Unemployment Insurance: Economic Circumstances of Individuals Who Exhausted Benefits
Published: 2012-02-17T00:00:00

Fast Facts:

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

section_title: Letter
paragraphs: The recession from 2007 to 2009 was the most severe in the United  States since the Great Depression of the 1930s. From the start of the  recession in December 2007 to its official end in June 2009, the U.S. lost  a net total of 7.5 million jobs. Since then, the economy has been slow to  recover. In January 2012, the unemployment rate was 8.3 percent, with  more than 40 percent of the 12.8 million unemployed out of work for 6  months or longer. Workers who involuntarily lose a job—referred to as  “displaced workers” in this report—may turn to financial assistance  offered through the Unemployment Insurance (UI) program. UI is a $156  billion federal-state program that temporarily and partially replaces the  lost earnings of those who become unemployed through no fault of their  own. Typically, states provide UI benefits for up to 26 weeks. Since mid- 2008, Congress and the states have temporarily extended the period of  time that displaced workers can receive UI benefits to up to 99 weeks,  though the maximum number of weeks of available benefits varies among  the states.
However, despite the UI benefit extensions, the slow economic recovery  may result in some displaced workers exhausting UI benefits without  finding a new job. This raises questions about how the Temporary  Assistance for Needy Families (TANF) program, one of the nation’s  primary income support programs for low-income families, is aiding UI  exhaustees. TANF is a $16.5 billion federal block grant program that  provides cash assistance and other services to low-income families with  children.
You asked us to provide information about displaced workers’ receipt and  exhaustion of UI. In response to your request, we answered the following  questions: (1) Among workers who lost jobs during the recession, how  many received and exhausted UI benefits? (2) What are the economic  circumstances of those who exhausted UI, and how many received  assistance from TANF and other support programs? (3) To what extent  do state UI agencies refer exhaustees to support programs?
To address these questions we used several different research methods.  To identify the number of displaced workers who received and exhausted  UI, referred to as “exhaustees” in this report, we analyzed data from the  2010 Displaced Worker Supplement to the January 2010 Current  Population Survey (CPS) conducted by the Census Bureau, which  surveyed individuals who lost jobs from 2007 to 2009. We also  compared some results from the 2010 Displaced Worker Supplement to  data from the 2008 supplement, which surveyed individuals who lost jobs  prior to the recession, from 2005 to 2007. Using data from the Displaced  Worker Supplements allowed us to examine the experiences of a cohort  of workers who lost jobs in the recession years and compare them to  workers who lost jobs before the recession, but our results are as of  January 2010 when the 2010 Displaced Worker Supplement was  conducted. To examine UI exhaustees’ economic circumstances and  determine how many exhaustees received supports from TANF and other  federal income support programs, we analyzed data from the 2010  Displaced Worker Supplement, merged with data from the Annual Social  and Economic Supplement of the 2010 CPS. Merging these two data  sets allowed us to identify UI exhaustees as of January 2010 (using data  from the Displaced Worker Supplement) and examine their household  incomes in 2009 (using data from the Annual Social and Economic  Supplement). We also interviewed officials from 16 state TANF agencies,  selected to reflect a range of changes in unemployment rates in recent  years, and we analyzed data on the UI and TANF programs from the  Department of Labor (Labor) and the Department of Health and Human  Services (HHS). To determine the extent to which UI agencies refer  exhaustees to other programs, we conducted a web-based survey with UI  agencies in 50 states and the District of Columbia, obtaining responses   For all research questions, we spoke with officials at Labor  from all 51.who oversee the UI program and officials at HHS who oversee TANF. We  also reviewed applicable federal laws and regulations, studies, and policy  documents. We conducted this performance audit from March 2011 to  February 2012, in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives (see appendix I  for further information on our scope and methodology).
subsections: section_title: Background
subsections: section_title: Unemployment Insurance Program
paragraphs: The UI program, established under Title III of the Social Security Act in  1935, was intended to, among other things, help those who become  unemployed through no fault of their own, and help stabilize the economy  during recessions. The program is generally financed by federal and state  payroll taxes levied on employers. Within the guidelines of federal law,  states administer the program and can specify who is eligible to receive  UI benefits and how much they receive. Nationwide, UI benefit payments  replaced 46 percent of a worker’s previous wages in 2010 on average.  Applicants must have earned at least a certain amount in wages and/or  have worked a certain number of weeks over a period of time to be  eligible for benefits. In addition, they must be available for and able to  work. For their part, UI agencies must identify recipients who are likely to  exhaust their benefits and refer them to re-employment services, such as  those available through state run-employment centers, known as “one- stops.” At these one-stops, states and localities are required to provide  services for many federally funded employment and training programs,  and they have the option of including additional programs, such as TANF.
