployment are more likely to 

receive UI benefits is probably due to the higher number of unemployed workers relative to available jobs, which may make workers more willing to apply for UI benefits as they engage in what are likely to be longer job searches. 

In contrast to the findings already discussed, we found that a key UI program 

element, the weekly UI benefit amount that unemployed workers are entitled to, is 

not associated with a greater likelihood of receiving UI benefits. Specifically, we 

used our model estimates to simulate benefit increases of 10 percent and 25 percent, 

and a decrease of 10 percent, and found that these changes did not affect the likelihood of UI benefit receipt among eligible workers. This finding is also consistent 

with the work of others, who have found that increases in the weekly benefit 

amount have mixed, but generally small, effects on UI benefit receipt, after controlling for other factors.9 Taken together, these results suggest that UI benefit levels 

have modest effects on individuals’ decisions about whether or not to receive UI benefits. 

Unemployed Workers Who Received UI in the Past Are More Likely to Receive UI during Subsequent Unemployment 

Of all the characteristics associated with UI benefit receipt, we found that one— 

past UI receipt—had a particularly strong effect on the likelihood of receiving UI 

benefits. (See fig. 3.) For example, when workers experience their first UI-eligible 

period of unemployment, their likelihood of receiving UI is 33 percent. During a second UI-eligible period of unemployment, the likelihood of receiving UI is 48 percent 

for workers who received UI during the first unemployment period, but only 30 percent for workers who did not receive UI. Furthermore, the likelihood that these UIeligible workers will receive UI benefits during successive periods of unemployment 

increases each time that they receive UI benefits and decreases each time that they 

do not.10

15 

Figure 3: Simulated Likelihood of Receiving UI Benefits for UI-Eligible 

Workers during Successive Periods of Unemployment, by Past UI Receipt 

Status 

Note: Simulations are the average likelihood of receiving UI during a current unemployment period for two extreme cases: (1) workers who always received UI benefits during previous unemployment and (2) workers who never received UI during 

previous unemployment. The average likelihood of receiving UI during first-time 

unemployment for all UI-eligible workers is 33 percent. See appendix I of GAO– 

06–341 for methodology and estimation results. 

This finding suggests that a worker’s first unemployment experience has a lasting 

and self-reinforcing effect. To the extent that all workers know about the UI program and whether or not they are eligible to receive benefits, receiving or not receiving UI may be a personal choice. Such a choice might be based on workers’ individual preferences, or may be related to other characteristics that were not captured 

in the NLSY79 data. On the other hand, if workers do not all have good information 

about UI, those who receive UI benefits may simply know more about the program 

than those who do not receive UI benefits, and their knowledge about the program 

may be improving each time they receive UI benefits. 

Receiving UI Benefits, along with Other Factors, Is Associated with Unemployment Duration 

We found that, overall, unemployed workers who receive UI benefits have longer 

unemployment duration than otherwise similar workers who do not receive UI benefits. Several other characteristics are also associated with unemployment duration. 

In particular, UI-eligible workers are more likely to experience longer unemployment duration if they have lower earnings before becoming unemployed or if they 

have completed fewer years of education. Other characteristics associated with 

longer unemployment duration include being African-American, or female, or not belonging to a union. 

Our results with respect to unemployment duration are generally consistent with 

the results of other research. In particular, researchers have suggested that the association between higher earnings and shorter periods of unemployment may be 

due, in part, to the higher cost of unemployment for workers with higher earnings, 


30438A.003
16 

11See Bruce D. Meyer, ‘‘Unemployment Insurance and Unemployment Spells,’’ Econometrica, 

vol. 58, no. 4 (1990). 12See Karen E. Needels and Walter Nicholson, An Analysis of Unemployment Durations Since 

the 1990–1992 Recession, UI Occasional Paper 99–6, prepared for the Department of Labor, 

1999. 13See Antoni Calvo ́-Armengol, and Matthew O. Jackson, ‘‘The Effects of Social Networks on 

Employment and Inequality,’’ The American Economic Review, vol. 94, no. 3, (2004) for a discussion of the effects of individuals’ social networks on employment outcomes. 14See Needels and Nicholson, and GAO, Women’s Earnings: Work Patterns Partially Explain 

Differences between Men’s and Women’s Earnings, GAO–04–35 (Washington, D.C.: Oct. 31, 

2003). 15See Needels and Nicholson. 16 Although the association between past UI receipt and current UI receipt is statistically significant for all industries combined, differences in this association among industries were statistically significant only for public administration, agriculture, and construction. 

when compared to the cost for workers with lower earnings.11 For example, the cost 

of unemployment can be measured in terms of lost wages. This cost is greater for 

workers with higher earnings, because they forego a higher amount of potential 

earnings in exchange for the time they can spend on unpaid activities, such as job 

search, home improvement, or recreation. Researchers have also suggested that the 

association between less education and longer periods of unemployment may be a 

result of workers with less education having fewer work-related skills.12 Two possible explanations for the differences in employment outcomes for African-American 

workers include labor market discrimination, and limited access to social networks 

that may enable these workers to find jobs more quickly.13 Likewise, longer unemployment duration among female workers may be due to labor market discrimination, or to differences in how women value paid work versus nonemployment activities, relative to men.14

The associations between shorter unemployment duration and union membership, 

and to longer job tenure, may reflect the greater access that these workers may 

have to reemployment opportunities, through union hiring halls or through informal 

peer networks. It may also reflect a greater likelihood of being recalled to previous 

jobs.15

UI-Eligible Workers from Certain Industries Are More Likely to Receive UI 

and to Have Longer Periods of Unemployment 

We found that first-time unemployed workers from mining and manufacturing are 

more likely to receive UI than workers from other industries. (See table 1.) For example, first-time unemployed workers from the manufacturing industry are about 

two-thirds more likely to receive UI benefits than workers from the professional and 

related services industry. We also found that the association between past and current UI benefit varies across industries. This effect is strongest for UI-eligible workers from the public administration sector, and weakest for workers from agriculture 

and construction.16

Table 1: Simulated Likelihood of Receiving UI Benefits during Different 

Periods of UI-Eligible Unemployment for Workers with Past UI Receipt, 

by Industry 

Industry 

Simulated likelihood of receiving UI benefits 

during current UI-eligible unemployment period, 

given past UI receipt (percent) 

First 

unemployment 

period 

Second 

unemployment 

period 

Third 

unemployment 

period 

Mining 46 57 69 

Manufacturing 40 52 65 

Public administration 37 68 91 

Wholesale and retail trade 35 52 70 

Agriculture, forestry, and fishing 34 42 50 

Business services 31 48 66 

Construction 31 40 51 

17 

Table 1: Simulated Likelihood of Receiving UI Benefits during Different 

Periods of UI-Eligible Unemployment for Workers with Past UI Receipt, 

by Industry—Continued 

Industry 

Simulated likelihood of receiving UI benefits 

during current UI-eligible unemployment period, 

given past UI receipt (percent) 

First 

unemployment 

period 

Second 

unemployment 

period 

Third 

unemployment 

period 

Finance, insurance, real estate 31 64 91 

Transportation and public utilities 29 46 66 

Entertainment and recreation services 26 45 67 

Professional and related services 24 39 58 

Personal services 23 38 56 

All industries 33 48 64 

Source: Simulations based upon GAO analysis of NLSY79 data. 

