Before turning to H.R. 3684, I would like to take a moment to provide some background information on the UI program. Since the advent of both programs, the economy has changed, the workforce has changed, the workplace has changed and the way we work has changed, affecting both workers and businesses. Research suggests that these changes may be impacting the UI program in unanticipated ways. UI coverage has expanded so that 97 percent of all wage earners are now covered by the UI program. However, UI recipiency has been declining, which means that a lower percentage of the unemployed receive benefits.
Research attributes the decline in recipiency to a number of factors.
Changes in the labor market, such as geographic shifts and sectoral shifts from manufacturing to the services sector, are part of the explanation. But State law changes that restrict program eligibility and lower wage replacement rates also play a role. Declining recipiency means that the UI program has lost some of its effectiveness as an automatic economic stabilizer. Despite these declines in UI recipiency, research indicates potential financial problems in the UI system. Projections show that State borrowing during the next recession will be much higher than it was in the 1980's because of relatively lower State trust fund reserves.