Typically, eligible unemployed workers can receive UI benefits for up to  26 weeks in most states, though individuals may be eligible for fewer  weeks. During periods of high unemployment, states may provide up to  13 or 20 additional weeks of benefits through the Extended Benefits  program, funded jointly by states and the federal government. In 2009,  Congress temporarily authorized full federal financing of the Extended  Benefits program and later extended the authorization several times,  most recently in 2011. In 2008, Congress made additional weeks of  benefits available through the Emergency Unemployment Compensation  program, which are federally funded. The Emergency Unemployment  Compensation program has four tiers of benefits, the first two of which  are available in all states and enable eligible UI recipients to obtain  benefits for up to an additional 34 weeks. The second two tiers are only  available in states with high unemployment and provide up to 19 weeks of  additional benefits. In states that provide at most 26 weeks of regular UI  benefits, that offer the maximum 20 weeks of Extended Benefits  payments, and that are on all four tiers of Emergency Unemployment  Compensation, some eligible unemployed workers may receive up to 99  weeks of UI benefits (see fig. 1). As of January 8, 2012, eligible  unemployed workers could potentially receive the maximum 99 weeks of  benefits in 17 states, according to Labor’s data, though some individuals  may be eligible for fewer weeks in these states. The Emergency  Unemployment Compensation program and full federal financing of the  Extended Benefits program are scheduled to expire in March 2012.
The Personal Responsibility and Work Opportunity Reconciliation Act of  1996 created the TANF block grant, a $16.5 billion fixed federal funding  stream allocated to states to provide a wide range of services to low- income families who have children. States must maintain a specified  level of spending, referred to as maintenance of effort, to get their federal  TANF funds. The most recent data available show that in fiscal year  2010, states spent approximately $35.8 billion in federal and state TANF  funds, with 70 percent used for programs and services other than ongoing  cash assistance.
As established in federal law, the goals of the TANF program are to  provide assistance to needy families so that children may be cared for in  their own homes or in the homes of relatives, end needy families’  dependence on government benefits, reduce out-of-wedlock pregnancies,  and encourage two-parent families. In line with these goals, TANF funds  may be used in a variety of ways, including monthly cash assistance to  low-income families, child care, employment and training, subsidized  employment, transportation, and single or short-term payments for one- time urgent needs, such as for rent or utilities. States have flexibility to set  eligibility requirements for TANF benefits and services and to determine  the type of assistance they provide. However, federal law requires states  to involve at least a specified percentage of TANF cash assistance  recipients in work activities, such as participating in job training or  subsidized employment. States face financial penalties if they do not meet these specified rates. Additionally, certain individuals who do not  cooperate in establishing or enforcing child support orders face reduced  levels of TANF assistance, and possible denial of all TANF benefits.
In the period of the recession, states were able to draw upon two  additional TANF-related funding sources. The Personal Responsibility  and Work Opportunity Reconciliation Act of 1996 had created a TANF  Contingency Fund of up to $2 billion that states could access in times of  economic distress. Only a portion of this fund had been drawn down by  the states at the start of the recession, but the fund was depleted by the  end of 2009. Congress has appropriated up to $612 million for the  Contingency Fund for fiscal year 2012. In 2009, Congress also created a  $5 billion TANF Emergency Contingency Fund in the American Recovery  and Reinvestment Act of 2009 (Recovery Act), which was made available  to states that had certain increases either in their cash assistance  caseloads or in their expenditures for nonrecurrent short-term benefits or  subsidized employment.
section_title: 2 Million of Those Who Lost Jobs in the Recession Years Exhausted UI Benefits by Early 2010
subsections: section_title: Half of Workers Who Lost Jobs in the Recession Years Received UI, an Increase from Prior Years
paragraphs: The number of displaced workers increased substantially during the  recession years, and proportionately more of them received UI than in the  3 years prior to the recession. Specifically, from 2007 to 2009, 49 percent  of the 15.4 million people who lost jobs received UI. In contrast, 36  percent of the 8.3 million people who lost jobs from 2005 to 2007 received  UI (see fig. 2). The UI safety net expanded during a recession that  affected so many workers, as it is designed to do.