Note: Simulations are the average likelihood of receiving UI during a first unemployment period, a second 

unemployment period with UI receipt during the prior unemployment period, and a third unemployment period with UI receipt during both prior unemployment periods. The positive effect that each prior UI receipt period has on the likelihood of current UI receipt is statistically significantly larger for the public administration 

industry relative to the professional and related services industry at the 95 percent confidence level, and 

smaller for the agriculture and construction industries. The simulations also incorporate the industry effects 

and the industry interactions with the number of prior periods of unemployment. See appendix I of GAO–06– 

341 for methodology and estimation results. 

Workers experiencing their first period of unemployment did not have past UI receipt. 

These results show that although UI-eligible workers in some industries are more 

likely to receive UI benefits when they experience unemployment for the first time, 

their likelihood of receiving UI benefits again when they become unemployed a second or third time is not necessarily higher than it is for workers from other industries. (See fig. 4.) For example, the likelihood of receiving UI benefits for workers 

from the manufacturing industry who are unemployed for the first time is relatively 

high—about 40 percent. This likelihood increases to 52 percent during a second period of unemployment for workers who have already received UI benefits, and 65 

percent during a third period of unemployment for workers who received UI each 

previous time they were unemployed. By comparison, the increase in the likelihood 

of receiving UI between the first and third periods of unemployment is higher for 

most other industries, especially public administration. Specifically, the likelihood of 

receiving UI benefits for public administration workers who are unemployed for the 

first time is 37 percent. This likelihood increases to 69 percent during a second period of unemployment for workers who received have already received UI, and to 

91 percent during a third period of unemployment for workers who received UI each 

previous time they were unemployed. 

18 

Figure 4: Simulated Effect of Past UI Benefit Receipt on the Likelihood of 

Receiving UI in Subsequent Periods of Unemployment, for Selected Industries 

Note: Simulations are the average likelihood of receiving UI during a first unemployment period, second unemployment period with UI receipt during the prior 

unemployment period, and a third unemployment period with UI receipt during 

both prior unemployment periods. The positive effect that each prior UI receipt 

period has on the likelihood of current UI receipt is statistically significantly larger for the public administration industry relative to the professional and related 

services industry at the 95 percent confidence level, and smaller for the agriculture and construction industries. The simulations also incorporate the industry 

effects and the industry interactions with the number of prior periods of unemployment. See appendix I of GAO–06–341 for methodology and estimation results. 

Administrative unemployment insurance data have shown that repeat UI recipients tend to be from industries that are seasonal, such as manufacturing and construction. Our results, however, suggest that this is not because workers with past 

UI receipt from these industries are more likely to receive UI benefits when they 

are unemployed than otherwise similar workers from other industries. Rather, it 

may be that workers from such seasonal industries are unemployed more often on 

average than workers from other industries, or that a larger proportion of unemployed workers from such industries have collected UI previously. 

In light of the strong association we found between UI receipt and unemployment 

duration, it is important that unemployed workers who become UI claimants have 

access to reemployment services that will help facilitate their quick return to work. 

However, the shift towards states’ accepting UI claims remotely has raised concerns 

that some UI claimants may not be receiving enough information on reemployment 

services or timely assistance to help them find a job, and little is known about 

whether states have policies in place to help unemployed workers quickly become 

reemployed. 


30438A.004
19 

A Variety of Reemployment Services Are Available to Help UI Claimants 

Get Jobs, but Little Information Exists to Determine the Extent to 

Which Workers Use Them 

In our review of states’ efforts to facilitate reemployment of UI claimants, we 

found that across states, UI claimants have access to a variety of reemployment 

services, and although most states accept UI claims remotely by telephone or Internet, states make use of UI program requirements to connect claimants with available services at various points in their claims. However, despite states’ efforts to design systems that link UI claimants to reemployment services, little data are available to gauge the extent to which claimants are receiving these services or the outcomes they achieve. Federal reporting requirements for states’ UI programs and for 

federally funded employment and training programs do not provide a full picture 

of services or outcomes, and few states monitor the extent to which claimants are 

receiving these services or outcomes for these claimants, in part because of limited 

information systems capabilities. 

Although Some federally Funded Reemployment Services Are Universally 

Accessible, Most Serve Targeted Groups of Workers 

UI claimants in all states have access to the range of Wagner-Peyser funded employment services and to Workforce Investment Act (WIA) funded core services that 

are available to all job seekers through the one-stop system. Such services include 

labor exchange services in all states, whereby claimants can access job listings and 

information on their state’s labor market trends using the Internet. Officials in 

many states said that claimants also have access to online labor exchange, or job 

matching services as well as other self-assessment services. One-stop centers in all 

states make computers available on-site, and most states provide access to self-help 

software, such as aptitude tests, computer tutorials, or job search guidance, at the 

centers. Claimants also have access to a variety of staff-assisted reemployment services through the one-stop system. Officials most often mentioned that claimants 

were likely to be offered 

• job search assistance; 

• re ́sume ́ assistance; 

• job matching, referral, and placement services; 

• orientation to services; 

• referral to WIA or other partners; 

• initial or general needs assessment; 

• counseling; and 

• interview assistance. 

In addition to states’ Employment Service and WIA core services, the WIA Adult 

and Dislocated Worker programs provide for additional levels of services to qualified 

workers. Intensive services include activities that require greater staff involvement 

than core services, and may include services such as comprehensive assessment and 

case management. Intensive services are available to adults and dislocated workers 

who have received at least one core service and are unable to find a job or have 

a job that does not lead to self-sufficiency. Training services, such as occupational 

skills or on-the-job training, are available on a more limited basis, typically to claimants who have received at least one intensive service but who are still unable to 

obtain or retain employment. Additional training assistance for workers who are 

laid off as a result of international trade is available through the Trade Adjustment 

Assistance (TAA) program, although the amount of funds available for training is 

limited by statute. 

States Use Program Requirements to Connect Claimants with Available 

Services 

Although all UI claimants can access the range of reemployment services through 

the one-stop system at any time, UI requirements often provide the context for 

states’ efforts to link claimants to reemployment services. Specifically, all federally 

approved state UI programs require that claimants be able and available to work. 

To meet these conditions, 44 states require that UI claimants register with the 

state’s Employment Service in order to be eligible for UI benefits. In addition, 49 

states impose a work search requirement as a condition for continuing UI eligibility, 

and claimants must document that they are meeting their state’s work search requirement in a number of ways. Most commonly, claimants are required to keep a 

log of work search activities that may be subject to review, or they must certify that 

they are able and available to work through the process of filing for a continuing 

claim. 

20 

17 Reemployment Services Grants, provided to ensure that UI claimants would receive necessary services to become reemployed, were provided to states annually from 2001 through 2005. 

No appropriation was made for these grants in fiscal year 2006, and no further appropriation 

has been requested for fiscal year 2007. 

These work registration and work search requirements often serve to link claimants to reemployment services. The process of registering for work with the state’s 

labor exchange, for example, may bring claimants into an Employment Service office 

or one-stop center where reemployment services are delivered. Officials in nearly 

two-thirds of the 44 states where claimants are required to register for work told 

us that coming into an Employment Service office or one-stop center is either a required part of the process or one of the options claimants have for completing their 

registration. Officials in close to a third of the states with this requirement told us 

claimants are registered with the labor exchange when they file their initial UI 

claim. 

Some states also use their processes for monitoring compliance with the work 

search requirement to direct claimants to reemployment services. Officials in 39 of 

the 49 states that require claimants to actively seek employment told us that telephone or in-person interviews with claimants may be used to monitor compliance 

with this requirement. In over two-thirds of these states, officials told us that some 

information on job search strategies or reemployment services is provided during 

the interview. 

