Unemployment Insurance: Factors Associated with Benefit Receipt and Linkages with Reemployment Services for Claimants
Published: 2006-03-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Unemployment Insurance (UI) has been a key component in ensuring the financial security of America's workforce for over 70 years. In fiscal year 2004, UI covered about 129 million wage and salary workers and paid about $41 billion in benefits to nearly 9 million workers. With unemployed workers at a greater risk of long-term unemployment than in the past, it is increasingly important to understand how individual workers are being served by UI. This testimony draws upon the results of three GAO reports providing new information about (1) the extent to which individual workers ever receive UI benefits or receive benefits multiple times, (2) the types of workers who are more likely to receive UI, and (3) what is known about the extent to which UI beneficiaries receive reemployment services and their reemployment outcomes. GAO is not making new recommendations at this time. The Department of Labor (Labor) generally agreed with the findings from each of the three reports on UI, but took issue with GAO's recommendation that the Secretary work with states to consider collecting more comprehensive information on UI claimants' services and outcomes. Labor commented that, in its view, current and planned efforts would provide sufficient information for policy makers. However, we believe that Labor's efforts would not provide a complete picture of UI claimants' services and outcomes.
section_title: What GAO Found
paragraphs: On the basis of our analysis of a nationally representative sample of workers born between 1957 and 1964, we estimate that, while 76 percent of these workers 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 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. Past experience with the UI program has a particularly strong effect on the likelihood of receiving UI benefits. In addition, 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. UI-eligible workers from certain industries, such as mining and manufacturing, are more likely than other workers to receive UI benefits. Across states, UI claimants have access to a variety of reemployment services, and 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.

section_title: Letter
paragraphs: 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.
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 follow-up 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 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.
subsections: section_title: Background
paragraphs: 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 enactment 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.
section_title: Most Workers Experience Unemployment and Over a Third Receive UI at Least Once
paragraphs: 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.
section_title: Some UI-Eligible Workers are More Likely to Receive UI Benefits than Others, or to Have Longer Periods of Unemployment
paragraphs: 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.
subsections: section_title: Certain Characteristics of UI-Eligible Workers Are Associated with Greater Likelihood of UI Receipt
paragraphs: 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. 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.
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 that younger  workers are less likely to receive UI benefits than older workers.
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. 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). Although the effect of education  on the likelihood of receiving UI benefits has been analyzed in other  research, no significant education effect was found. 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    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. 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 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. Taken together, these results suggest that UI benefit  levels have modest effects on individuals’ decisions about whether or not  to receive UI benefits.
section_title: Unemployed Workers Who Received UI in the Past Are More Likely to Receive UI during Subsequent Unemployment
paragraphs: 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 UI-eligible  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.
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.
section_title: Receiving UI Benefits, along with Other Factors, Is Associated with Unemployment Duration
paragraphs: 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, when compared to the  cost for workers with lower earnings. 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. 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. 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.
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.
section_title: UI-Eligible Workers from Certain Industries Are More Likely to Receive UI and to Have Longer Periods of Unemployment
paragraphs: 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.
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.
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.
section_title: 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
paragraphs: 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.
subsections: section_title: Although Some Federally Funded Reemployment Services Are Universally Accessible, Most Serve Targeted Groups of Workers
paragraphs: 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;  résumé 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.
section_title: States Use Program Requirements to Connect Claimants with Available Services
paragraphs: 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.
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 one-stop  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. 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.
section_title: Little Information Exists to Provide a Complete Picture of Reemployment Services for Unemployment Insurance Claimants
paragraphs: 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 information 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 self- directed 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.
section_title: GAO Contacts and Staff Acknowledgments
paragraphs: For information regarding this testimony, please contact Sigurd R. Nilsen,  Director, Education, Workforce, and Income Security, at (202) 512- 7215.  Individuals who made key contributions to this testimony include Brett  Fallavollita, Dianne Blank, Janice Peterson and Regina Santucci.
section_title: Related GAO Products
paragraphs: 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.
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