One reason for the higher rate of UI receipt during the recession is that  fewer displaced workers became re-employed quickly. Displaced workers  have diverse labor market experiences following a job loss, with some  finding new work soon afterwards, while others take longer to become re- employed. For workers displaced during the recession years, however,  comparatively fewer of them found new jobs quickly. Prior to the  recession, 30 percent of displaced workers did not receive UI and were  working again within 5 weeks of losing their job, compared to 18 percent  of workers who lost jobs in the recession years.
section_title: Lower-Wage Workers Were Less Likely to Receive UI
paragraphs: In both recessionary and nonrecessionary times, not all people who lose  jobs receive UI, an issue of interest to policymakers for many years. Our  previous work found that lower-wage workers were less likely to receive  UI than higher-wage workers in the 1990s and early 2000s. This trend  continued in the recent recession. Among workers who lost jobs from  2007 to 2009, those in the bottom 30 percent in earnings were half as  likely to receive UI benefits as displaced workers in the top 70 percent.  However, both groups received UI at a higher rate during the recession  than in the period before the recession (see fig. 3). We and others  previously identified several possible reasons for the historically lower  rate of UI receipt among lower-wage workers. For example, they are less  likely to have met the minimum earnings required for UI eligibility,  particularly if their work was intermittent or part-time. Family crises can  also cause some in marginal financial situations to quit a job (for example,  to care for a sick child), potentially making them ineligible for UI.
In the Recovery Act, Congress provided for incentive payments for states  that have certain UI laws in place, and low-wage workers may benefit  from such laws. As of September 2011, 39 states have been approved for  Recovery Act incentive payments totaling $4.4 billion (see table 1). Labor  has contracted with a research organization to examine the effects of  these incentive payments. The final evaluation report is due in 2013.
Most of the states that did not apply for incentive payments (8 states out  of 13) reported in our survey that they did not apply because of concerns  about costs, such as increased benefit payments or effects on state trust  funds or employers. Additionally, in our survey, 11 states responded  that their state had enacted laws resulting in more stringent eligibility  requirements or decreased coverage, such as reducing the maximum  number of weeks UI benefits could be provided or increasing the wage  level needed to qualify for UI.
section_title: 2 Million Displaced Workers Exhausted UI by January 2010, with More since Then
paragraphs: Two million of the 7.5 million workers who lost jobs from 2007 to 2009  and received UI had exhausted their UI benefits by January 2010, based  on the 2010 Displaced Worker Supplement (see fig. 4). While this  number is based on the most recent data available, it does not include  those who may have exhausted their benefits after the survey was  conducted.700,000 more who exhausted benefits than in the earlier period. Also, a  smaller percentage of those displaced in the 2007 to 2009 period  exhausted UI (27 percent) than in the earlier period (44 percent), likely  reflecting to some extent the availability of additional weeks of UI benefits  (see fig. 5).
section_title: Many UI Exhaustees Faced Difficult Economic Circumstances, but Few Were Likely to Qualify for TANF
subsections: section_title: 18 Percent of Exhaustees Were in Poverty in 2009
paragraphs: For those who lost jobs from 2007 to 2009 and exhausted UI, the CPS  data suggest that many faced difficult economic circumstances. Many  were still not employed in January 2010 and those with employment often  had reduced earnings. It is unknown whether the situations of these  exhaustees have improved or worsened since then because more current  data are not available.
More specifically, an estimated 46 percent of UI exhaustees who lost jobs  in the recession years were unemployed at the time they were surveyed  in January 2010 (see fig. 7). About a third (35 percent) of the exhaustees  were re-employed in January, a smaller proportion than in the period  before the recession (57 percent).
Among the exhaustees who were unemployed in January 2010, about  half appeared to have worked at some point in the previous year. An  estimated 50 percent had some earnings in 2009. These workers might  have done temporary work at some point in 2009, worked in a short-term  or a seasonal job, or found a new job but then were laid-off again.
Among those UI exhaustees who lost jobs in the recession years and  were re-employed, 71 percent experienced a reduction in earnings.median earnings replacement ratio was 0.74, meaning that half of re- employed exhaustees experienced a reduction in earnings greater than  26 percent, while the other half experienced a reduction of less than 26  percent or an earnings increase.
In addition to data on exhaustees’ employment and earnings, information  on household income provides a broader perspective on how exhaustees  have fared. These data suggest that some exhaustees may have been  helped by other sources of income, such as a household member who  was earning income in 2009, or income from assets, such as interest or  dividends. About two-thirds of exhaustees had a household member with  some wage or salary earnings in 2009. About 40 percent of exhaustees’  households had some income from assets, namely interest, dividends,  retirement, or rental income. In total, about 90 percent of UI exhaustees  had some private income sources within their household during calendar  year 2009 (table 2).
Nevertheless, while the annual income levels of UI exhaustees varied in  2009, their poverty rate was higher than that of other working-age adults  (ages 18 to 64). Specifically, 18 percent of UI exhaustees were in  poverty, in contrast to 13 percent of working-age adults (see fig. 8).  Furthermore, about 40 percent of UI exhaustees had incomes under 200  percent of the federal poverty threshold, compared to about 30 percent of  working-age adults.