States also engage some claimants in reemployment services directly through programs that identify certain groups for more targeted assistance. In particular, states 

target reemployment services to claimants who are identified through federally required claimant profiling systems—a process that uses a statistical model or characteristics screen to identify claimants who are likely to exhaust their UI benefits before finding work. Claimants identified through this process are then referred to reemployment services while they are still early in their claim. Although profiled 

claimants can access the services available to all job seekers through the one-stop 

system, participation in the services they are referred to is mandatory. State officials most often identified orientation and assessment as services that profiled 

claimants were required to receive. In addition, many officials told us that the services profiled claimants received depended on their individual needs following an assessment, the development of an individual plan, or the guidance of staff at a onestop center. While failure to report to required reemployment services can result in 

benefits being denied, states vary in the conditions that prompt denying benefits. 

From 2001 through last year, states made use of Labor’s Reemployment Services 

Grants to fund these services.17 Although these grants are no longer available, officials in the majority of the states we interviewed told us their states had been using 

the Reemployment Services Grant funds to hire staff to provide reemployment services. Some states have also used these grants to direct reemployment services to 

claimants beyond those who have been profiled and to support other enhancements 

in the provision of reemployment services to claimants. 

Little Information Exists to Provide a Complete Picture of Reemployment 

Services for Unemployment Insurance Claimants 

Despite states’ efforts to design systems that link UI claimants to reemployment 

services, little is known about the extent to which claimants receive reemployment 

services or about the outcomes they achieve. Although states must meet a number 

of federal reporting requirements for their UI and employment and training programs, none of these reports provides a complete picture of the services received or 

the outcomes obtained by UI claimants, and only recently has Labor begun to require that states provide information on the reemployment outcomes of UI claimants. We also found that few states monitor the extent to which claimants are receiving these services, and even fewer monitored outcomes for these claimants at 

the time of our review, largely because of limited information systems capabilities. 

As discussed earlier, UI claimants may access federally-funded reemployment assistance from the Wagner-Peyser Employment Service, WIA Adult or Dislocated 

Worker programs, and, if they are laid off because of trade, TAA. To monitor the 

performance of these programs, Labor does require states to meet a number of reporting requirements, but these reports are submitted on a program-by-program 

basis, and none of these reports provide a complete picture of the services received 

or the outcomes obtained by all UI claimants. 

Reporting requirements for the Wagner-Peyser funded Employment Service are 

similarly limited. States are required to provide quarterly reports that include summary information on the numbers of Employment Service participants who received 

specified services, or who obtained particular outcomes, and breaks out this informaVerDate Aug 31 2005 01:50 Jan 05, 2007 Jkt 030438 PO 00000 Frm 00024 Fmt 6633 Sfmt 6621 E:\HR\OC\30438.XXX 30438
21 

tion by several demographic categories, and whether or not the participant was a 

UI claimant. However, these reports only contain information on individuals who 

are registered with the Employment Service, and although anyone who receives 

services funded by Wagner-Peyser must be registered with the Employment Service, 

not all UI claimants receive Wagner-Peyser funded services. 

WIA and TAA reporting requirements also do not provide a complete picture of 

claimant services and outcomes. Although WIA tracks several performance measures directly related to outcomes for Adults and Dislocated Workers, including job 

placement, job retention, and wage gain or wage replacement, these records do not 

contain information for UI claimants who are not registered under WIA. Furthermore, many individuals served under WIA—particularly those who receive only selfdirected services—are not registered or tracked for performance and are, therefore, 

not reflected in any of the WIA data. Similarly, for the TAA program, Labor requires states to submit participant data files on all who exit the program each quarter, but the reports are limited to those claimants served by TAA. 

Having data that show the degree to which reemployment services are reaching 

UI claimants is key to good program management and provides a first step toward 

understanding the impact of these programs. However, knowing how many claimants may be accessing reemployment services and the type of outcomes they may 

be achieving has proven difficult for state and local officials. 

We found that only 14 states go beyond the federal reporting requirements to routinely track the extent to which claimants receive services from the broad array of 

federally funded programs that are designed to assist them. Of the remaining 36 

states that do not routinely track claimant services, 4 told us it would not be possible for them to do so. In addition, 37 states reported that tracking UI claimants 

who receive reemployment services was somewhat or very difficult, while only 6 

states said it was not at all difficult. States most often told us that tracking claimant services across multiple programs was made difficult by the fact that reemployment services and UI claimant data were maintained in separate data systems— 

systems that were either incompatible or difficult to link. 

While relatively few states routinely track claimants’ services, even fewer track 

outcomes. Only 6 states go beyond the federal reporting requirements to routinely 

monitor any outcomes for UI claimants who receive reemployment services—outcomes such as reemployment rate, average benefit duration, and UI exhaustion rate. 

Eleven states reported that it would not be possible to calculate any of the outcomes 

for these claimants. The issues states cited in tracking outcomes across programs 

for UI claimants were similar to those for tracking use of services. Officials from 

35 states told us that tracking one or more outcome measures was made difficult 

by the fact that reemployment services and UI claimant data were maintained in 

different systems that were either incompatible or difficult to link. 

Labor has some initiatives that may begin to shed light on claimant services and 

outcomes, including modifying its performance measures to require states to track 

a reemployment rate for their UI claimants—defined as the percentage of UI claimants who are reemployed within the quarter following their first UI payment. Labor 

is also developing a system to consolidate reporting on performance for Labor’s Employment and Training Administration (ETA) programs. This system—ETA’s Management Information and Longitudinal Evaluation (EMILE) system—would consolidate performance reporting across a range of Labor programs including WIA, Employment Service, and TAA. Current plans do not include incorporating UI reporting 

into EMILE. 

Last year, we recommended that the Department of Labor work with states to 

consider the feasibility of collecting more comprehensive information on UI claimants’ services and outcomes. Although Labor generally agreed with our findings, 

Labor commented that current and planned data collection efforts would provide 

sufficient information to policy makers. While Labor’s new initiatives, in combination with current reporting requirements, will provide valuable information on the 

reemployment activities of some UI claimants, these efforts will not allow for a comprehensive, nationwide understanding of claimants’ participation in the broad range 

of reemployment services designed to assist them. Furthermore, these efforts will 

not move states in the direction of having the data they need to better manage their 

systems. 

Mr. Chairman, this completes my prepared statement. I would be happy to respond to any questions you or other Members of the Subcommittee may have at this 

time. 

22 

Unemployment Insurance: Factors Associated with Benefit Receipt. GAO–06–341. 

Washington, D.C.: March 7, 2006. 

Trade Adjustment Assistance: Most Workers in Five Layoffs Received Services, but 

Better Outreach Needed on New Benefits. GAO–06–43. Washington, D.C.: January 

31, 2006. 

Workforce Investment Act: Labor and States Have Taken Actions to Improve Data 

Quality, but Additional Steps Are Needed. GAO–06–82. Washington, D.C.: November 

14, 2005. 

Unemployment Insurance: Better Data Needed to Assess Reemployment Services to 

Claimants. GAO–05–413. Washington, D.C.: June 24, 2005. 

Unemployment Insurance: Information on Benefit Receipt. GAO–05–291. Washington, D.C.: March 17, 2005. 