In 2009, few UI exhaustees were likely to have received TANF support,  which is targeted to very low-income families with children. The majority  of UI exhaustees would not have qualified because they did not have a  minor child—55 percent of exhaustees did not have a child age 18 or  younger in their household. Among the 18 percent of exhaustees in  poverty, less than half (48 percent) had minor children. Overall, only 9  percent of exhaustees had a child age 18 or under, as well as income  below the federal poverty threshold, two general criteria for TANF  eligibility though the specific criteria vary by state.
Data derived from the CPS show that less than 3 percent of UI  exhaustees’ households received financial assistance from TANF or other  welfare programs in 2009 (see table 3). Overall, about one-third of exhaustees’ households received at least one government support in that  year. Significantly more of the households of UI exhaustees received  benefits from Social Security programs (18 percent for retirement,  Disability Insurance, and survivors programs) or Supplemental Nutrition  Assistance Program (SNAP, formerly known as the Food Stamp  Program)(15 percent) than from TANF.
With regard to Social Security, 21 percent of UI exhaustees’ households  received benefits from the retirement, Disability Insurance, survivors, or  Supplemental Security Income programs. Other than Supplemental  Security Income, the CPS data do not distinguish among the types of  Social Security benefits a household received, but 7 percent of  exhaustees were age 62 or older in January 2010 and therefore  potentially eligible for Social Security retirement benefits (see fig. 9).Some exhaustees may have received the other types of Social Security  benefits, or they may have been residing with a household member who  received Social Security benefits.
The estimated percentage of exhaustee households receiving TANF may  be slightly higher among those households more closely aligned with the  TANF target population. Among the households of UI exhaustees that  had minor children and income below 200 percent of the federal poverty  threshold, less than 10 percent received TANF or other welfare benefits in  2009 (see table 4). More than one-third of these households received  SNAP benefits.
Regarding the use of TANF benefits by UI exhaustees or others who  have lost jobs, state TANF officials we spoke with offered several reasons  why they may not have sought or received such assistance. One official  noted that some may not have sought TANF because they may still have  some resources or assets that they can rely on. Such assets may also  make a person ineligible for TANF since nearly all states consider the  value of a family’s assets when determining their eligibility for ongoing  TANF cash assistance. Other state officials said that some workers who  recently lost jobs may be reluctant to seek TANF due to its work activity  or child support requirements, particularly given the fact that the TANF  benefit is low.activities that limit the amount of time that can be spent on education and  training may not match the needs of displaced workers, who may require   Some officials also noted that the restrictions on work  more education or retraining to find a new job. Finally, several state  officials told us that some people who recently lost jobs may not apply for  TANF because they perceive a stigma attached to being a welfare  recipient.
In addition, with many states facing budget deficits related to the  economic recession, several of the state officials discussed with us  challenges in serving those affected by the recession. Officials we  interviewed in 7 of the 16 states said that their states have decreased  funding for the TANF program since the recession began. With regard to  federal funds, as a block grant, the TANF allocations that states receive  are not adjusted for caseload size, and the amounts have not been  adjusted for inflation since 1996. Collectively, states in economic distress  can access up to $612 million in the TANF Contingency Fund in fiscal  year 2012, but they must spend more than a specified amount of state  funds to do so. Other TANF funding sources that states had access to  during the recession have expired. For example, nearly all 51 states  accessed TANF Emergency Contingency Funds provided in the Recovery  Act, but these funds expired at the end of fiscal year 2010. In addition,  TANF supplemental funds, which had been awarded to 17 states with  historically low welfare spending per person and high population growth,  expired in June 2011. In our interviews, officials said that budgetary  constraints have led to decreased spending on work supports, such as  employment and training services and childcare, hiring freezes, and, also  greater enforcement of time limits. States must restrict most families to a  lifetime limit of 60 months of federally funded TANF cash assistance, but  they may use state funds to continue benefits for families reaching the  limit. In our interviews, some state officials said that budgetary constraints  had led their states to discontinue these payments.
section_title: Most State UI Agencies Reported Efforts to Provide UI Exhaustees with Information about Other Support Programs
paragraphs: While there are no federal requirements to refer UI exhaustees to other  support programs, most (45) of the state UI agencies we surveyed reported providing information or connections to support programs for exhaustees.These connections are made in a number of ways, such as through  websites, mail, staff referrals, and interagency coordination (see table 5).
States’ efforts to provide information or connect exhaustees to other  resources varied. For example:
Colorado’s UI website contains a list of resources for people who are  exhausting benefits, including TANF and programs that provide  assistance with foreclosure prevention, health insurance, and food  aid.
In Ohio, the UI agency mails letters to people who may be nearing the  exhaustion of their UI benefits. The letter provides websites and  phone numbers for programs that provide food assistance, cash  assistance, Medicaid, and help with foreclosure prevention, child  support payments, and job search.
In Washington state, a multiagency working group created a detailed  demographic analysis of potential exhaustees, shared data on  exhaustees across agencies, developed a resource guide that was  mailed to exhaustees and posted online, and established a new unit  of employees and a phone number to handle questions from  individuals about to exhaust UI. This working group includes  representatives from social and health services, veterans, commerce,  higher education, and workforce agencies. These stakeholders  continue to meet and share ideas regarding the coordination of  outreach activities to the growing population of exhaustees, according  to Washington officials.
According to Pennsylvania officials, UI exhaustees were one of the  populations Pennsylvania targeted for its subsidized employment  program that was funded by TANF Recovery Act funds. Using data  from the UI program, the workforce agency mailed UI exhaustees  information on the subsidized employment program.
State UI agencies we surveyed reported limitations associated with any  efforts to connect UI exhaustees with TANF, SNAP, and other support  programs. State UI agencies’ greatest barriers were limited UI agency  resources or staff, along with a restriction on spending UI administrative  funds (see fig. 10). These funds are provided by the federal government  and can only be used for administering the UI program. Other limitations  cited by state UI agencies include the lack of requirement for UI agencies  to refer exhaustees to support programs, confidentiality laws, and the  knowledge and training needed for UI staff to provide referrals to specific  programs. In addition, one state UI agency noted that automation has  been beneficial for reducing costs, but the corresponding reduction in in- person contact reduced the ability of the UI agency to refer people to  other programs. In many states, UI claims are filed remotely, primarily by  telephone or the Internet.
section_title: Conclusions
paragraphs: As the U.S. has faced the worst economic conditions since the 1930s, the  UI program has played a critical role in helping millions of displaced  workers through job losses. Despite the temporary benefit extensions,  however, some individuals have exhausted UI benefits without a job, and  a significant percentage have low incomes. As for the programs UI  exhaustees and their households have turned to for additional assistance,  few have received TANF as of 2009 in part because most do not match  the target population of TANF. As currently financed and structured at the  federal and state levels TANF does not appear to provide many of those  we studied income support to help them weather the bad economic times.  Some households have also turned to SNAP, whose financing and design  may have helped it to expand with the poor economic conditions. Those  eligible for Social Security retirement, disability, or survivors programs  appear to have turned to those programs. While most state UI agencies  already had efforts in place to help direct exhaustees to support  programs, continued attention to outreach may help ensure that eligible  people are connected to aid.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Secretaries of Labor and Health  and Human Services for review and comment. Labor provided written  comments, which are reproduced in appendix II. Labor said that our  report will help policymakers understand the economic circumstances of a  large percentage of unemployed workers and that it highlights the role the  UI program has played in helping unemployed workers, as well as the  role states have played in referring UI exhaustees to other support  programs. Labor and HHS provided technical comments, which we  incorporated as appropriate. We also provided a draft of this report to  Census Bureau officials for a technical review; we incorporated their  comments as appropriate.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Labor, the Secretary of Health and Human  Services, and other interested parties. The report is also available at no  charge on the GAO website at www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-7215 or at brownke@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. Staff members who made key contributions  in this report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To address the objectives of this request, we used a variety of methods.  Specifically, we analyzed pertinent data from two supplements to the Current  Population Survey (CPS): the Displaced Worker Supplement and the  Annual Social and Economic Supplement;  conducted a web-based survey with Unemployment Insurance (UI)  agencies in 50 states and the District of Columbia;  conducted structured phone interviews with officials from 16 state  Temporary Assistance for Needy Families (TANF) agencies; analyzed data on the UI program from the Department of Labor  (Labor), on the TANF program from the Department of Health and  Human Services (HHS), and on the Supplemental Nutrition  Assistance Program (SNAP) from the U.S. Department of Agriculture  (USDA); and  conducted interviews with officials from Labor and HHS, as well as  researchers, and reviewed applicable federal laws and regulations,  studies, and policy documents.
subsections: section_title: Analysis of Displaced Worker Supplement Data
paragraphs: To identify the number of workers who received and exhausted UI, we  used data from the biennial Displaced Worker Supplement to the Census  Bureau’s CPS. The CPS is the nation’s source of official government  statistics on employment and unemployment, and it is conducted on a  monthly basis with about 60,000 households. Every 2 years with the  January CPS, Census asks respondents 20 years or older whether they  or someone in their household have experienced a job loss within the  previous three years due to a plant or company closing or moving,  insufficient work, or their position or shift being abolished. If a respondent  answers yes, he or she is asked the questions in the Displaced Worker  Supplement.defined as a person who has experienced a job loss within the previous 3   As such, for purposes of our review, a displaced worker is  years due to a plant or company closing or moving, insufficient work, or  their position or shift being abolished. A person of any current  employment status (employed, unemployed, or not in the labor force) may  be classified as a displaced worker. For this review, we used data from  the 2010 Displaced Worker Supplement (the most recent available),  conducted in January 2010 with households in which someone lost a job  from 2007 to 2009—the years of the recent recession. For some of our  analyses, we also compared the 2010 data to data from the 2008  Displaced Worker Supplement, conducted with households in which  someone lost a job from 2005 to 2007, so that we could compare workers  displaced during the recession to those displaced prior to the recession.  Results of our review are as of January 2010 and January 2008, when  the Displaced Worker Supplements were conducted.