Trade Adjustment Assistance: Reforms Have Accelerated Training Enrollment, but 

Implementation Challenges Remain. GAO–04–1012. Washington, D.C.: September 

22, 2004. 

Workforce Investment Act: States and Local Areas Have Developed Strategies to 

Assess Performance, but Labor Could Do More to Help. GAO–04–657. Washington, 

D.C.: June 1, 2004. 

Workforce Training: Almost Half of States Fund Employment Placement and 

Training through Employer Taxes and Most Coordinate with federally Funded Programs. GAO–04–282. Washington, D.C.: February 13, 2004. 

Workforce Investment Act: One-Stop Centers Implemented Strategies to Strengthen 

Services and Partnerships, but More Research and Information Sharing Is Needed. 

GAO–03–725. Washington D.C.: June 18, 2003. 

Multiple Employment and Training Programs: Funding and Performance Measures for Major Programs. GAO–03–589. Washington, D.C.: April 18, 2003. 

Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is Limited. 

GAO–01–181. Washington, D.C.: December 29, 2000. 

f 

[The GAO Report follows:] 

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116 

Chairman HERGER. Thank you very much, Dr. Nilsen. I want 

to thank you and your team again for the excellent work of this report. It challenges many assumptions about unemployment benefits. In the process it challenges policymakers to consider ways to 

better serve people who lose jobs and all other taxpayers. One of 

the most commonly stated assumptions about unemployment benefits is that collecting benefits allows people time to find higher paying jobs. That would seem to make sense. It certainly has been one 

of the operating assumptions of this program since its beginning. 

Is there any evidence to show that those who collect unemployment 

benefits, especially for longer periods of time, return to better-paying jobs? If not, do you think this type of information should be collected? 

Dr. NILSEN. You are right, Mr. Chairman. This is a very important aspect of knowing what the program is achieving, but in our 

work so far we have not been able to look at the employment outcomes, whether or not people who spend more time in a job search 

and more time on Unemployment Insurance benefits end up getting a better job than those who are on for a shorter period of time, 

or those who don’t get benefits. One study that we did recently that 

is not part of what I talked about today, looked at a series of case 

studies on the Trade Adjustment Assistance Program, and we 

looked at five plant closings across the country, and we tracked 

every worker who was laid off. Some workers made it into a onestop to get reemployment assistance. Some people made it into 

training, and other people didn’t come in for services at all. 

One of the things we found was that the reemployment experiences of all those workers was about the same. They all got reemployed at about the same rate, and they all got reemployed at 

about the same wage replacement level. The differences between 

the workers was that those who didn’t go into the one-stops were 

the higher wage workers, more likely had better skills and better 

networks, and were able to get reemployment quicker, where those 

who needed additional assistance were the ones who came into the 

one-stop, they were the lower wage workers. The lowest wage 

workers were the ones who needed to change careers and got into 

training. I think we need to know a lot more about the dynamics 

of how UI works and how it helps workers, and which workers are 

the ones that really need more assistance to become reemployed. 

Chairman HERGER. Thank you. I think this is a key challenge 

to those of us who are policymakers, from your report, specifically 

how can we best ensure that States engage unemployment benefit 

recipients to ensure that these benefits help laid-off workers quickly return to work, and in high-paying jobs. With that, the gentleman from Washington, Mr. McDermott, to inquire. 

Mr. MCDERMOTT. Dr. Nilsen, what is unemployment for; what 

are we trying to do with it? I have trouble understanding some of 

the data and all the rest, because it seems to me unemployment 

is one of those issues where you are trying to replace income while 

people look for another place, and when you have two-thirds of the 

people not eligible for it, what is the point of the system? Why do 

we just pick that third? Why do the States pick that third and say, 

‘‘We will help them, and then the rest we will exclude by a various 

set of means?’’ 

117 

Dr. NILSEN. I can’t speak for the States and why they design 

their systems in particular ways, but you are right. In the early fifties, about 50 percent of workers unemployed received benefits, and 

now it is closer to a third. The two focuses of the Unemployment 

Insurance system are for wage replacement, earnings replacement, 

while people are unemployed, looking for work, and to provide economic stabilization for the economy by pumping money into the 

economy. There are a lot of factors that have driven the UI system 

down from a 50 percent recipiency rate to about a 33 percent 

recipiency rate, and a lot of it has to do with the changes in the 

workforce, changes away from manufacturing and unionized work, 

which traditionally had much higher recipiency rates, part of that 

as a result of being full-time workers for long periods of time. Also, 

the declining proportion of full-time workers. There are many more 

workers who are part time now, and if you are a part-time worker 

and if you are looking to go into another part-time job, most States 

do not provide you benefits. So that is up to the States. As you 

know, Title III of the Social Security Act established the UI system, 

but allowed States that met certain criteria to operate and manage 

their own systems. Very often, these are designed cooperatively between labor and management with the State legislatures, and they 

work out the sort of system they want to serve their State. 

Mr. MCDERMOTT. Is the data you are collecting then collected 

against a model that no longer exists of employment? You don’t go 

to work for Boeing today and work for 40 years for Boeing, or you 

don’t go in the woods and work felling trees for 40 years, knowing 

that every winter you will be off, and then you will be back on in 

the next—or fishing. Our State, we have had ups and downs in our 

employment all the time related to the local industries. It seems to 

me the data that you are collecting now doesn’t really—is it not 

looking at what the workforce is. 

Dr. NILSEN. I think it is—an important consideration is, is the 

system meeting the current workforce needs? The people who are 

becoming unemployed now, is the system able to help them? That 

is something that would be important to look at. 

Mr. MCDERMOTT. It seems to me there is a lot of difference between a 35-year-old employee of a software company in Seattle, 

who is laid off, but knows that job is going to come back when that 

next contract comes due in about 4 months, so they say, why 

should I go get unemployment benefits, as opposed to somebody 

who gets laid off in a manufacturing job or something where there 

is no idea whether the job will ever come back. The system seems 

to be aimed at those people who are the long-term ones. It doesn’t 

have anything to say about what happens to people in the short 

term. 

Dr. NILSEN. One thing that we found is the different experiences of people who are on Unemployment Insurance, and their duration of unemployment. If you have more education—and that is 

correlated with higher skills—you are not on UI as long as somebody else who has less education. You have marketable skills is 

this is allowing you to reenter the workforce and find employment 

relatively quicker. Those who have a harder time have less education, likely less marketable skills, are having a harder time finding another job. 

118 

Mr. MCDERMOTT. I happen to know that my State collects 

data, and I would like to hear why six States collect for your study, 

and 44 States don’t. What is going on here? Why don’t they want 

to know what is going on? 

Dr. NILSEN. I can’t answer that question directly in terms of 

why don’t they want to know, but the history of these programs are 

that the UI system very separate from the job training and reemployment system. 

Mr. MCDERMOTT. Still today? 

Dr. NILSEN. They have been in the past. They are starting to 

get better integrated. The Workforce Investment Act (P.L. 105–220) 

was passed in 1998. One of the things it established was the onestop centers which required that 17 job training programs be more 

highly integrated, bringing services together, at least linked, centrally. This is starting a movement in that direction, but right now, 

very often, UI data systems are still separate, and while the linkages are there, they refer people to the one-stops, to the employment service, I think more needs to be done to get these systems 

together with the same outcome in mind, and that is, getting people reemployed. 

Mr. MCDERMOTT. Thank you. 

Chairman HERGER. The gentleman’s time has expired. The gentleman from Louisiana, Mr. McCrery, to inquire. 