We chose to use the Displaced Worker Supplement over other possible  data sources, such as the Survey of Income and Program Participation,  because the Displaced Worker Supplement contains questions to identify  whether an individual who lost a job received and exhausted UI. For  purposes of our review, we defined a UI exhaustee as a displaced worker  with “yes” responses to the following two questions in the Displaced  Workers Survey:  “Did you receive unemployment insurance after that job (the job from  which the worker was displaced) ended?” and  “Did you exhaust your eligibility for unemployment benefits?”
We analyzed data from the Displaced Worker Supplement to estimate the  percentage of displaced workers who received UI and the percentage  who exhausted UI. We also used the data to examine the characteristics  and labor force statuses of UI exhaustees specifically, in particular their  ages, employment status at the time they were surveyed, and for those  employed, their earnings at their new job compared to their previous job.  Given the structure of the Displaced Worker Supplement, the survey  captures the experiences of workers who lose jobs earlier in the 3-year  period of the survey more fully than those who lost jobs later in the period,  since more time would have elapsed between when they lost their job and  when the survey was conducted. More specifically, the estimate of the  number of displaced workers who exhausted UI does not include workers  who may have exhausted UI at some point after January 2010.
In comparing UI receipt among higher-wage and lower-wage workers in  the 2005-2007 and 2007-2009 time periods (using the 2008 and 2010  Displaced Worker Supplements, respectively), we conducted the analysis  in two different ways and obtained virtually identical results. In the first  approach, for each of the time periods, we compared displaced workers  in the bottom 30 percent in average weekly wages with displaced workers  in the top 70 percent, for the respondents with wage data available.  Conducting the analysis in this way, displaced workers in the bottom 30  percent had average wages of $380 per week or less in the 2005-2007  time frame and average wages of $418 per week or less in the 2007-2009  time frame. In our second approach, we used the same average weekly  wage as the cut-off point for defining the lower-wage worker group in the  two time frames, adjusting for inflation. Specifically, lower-wage workers  were still defined as those with average wages of $380 per week or less  in 2005-2007. However, for 2007-2009, we used the $380 value to define  the lower-wage group, but adjusted it for inflation. As such, displaced  workers in the 2007-2009 time period were in the lower-wage group if  they had average weekly wages of $400 or less. These two methods  yielded results that were nearly identical. We presented the results of the  first approach in figure 3.
section_title: Analysis of Displaced Worker Supplement Merged with the Annual Social and Economic Supplement
paragraphs: To examine the incomes of UI exhaustees and their receipt of benefits  from government programs, we merged data from the Displaced Worker  Supplement with data from the CPS’ Annual Social and Economic  Supplement (ASEC). Census conducts the ASEC annually to provide the  usual monthly labor force data, as well as additional national data on work  experience, income, and use of government benefits, among other topics.  Due to the rotation structure of the CPS, approximately half of the  households who were administered the Displaced Worker Supplement in  January 2010 were also interviewed for the ASEC in March 2010.Merging data from the two surveys allowed us to identify UI exhaustees  (from the Displaced Worker Supplement) and examine their incomes  (from the ASEC). Specifically, we used the merged data to examine UI  exhaustees’ private income sources, their family incomes relative to the  federal poverty threshold, the presence of a child under the age of 18 in  the household, and the benefits received from government programs.  Data we report from the 2010 ASEC on the income status and receipt of  benefits of UI exhaustees is for calendar year 2009. As such, our results  may not necessarily reflect individuals’ circumstances directly after  exhausting their UI benefits, as we included all individuals who lost jobs  from 2007 to 2009 and who then received and exhausted UI during that  period and through January 2010, when the Displaced Worker  Supplement was conducted.
Because the merged sample contains approximately half the number of  observations as the full Displaced Worker Supplement sample, we  inflated the population weights so that the weighted population counts  from the merged sample would reflect the full displaced worker  population. In addition, following the guidance of staff at the Bureau of  Labor Statistics and the Census Bureau, we constructed raking factors to  rebalance the merged sample by the race and ethnicity of the  householder, the presence of children in the household, and the gender  of the displaced worker.