Mr. MCCRERY. Thank you, Mr. Chairman. I heard my colleague 

from Washington say something about six States and 44 States 

didn’t participate. What is he talking about? 

Dr. NILSEN. Whether or not they have outcomes for people who 

are on Unemployment Insurance, whether or not they were 

linked—information on the extent to which they were kinked with 

the workforce development system, and then did you have information on the outcomes that were achieved? Did they get reemployed, 

and what kind of wage replacement? There are only six States that 

have that kind of data. 

Mr. MCCRERY. Your study includes data other than just those 

six States. 

Dr. NILSEN. Right. We covered all 50 States. This was a nationally representative sample. Then when we looked at the linkages, 

we surveyed all State workforce development systems to find out 

how their systems were linked. 

Mr. MCCRERY. Even though it is one-third, approximately onethird unemployed workers who receive unemployment benefits, 

there is fully 76, 77 percent who are eligible to receive benefits who 

become unemployed. 

Dr. NILSEN. Right. 

Mr. MCCRERY. Only about half of those, for whatever reason, 

collect unemployment benefits. In a typical State, do you know how 

long between the time a worker loses his job and the time he gets 

his first unemployment check is? 

Dr. NILSEN. It is usually on the order of 1 to 2 weeks. Some 

States have a 1 week waiting period, but it is then really 1 to 2 

weeks. 

Mr. MCCRERY. I am just trying to figure out, or get some idea 

of why there is fully one-half of people who become unemployed 

119 

who do not collect unemployment benefits. I didn’t really see anything in your study that clearly says this is the reason. 

Dr. NILSEN. No. We would like to get behind our analysis and 

the factors, and understand the motivations of people to find out, 

okay, was it because you thought you could get out there yourself 

and get a job quicker? Were you going to drop out of the workforce 

anyway? There are some who may have tried to get benefits and 

might have been denied benefits that we were not able to measure 

in this. 

Mr. MCCRERY. Clearly, those who don’t get unemployment benefits get jobs more quickly than those who do get unemployment 

benefits by a long shot. 

Dr. NILSEN. That is correct. 

Mr. MCCRERY. On average 8 weeks for those who don’t collect 

unemployment benefits, and what is it, 21—— 

Dr. NILSEN. Twenty-one. 

Mr. MCCRERY. Twenty-one weeks. More than two-and-a-half 

times the amount of time. Certainly, I think we can conclude that 

motivation is a big factor for those who aren’t collecting unemployment benefits, they are obviously more motivated to get a job. That 

is—yes, they may be more educated, they may be—they have more 

skills, but I don’t think the data clearly shows that. Human nature 

is, if you are not getting some kind of check, you are going to get 

out there and try to get a job. I am just wondering how much— 

and this would be a good study for a sociologist or somebody to conduct—what else in involved in that motivation? Is it a higher sense 

of one’s ability? Is it a higher sense of self-worth? Just what are 

those factors in those individuals that lead them to forego pretty 

much a sure check, and get out there and find a job in a relatively 

short period of time? I don’t know. I was disappointed that the 

study didn’t go more into that, or didn’t develop any data that 

could give us some better ideas. I agree with Mr. McDermott that 

our goal should be to help people through those, what we hope are 

temporary periods of unemployment, but I think also our goal 

should be to do what we can to encourage and help those people 

to find a job, and to reduce their time on unemployment benefits. 

In welfare, for example, we put into the law requirements for 

States to get welfare recipients to work. Is there something that 

maybe we should do, maybe we should mandate in the unemployment field for States, either by rewards or by sticks, to get them 

to provide more services to people to get them back in the workforce in a shorter period of time? 

Dr. NILSEN. Two points. It was just in 2005, I believe, that the 

Labor Department established a performance measure for the 

States that measured the speed at which people became reemployed. Prior to that, all their performance measures focused on 

getting a check out quickly, and then also focusing on getting the 

right check out, basically, making sure people were eligible and 

they were doing the calculations correctly. Now they have a reemployment measure that is a performance measure. However, there 

are no consequences associated with meeting or not meeting that 

measure. There are two States that have established much more 

aggressive reemployment programs for people on Unemployment 

Insurance, and one of the States is Washington, where the GovVerDate Aug 31 2005 01:50 Jan 05, 2007 Jkt 030438 PO 00000 Frm 00123 Fmt 6633 Sfmt 6602 E:\HR\OC\30438.XXX 30438
120 

ernor set a goal that they would—of not paying out more than 

about three-quarters of total benefits, total eligible benefits, to 

bring down to 73 percent is the measure. One way they do that is 

target people. Once people hit halfway on their UI term, they really 

target those people with reemployment assistance in addition to 

the federally required, what is called profiling for people likely to 

exhaust their benefits. This happens at the State level. 

Mr. MCCRERY. My time is up, Mr. Chairman, but I would like 

for GAO, if he could, to present to us in writing any suggestions 

that GAO might have for legislation directing States to engage 

more forcefully in reemployment efforts. Thank you. 

[The written response of Dr. Nilsen follows:] 

At this time, we are unable to provide recommendations for legislative action that 

would direct states to involve more UI benefit recipients in reemployment efforts. 

However, we have recommended that Labor work with states to consider collecting 

more comprehensive information on UI claimants’ use of reemployment services and 

the outcomes they achieve. As stated above, results from Labor’s ADARE and 5-year 

evaluation initiatives may provide useful information to guide future decisions about 

the structure of the UI system. Nevertheless, we continue to believe that having 

more comprehensive information on UI claimants who are and are not receiving 

services is an important step in the development of reemployment efforts that hasten workers’ reemployment and minimize UI benefit costs. 

f 

Chairman HERGER. I thank the gentleman from Louisiana, and 

that would be very good data and information for us to have. The 

gentleman from California, Mr. Becerra, to inquire. 

Mr. BECERRA. Thank you, Mr. Chairman. Dr. Nilsen, thank you 

very much for being here. Let me pick up on what the gentleman 

from Louisiana just said. I think he hit on the most important 

point about this hearing, and that is that it seems like we have information, but the information doesn’t lead us to any clear conclusions. I think most of us are here to find out we can make sure 

that some American who has just become unemployed, as quickly 

as possible, and with the best job opportunity possible, gets back 

to work. It seems to me that the missing link here is the fact that 

while we have services for those who become unemployed, they are 

principally services to linkage information or to a contact to perhaps find that next job, but it is not to get you prepared for that 

next job if your previous experience hasn’t trained you for it, and 

certainly not necessarily to train you for that new job, because 

most of the services that are provided are not retraining services. 

I am correct in saying that, right? 

Dr. NILSEN. It depends. We did another study last year looking 

at spending in the Workforce Investment Act on training services, 

and about 40 percent of the funds were spent on training. At each 

of what is called the one-stop centers, people come in and they do 

an assessment of what people need. Depending upon how much 

funds they have available and how much assistance they feel somebody needs to get reemployed, you may or may not be referred to 

training. 

Mr. BECERRA. That—— 

Dr. NILSEN. I just want to make one point. 

Mr. BECERRA. Sure. 

121 

Dr. NILSEN. This kind of work, getting behind the motivation is 

an important point. This is the first kind of comprehensive study 

of this nature to get this far, to understand at least this much 

about how the system is operating. I think you are right, looking 

at, now, what is the difference, at a different level, between those 

people who are using the Unemployment Insurance system? Is it 

because they are looking for a better job to replace higher wages, 

or is there some other reason behind it? 

Mr. BECERRA. I think you raise more questions than can be answered. For example, it goes against logic to think that someone 

who earns more in a previous job, then becomes unemployed, is 

more likely to draw Unemployment Insurance benefits than someone who earns less. You would think the person who makes less 

money and now become unemployed needs it more and would 

apply. It makes no sense why a third of all those who are eligible 

for Unemployment Insurance don’t apply or don’t get it. There is 

a missing link here in that information. Returning back to the reemployment services, over the last several years we have begun to 

cut back moneys for retraining services that can be offered, which 

would seem to fly in the face of what you are presenting here that 

says that we have folks who need services beyond just the linkage 

to a potential new job. You have got to, in many cases, be retrained, especially since these days we are seeing more and more 

manufacturing jobs being lost, and so folks who may have spent 20 

years doing work in the manufacturing industry, all of a sudden 

have to, perhaps, consider doing work in a high-tech company, and 

they may not be ready. 

My concern would be, one, we need to get a clear answer—and 

maybe GAO can help us in doing this analysis, as Mr. McCrery has 

suggested—in helping direct Congress to figure out where we go 

next with services, unemployment services. At the same time I 

think we have to have a clearer exploration of what reemployment 

services are essential, and here I think retraining services are essential. I think one of the first things Congress has to do is stop 

cutting moneys for training programs, and I think the President’s 

budget would cut retraining programs by some $2 billion compared 

to 2002 levels. So we are really seeing a marked abandonment of 

retraining programs at a time when we are finding that there are 

a lot of folks who don’t use unemployment benefits to begin with, 

and those who do aren’t necessarily finding a lot of success. I think 

it is good that you give us the report. I think though, perhaps, the 

clearest answer we get from your report is that we need more information, and we need to go that next step now beyond just compiling data about who some of these folks are who are unemployed, 

but how we actually get them back to work at a good job, not just 

back to work, because too many folks are finding that they are losing a $16 an hour job and obtain a $7 an hour job, and that is really tough. That is a big hit. Thank you for the information. Lots of 

questions. I will yield back my time, but I hope that what we are 

able to do is follow this up with information that tells us how we 

get the next step that Americans are expecting of us, and how we 

link all this to make sure that there is a job at the end of the day 

that someone is ready and willing to take. Thank you. Yield back. 

122 

Chairman HERGER. I thank the gentleman from California, 

Again, this is a very helpful hearing, some information that, again, 

has not been out there before. Again, I thank the GAO, and I thank 

each of the Members on this Subcommittee for some very good 

questions and some great observations. With that, the gentlelady 

from Pennsylvania, Ms. Hart, to inquire. 

Ms. HART. Thank you, Mr. Chairman. I agree that this information probably brings up more questions than it answers, but one of 

the points that is made regarding the States and some of the requirements that States place upon those who are actually recipients of Unemployment Insurance, that they are monitored, that 

they be searching for a job, a number of different things. I have 

been informed that 49 States have some kind of requirements 

placed on recipients regarding searching for work or going to 

school, but Pennsylvania does not. 

Dr. NILSEN. Right. 

Ms. HART. Have you noticed a glaring difference, or is there statistical information that would actually separate Pennsylvania out 

to show that maybe there is more stubborn unemployment as a result, or there is any difference as a result of that? 

Dr. NILSEN. I haven’t really studied the difference between the 

49 other States and Pennsylvania because it does not have a work 

search requirement. 

Ms. HART. Is the work search requirement a Federal requirement that has been waived in Pennsylvania, or is it just something 

that they have chosen? 

Dr. NILSEN. The Federal Government requires that people be 

ready, willing and available for work, and the 49 other States implement that in a particular way that says there is a work search 

requirement, and Pennsylvania doesn’t. Really, we haven’t looked 

at that difference. 

Ms. HART. I am interested in if there is something that came 

out of this report that would direct us to determine that there 

should be certain requirements placed on those who are actually 

receiving the benefit. If that comes to light, I certainly would be 

very interested in knowing that. 

Dr. NILSEN. Sure. I think that the important thing, again, is to 

see—we would like better information I think that we can make 

better suggestions for improving the program by having better information about what happens to people once they become unemployed and they are on the UI rolls. Are they actually actively 

working with a reemployment system to become reemployed? Is it 

the labor market that is stopping them, or is it something else? 

Ms. HART. The other thing that seemed a little counter-intuitive 

at first when I read the information that said that people who are 

receiving the benefit are more likely to be more educated, until I 

thought about it, and then I thought, well, there are probably fewer 

positions that are available for those folks, so they are probably 

more likely to take longer to find a similar position. 

Dr. NILSEN. Well, actually, the duration for those who are more 

educated is less. You are more likely, if you are higher educated, 

you are more likely to get benefits, and it could be because you 

know more about how the system operates or whatever, and you 

are more willing to take advantage, use the system, but once you 

123 

are on benefits, if you are higher educated, your duration is less 

than someone who is less educated. 

Ms. HART. You are just more likely to seek them? 

Dr. NILSEN. Yes. 

Ms. HART. Get them, qualify for them. The folks who don’t qualify—well, actually, you said they are eligible, they are not receiving. 

Dr. NILSEN. Yes. In our analysis they are likely eligible, but not 

receiving. 

Ms. HART. Do we know anything more about them than that? 

Dr. NILSEN. Well, similarly, we looked at their characteristics, 

and that is how we were able to compare the different educational 

levels, age—— 

Ms. HART. The folks who in your 39 percent unemployed and eligible, are less educated? 

Dr. NILSEN. Yes, on average. 

Ms. HART. On average. Is there anything else that was a distinguishing characteristic? 

Dr. NILSEN. Younger workers are more likely to get benefits. 

Ms. HART. You are saying they are older than—— 

Dr. NILSEN. We controlled for each of these factors. Older workers are less likely. Men are less likely. Women are more likely. 

Ms. HART. Just the opposite of all the ‘‘more likelys.’’ 

Dr. NILSEN. Yes. 

Ms. HART. One of the things, just anecdotally, that we experience in the communities I represent is there is significant turnover 

in positions that require fewer skills. Always the employers are 

talking to me, saying we’ve got to find ways to get these people to 

stay here, to retain them, that sort of thing, trying to pay them 

more, trying to provide them with benefits, trying to provide whatever they can to help secure people in these jobs. The complaints 

have been that people just are not used to working, people show 

up drunk for work, all those kinds of problems that, obviously, they 

end up not working. The concern I think that I have is that a lot 

of folks who may qualify for unemployment benefits—or maybe 

they don’t qualify—but I am presuming that a lot of people qualify 

for unemployment benefits because the employer doesn’t want to 

fight it in the incidents such as some of the employers in my district would talk about people show up constantly late, they show 

up drunk, and then they kind of leave, and then they apply for unemployment benefits and normally get them. Is there any information in any of the surveys that you did that deal with the employers’ behavior regarding whether or not they will just accept a person’s application for unemployment benefits or fight it, anything 

that you did at all? 

Dr. NILSEN. No. We really haven’t looked at the application and 

appeals process. 

Ms. HART. Nothing at all? 

Dr. NILSEN. I think the—— 

Ms. HART. Is there any study that you can refer me to? 

Dr. NILSEN. I think DOL does have information on the appeals. 

I am not sure. I could check on that. 

Ms. HART. We could follow up with DOL. 