We used data in the ASEC to examine the incomes of UI exhaustees’  households from both private and government sources. For each person  in the sample 15 years old and over, the ASEC asks questions on the  amount of money income received in the preceding calendar year from  each of the following sources: earnings; unemployment compensation;  workers’ compensation; Social Security; Supplemental Security Income;  public assistance; veterans’ payments; survivors benefits; disability  benefits; pension or retirement income; interest; dividends; rents,  royalties, and estates and trusts; educational assistance; alimony; child  support; regular financial assistance from outside of the household; and  other periodic income. The income statistics in the ASEC refer to receipt  of income during the preceding calendar year, in contrast to the  demographic characteristics, such as age, labor force status, and family  or household composition, which are as of the survey date. The income of  the family/household does not include amounts received by people who  were members during all or part of the income year if these people no  longer resided in the family/household at the time of interview. However,  the ASEC collects income data for people who are current residents but  did not reside in the household during the income year.
Data on consumer income collected in the ASEC by the Census Bureau  cover money income received (exclusive of certain money receipts such  as capital gains) before payments for personal income taxes, Social  Security, union dues, Medicare deductions, etc. Therefore, money income  does not reflect the fact that some households receive part of their  income in the form of noncash benefits, such as food stamps, health  benefits, rent-free housing, and goods produced and consumed on the  farm. In addition, money income does not reflect the fact that noncash  benefits are also received by some nonfarm residents which often take  the form of the use of business transportation and facilities, full or partial  payments by business for retirement programs, medical and educational  expenses, etc. Moreover, readers should be aware that for many different  reasons there is a tendency in household surveys for respondents to  underreport their income. Based on an analysis of independently derived  income estimates, the Census Bureau determined that respondents  report income earned from wages or salaries much better than other  sources of income and that the reported wage and salary income is  nearly equal to independent estimates of aggregate income.
We determined exhaustees’ income-to-poverty ratios using Census  computations. The Census classifies the income-to-poverty ratio of each  family and unrelated individual using a poverty index adopted by the  Federal Interagency Committee. The index provides a range of income  cutoffs or “poverty thresholds” adjusted to take into account family size,  number of children, and age of the family householder or unrelated  individual. If a family’s total money income is less than the applicable  threshold, then that family and every individual in it are considered in  poverty. The official poverty thresholds are updated annually for inflation  using the Consumer Price Index. The official poverty definition uses  money income before taxes and excludes capital gains and noncash  benefits (such as SNAP benefits and housing assistance). The thresholds  do not vary geographically.
We calculated standard errors for our estimates using the Census  generalized variance functions, as published in the CPS January 2010  Displaced Worker, Employee Tenure, and Occupational Mobility  Technical Documentation. However, we adjusted these standard error  calculations to take account of the larger sampling interval of the merged  sample, following guidance from staff at the Bureau of Labor Statistics  and the Census Bureau.
We assessed the reliability of the CPS generally and of data elements  that were critical to our analyses and determined that, despite the  limitations outlined below, they were sufficiently reliable for our analyses.  Specifically, we:  reviewed documentation on the general design and methods of the  CPS Displaced Worker Supplement and the CPS ASEC, and on the  specific elements of the CPS data that were used in our analysis;  interviewed Census Bureau and Bureau of Labor Statistics officials  knowledgeable about the CPS data and consulted with these officials  periodically throughout the course of our study; and  completed our own electronic data testing to assess the accuracy and  completeness of the data used in our analyses. To the extent  possible, we compared our estimates against published reports using  the CPS.
As a result of these efforts, we identified the following limitations with the  data:
The Census Bureau determined that respondents report income  earned from wages or salaries much better than other sources of  income. Therefore, estimates of receipt of government assistance  may be underestimated.
Due to the small sample sizes in our merged sample, confidence  intervals around some of our estimates are wide. For these results,  we report the upper bound of the 95 percent confidence interval.
section_title: Survey of State UI Agencies
paragraphs: To determine the extent to which UI agencies refer exhaustees to other  programs, we conducted a web-based survey of state UI administrators in  all 50 states and the District of Columbia. The survey was conducted from  August to November 2011, with administrators from every state and the  District of Columbia responding. The survey included questions about  providing information to UI exhaustees about other support programs,  coordinating or working with one-stops and/or workforce agencies, data  on UI exhaustees, and changes states are making that may affect UI  coverage.