[The written response of Dr. Nilsen follows:] 

124 

In reference to background information on employer certification of unemployment 

benefit applications, all states provide employers the opportunity to contest UI benefit claims and to provide evidence that may invalidate these claims. A summary 

and comparison of state laws on processing UI claims appeals are available online 

at: http://workforcesecurity.doleta.gov/unemploy/uilawcompar/2005/appeals.pdf. (See 

the following attachment.) 


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Dr. NILSEN. We have not looked into that to see whether or not 

there is a difference in terms of employers’ behavior about whether 

or not if people go in to file for benefits, but very often, it is a fairly 

rigorous process, and the UI system calls back the employer to 

verify the information about why someone was fired or let go. 

Ms. HART. Do they become not eligible when they get a negative 

report? 

Dr. NILSEN. They can. If they say they were fired for cause, in 

most States they are not eligible for benefits. The information on 

wages and how long they worked, that all comes from a data system that is maintained by the UI system. 

Ms. HART. Do you think there is too much flexibility? I know I 

am running over time. Is there too much flexibility, yes or no, in 

what we allow the States to do as far as determining whether people are eligible? 

Dr. NILSEN. That is your decision, I think. 

[Laughter.] 

Ms. HART. All right. I will take it back. Thank you, Mr. Chairman. 

Chairman HERGER. I thank the gentlelady from Pennsylvania. 

This has been a very interesting hearing. I think we probably all 

agree we have far more questions than we have answers here. I 

want to thank the GAO, and particularly you, Dr. Nilsen, and your 

staff, who has worked with you on bringing this information to 

light. I believe the gentleman from Washington had a comment to 

make. 

Mr. MCDERMOTT. In answer to the gentlewoman from Pennsylvania, it is not in the employer’s interest to tell the employee that 

they are eligible for benefits, is it? Since if it gets reported, it goes 

on their tax rate? 

Dr. NILSEN. Well, if an employee is let go and files for benefits, 

it could affect the UI tax rate of the employer, that is correct. 

Mr. MCDERMOTT. If they let them go but there is nothing that 

encourages them to say, ‘‘But there are benefits out there for you.’’ 

Dr. NILSEN. I do not believe employers are required to let employees know. 

Mr. MCDERMOTT. They are required to? 

Dr. NILSEN. I don’t believe they are—— 

Mr. MCDERMOTT. They are not required to. I think that is part 

of what she was asking was, when somebody quits. I remember 

when I was in the State legislature, when we had unemployment 

benefits for college students who worked the summer and then 

drew their benefits during the school year, lived off their benefits. 

We had a real wide open system that everybody understood, and 

we gradually squeezed it down to the point where—that is why you 

only have half the people getting the benefits. We had way more 

than 50 percent in the State of Washington who worked fishing 

and logging and all sorts of things I the summertime, and made it 

the rest of the year. Thank you, Mr. Chairman. 

Chairman HERGER. I thank you. Again, Dr. Nilsen, thank you 

very much again for your testimony today. This information will be 

invaluable as we continue reviewing ways to improve out unemployment program. With that, this Committee stands adjourned. 

[Whereupon, at 11:23 a.m., the hearing was adjourned.] 

131 

[Questions submitted from Chairman Herger to Dr. Nilsen and 

responses follow:] 

Question: The report (page 16) finds that on average a person collecting 

unemployment benefits spends 21 weeks unemployed, compared with only 

8 weeks unemployed for a person who doesn’t collect unemployment benefits. Do we know whether people who spend more time unemployed get additional training or job skills that help them stay in the labor force once 

they get back to work or gain higher wages when they return to work, 

compared to their peers who don’t collect unemployment benefits? 

Answer: As we reported last year (GAO–05–413), although UI claimants have access to a variety of reemployment services, Federal reporting requirements for 

states’ UI programs and for federally funded employment and training programs do 

not provide a full picture of the services received or the outcomes obtained by all 

UI claimants. Few states monitor the extent to which claimants are receiving these 

services or outcomes for these claimants. Therefore, we do not have data to determine whether people who spend more time unemployed receive additional training 

or job skills to help them stay in the labor force once they return to work, or whether they gain higher wages when they return to work, compared to their peers who 

do not receive UI benefits. 

Question: It is telling that you found ‘‘only one UI program factor (other 

than current UI receipt) has a statistically significant impact on an individual’s unemployment duration. Specifically, individuals who are unemployed in states with higher denial rates for continuing UI claims have 

higher escape rates from unemployment’’ (p. 71). Does that mean the only 

thing states do that actually can be shown to help unemployed workers return to work quickly is to deny them unemployment benefits? Are there 

other ways states try to speed returns to work? 

Answer: Our data does suggest that, in the aggregate, individuals who are unemployed in states with higher denial rates for continuing UI claims have higher escape rates for unemployment. However, the NLSY79 dataset does not include information about whether or not an individual worker was denied continued UI benefits; therefore, we are unable to determine how denying an individual’s claim might 

influence their individual reemployment outcome, or whether or not this is an effective strategy for helping unemployed workers return to work quickly. Although we 

included several state program factors in our analysis, including the rate of denial 

for continuing UI claims, these factors do not represent the full range of state program variables, since including all aspects of state programs was not within the 

scope of our analysis. It is possible that other program variables that were not included in our analysis may help speed returns to work for UI beneficiaries. For example, officials in Washington state have the ability to identify various subgroups 

of claimants using a tracking device called the Claimant Progress Tool. Officials told 

us that staff typically use this tool to identify claimants who are about 100 days 

into their claim, and then contact them for targeted job search assistance and job 

referrals. Similarly, in Georgia, a state-funded Claimant Assistance Program identifies claimants who are seen to be ready for employment and requires them to participate in reemployment services. However, we are unable to determine how effective these services are, based on our work to date. 

Question: It is commonly observed that the length of time someone collects unemployment benefits is related to the unemployment rate. So unemployment durations would typically rise as unemployment rates go up, and 

then fall back as more workers return to work. In the past 15 years, however, average unemployment durations have remained high even as unemployment rates have fallen to historically low levels. For example, at the 

height of the recession in the early nineties, the unemployment rate was 

7.8 percent and the average duration of unemployment was 18 weeks. This 

past month, the unemployment rate was 4.8 percent and the average duration of unemployment was still about 17.5 weeks. Is there anything in your 

report than might help explain this phenomenon? Your report finds that 

women and longer tenured workers are more likely to collect unemployment benefits. Further, experience collecting unemployment benefits 

makes a worker more likely to collect benefits, and benefit collection is associated with longer spells of unemployment. That all seems to suggest that 

an aging workforce including relatively more women might result in longer 

132 

average durations of unemployment. Is that consistent with what your data 

found? This suggests states may wish to target job search and other reemployment services to groups that might otherwise spend the longest times 

out of work. Is that happening in any states? 

Answer: Although we cannot fully answer this question, your conclusion is consistent with our findings. Yet, because our analysis does not cover unemployed 

workers who are older than 45, we cannot say what will happen as this cohort of 

individuals ages. Again, your question points out a key weakness in this program. 

That is, research and data are lacking in how to speed reemployment for UI claimants. Our analysis used state unemployment rates rather than national unemployment rates, so we are unable to comment on how national rates are related to unemployment duration. While we found that higher state unemployment rates are associated with longer unemployment durations for the population we studied (younger baby-boom workers), we cannot generalize our results to all ages of workers. It 

is possible that longer durations overall are more closely related to changes in the 

economy, which may be causing the skills of certain displaced workers to become 

less marketable. With respect to women and longer tenured workers, we did find 

that the likelihood of UI receipt is higher for these groups of workers, and that 

women have somewhat longer average unemployment durations, and it may be that 

this has influenced the trend of longer unemployment duration for all workers over 

the last several years. However, our results are specific to one age cohort, and these 

trends may not hold for workers from other age cohorts, who could have different 

experiences over time. Since 1993, the Federal Government has required that states 

establish a Worker Profiling and Reemployment Services (WPRS) system and implement a process typically referred to as claimant profiling. The claimant profiling 

process uses a statistical model or characteristics screen to identify claimants who 

are likely to exhaust their UI benefits before finding work and targets services to 

these claimants. A number of states have found that job tenure is a meaningful 

variable and have incorporated it in their profiling model. 

Question: A 2005 GAO report on unemployment benefit recipients noted 

that a slight majority of laid off workers who were eligible to collect unemployment benefits actually turned down those benefits. Specifically, out of 

a large sample of workers tracked over more than two decades, 39 percent 

were ‘‘unemployed and eligible at least once but never received UI’’ while 

38 percent were ‘‘eligible and received UI’’ at least once. Does your March 

2006 report shed more light on that decisionmaking, specifically why so 

many apparently eligible unemployed workers might turn down these benefits? Elsewhere the report suggests that ‘‘receiving or not receiving UI 

benefits may be a personal choice based on unobserved worker characteristics or preferences’’ (p. 15). What are some examples of the ‘‘worker characteristics or preferences’’ influencing someone’s decision to collect unemployment benefits—or not collect them? 

Answer: The 2005 GAO report on UI benefit receipt (GAO–05–291) concluded that 

a slight majority of unemployed workers who were likely eligible for UI benefits did 

not receive them. Given what was available in the dataset we used for that study, 

we were unable to determine how many of these workers did not seek to apply for 

benefits, or if they applied, how may were denied benefits. Our March 2006 report 

relied on the same data, and does not provide more information on whether or not 

these unemployed, UI-eligible workers decided to apply for benefits. Our March 

2006 report describes the strong relationship between past and current receipt/nonreceipt of UI benefits, when other factors are taken into account. In describing the 

possible explanations for this relationship, we suggested that unmeasured worker 

characteristics may be at play. For example, a lack of information about the UI program or personal preference could explain the continued non-receipt of UI despite 

meeting possible eligibility requirements when unemployed on multiple occasions. 

However, we are unable to determine the extent to which these or other 

unmeasured characteristics contribute to an individual’s decision to file for UI benefits. In our 2005 report (GAO–05–291, p. 23) we cited the results of two supplements 

to the Current Population Survey designed to explore the reasons why some unemployed workers did not file for UI benefits. In these supplements, the most cited reasons for not applying for benefits were perceived ineligibility, and optimism about 

becoming reemployed quickly. 

Question: The report finds that younger workers are more likely to receive unemployment benefits. What factors might cause that? 

133 

Answer: Our 2006 report notes that we are unable to explain why younger workers are more likely than older workers to receive UI benefits (GAO–06–341, p. 11). 

However, we posit three possible explanations: (1) our analysis isolates the effect 

of age more carefully than prior studies by controlling for the interactions between 

age and other factors that are associated with age, such as the number of previous 

job losses and periods of UI receipt, job tenure, earnings, and so forth., (2) older 

workers (through age 45) may be better able to weather a period of unemployment 

without the assistance of UI benefits, or (3) younger workers may simply be less 

confident about future prospects for reemployment than older workers. An important point to remember is that our analysis only covers workers through age 45. 

These are generally considered prime age workers who do not have the reemployment problems faced by older workers (ages 55 and older). 

Question: In the world of welfare, states are expected to engage low-income parents in work and training. Federal welfare funds for states depend at least in part on state success in helping more welfare recipients 

go to work. And as a result, work and earnings among low-income parents 

rose dramatically in recent years. When it comes to providing Federal unemployment funds, are states held to any similar performance standards 

related to helping laid off workers more quickly return to work? Have 

states ever experienced any loss of Federal funds for failure to satisfy such 

Federal performance standards related to returns to work, to your knowledge? If not such return to work outcomes, what generally determines how 

much Federal funding is provided to states to administer unemployment 

benefit programs today? 

Answer: Federal law provides a great deal of flexibility to states in how they design their UI programs, including whether or not they have goals for reemployment 

of UI benefit recipients. Labor does not currently have a performance goal for reemployment of UI recipients. However, Labor is working on developing such a measure 

for its Strategic Plan, and has required that states track a reemployment rate for 

their UI claimants—defined as the percentage of UI claimants who are reemployed 

within the quarter following their first UI payment—since summer 2005. To date, 

no state has experienced a loss of funds as a result of failing to satisfy Federal goals 

related to reemployment—in fact, administrative funding is only based on projected 

workloads and the cost of processing claims. Additional Federal funds that help pay 

for regular or temporary extended benefits, or Disaster Unemployment Assistance 

benefits, are based on whether or not claimants meet UI program eligibility requirements and are not contingent on state performance. 

Question: Your testimony indicated that states have little data to gauge 

the extent to which unemployed individuals are receiving reemployment 

services, or the outcomes these services achieve. It seems that having this 

type of information would be essential to determine which federally funded 

activities are most effective in helping laid off workers get back on the job. 

Do you have any suggestions for what Congress can do to see that this type 

of information becomes available and is used to improve the effectiveness 

of programs in helping unemployed workers go back to work? 

Answer: Beyond our previous recommendation that the Secretary of Labor work 

with states to consider the feasibility of collecting more comprehensive information 

on UI claimants’ use of reemployment services and the outcomes achieved by claimants, GAO is not making additional recommendations at this time. However, Labor 

has two initiatives that have the potential to provide somewhat better information 

about the effectiveness of federally funded activities targeted to unemployed workers. The first initiative, the Administrative Data Research and Evaluation project 

(ADARE), is an alliance of 9 state partners that provide authorized third-party researchers with detailed, longitudinal data on participants in the Wagner-Peyser Employment Service, Workforce Investment Act (WIA) programs, Temporary Assistance 

for Needy Families (TANF), and Perkins Vocational Education, as well as UI wage 

and benefit records and education records. Together, participating states represent 

43 percent of the civilian workforce in the United States. While using ADARE would 

enable analysis of claimants’ use of services and of their outcomes in a few states, 

efforts so far have focused largely on evaluating welfare-to-work programs and WIA. 

Labor last provided funds for ADARE in October 2004 and has not requested additional work. The second initiative is a 5-year evaluation of the UI benefits program 

that researchers hope will include data from up to 25 states. This study was designed to identify changes in the labor market, population, and economy relative to 

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134 

ing UI benefits. The original design of the study included an assessment of the extent to which claimants are receiving reemployment services and their outcomes, 

but those plans were sidelined due to resource constraints. The study is due to be 

completed in 2009. 

Question: In general, states provide unemployment benefit claimants 

with information about reemployment services and some states require at 

least some interaction with the employment services program in order for 

recipients to maintain unemployment benefit eligibility. Is there any evidence to suggest there are positive benefits in the states that require 

stronger interaction between their unemployment and reemployment programs? What do the most effective states do to help the typical unemployed 

worker return to work, and at higher wages? 

Answer: Because little data are available to gauge reemployment outcomes, it not 

possible at this time to determine whether or not states that require stronger interaction between their unemployment and reemployment programs have different outcomes for claimants. 

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