Because this was not a sample survey, there are no sampling errors.  However, the practical difficulties of conducting any survey may introduce  nonsampling errors, such as variations in how respondents interpret  questions and their willingness to offer accurate responses. We took  steps to minimize nonsampling errors, including pretesting draft  instruments and using a Web-based administration system. Specifically,  during survey development, we pretested draft instruments with UI  administrators from three states (Alabama, Arizona, and Pennsylvania)  and a representative from the National Association of State Workforce  Agencies in July 2011. We selected the pretest states to provide variation  in selected state UI program characteristics and geographic location. In  the pretests, we were generally interested in the clarity, precision, and  objectivity of the questions, as well as the flow and layout of the survey.  For example, we wanted to ensure definitions used in the surveys were  clear and known to the respondents, categories provided in closed-ended  questions were complete and exclusive, and the ordering of survey  sections and the questions within each section was appropriate. We  revised the final survey based on pretest results. Another step we took to  minimize nonsampling errors was using a web-based survey. Allowing  respondents to enter their responses directly into an electronic instrument  created a record for each respondent in a data file and eliminated the  need for and the errors associated with a manual data entry process. To  further minimize errors, programs used to analyze the survey data and  make estimations were independently verified to ensure the accuracy of  this work.
While we did not fully validate specific information that states reported  through our survey, we took several steps to ensure that the information  was sufficiently reliable for the purposes of this report. For example, we  reviewed the responses and identified those that required further  clarification and, subsequently, conducted follow-up research to ensure  the information they provided was reasonable and reliable. In our review  of the data, we also identified and logically fixed skip pattern errors for  questions that respondents should have skipped but did not. On the basis  of these checks, we believe our survey data are sufficiently reliable for  purposes of our work.
section_title: Interviews with State TANF Officials
paragraphs: To examine the role TANF played for individuals who lost jobs during the  recession and its aftermath, we conducted semi-structured telephone  interviews with TANF officials in 16 states. We pretested our questions  with California and Pennsylvania. In our interviews we asked questions  about the types of people seeking TANF, the types of services being  provided, whether the state received TANF Emergency Contingency or  TANF Contingency funds, challenges they faced in providing assistance  to those in need, and their knowledge of whether a relationship exists  between their agency and the state’s UI program.
The 16 states we selected to interview were chosen to represent a range  of unemployment rates and TANF cash assistance caseloads and to  achieve geographic diversity. The 16 states included in our analysis were:  Alabama, Arkansas, California, Colorado, Florida, Illinois, Michigan,  Minnesota, Montana, New York, North Carolina, Ohio, Pennsylvania,  Rhode Island, Texas, and Washington state. Collectively these states  represent more than half the families receiving ongoing TANF cash  assistance nationally.
section_title: Analysis of Labor, HHS, and USDA Data
paragraphs: We analyzed relevant data from Labor to supplement our analysis of CPS  data. Specifically, we analyzed Labor’s data on UI claims to determine the  number of people claiming UI benefits since 2007. We assessed the  reliability of the data by interviewing Labor officials knowledgeable about  the data, conducting electronic testing, and reviewing relevant  documents. We determined that the data were sufficiently reliable for our  purposes.
We also analyzed data on TANF and SNAP from HHS and USDA,  respectively, for our background sections and text boxes.
section_title: Interviews with Agencies, Researchers, and Others
paragraphs: We interviewed officials from HHS and Labor about their UI and TANF  programs and reviewed relevant federal laws and regulations, as well as  guidance and other agency documentation. Additionally, we interviewed  researchers and professionals from a variety of national organizations,  including workforce and unemployment organizations, and reviewed  available literature from these groups. These included the American  Public Human Services Association, National Employment Law Project,  National Association of State Workforce Agencies, and the Urban  Institute, among others.
section_title: Appendix II: Comments from the Department of Labor
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: Gale Harris (Assistant Director), Yunsian Tai (Analyst-in-Charge), Keira  Dembowski, Rosemary Torres Lerma, Rhiannon Patterson, Stuart  Kaufman, Monique Williams, and Hiwotte Amare made significant  contributions to all aspects of this report. Also contributing to this report  were Susan Bernstein, Nancy Cosentino, Stanley Czerwinski, Julianne  Hartman Cutts, Alex Galuten, Thomas James, Sarah McGrath, Mimi  Nguyen, Jeremy Sebest, and Almeta Spencer.
section_title: Related GAO Products
paragraphs: Temporary Assistance for Needy Families: Update on Families Served  and Work Participation. GAO-11-880T. Washington, D.C.: September 8,  2011.
Temporary Assistance for Needy Families: Implications of Caseload and  Program Changes for Families and Program Monitoring. GAO-10-815T.  Washington, D.C.: September 21, 2010.
Temporary Assistance for Needy Families: Implications of Recent  Legislative and Economic Changes for State Programs and Work  Participation Rates. GAO-10-525. Washington, D.C.: May 28, 2010.
Unemployment Insurance Trust Funds: Long-standing State Financing  Policies Have Increased Risk of Solvency. GAO-10-440. Washington,  D.C.: April 14, 2010.
Temporary Assistance for Needy Families: Fewer Eligible Families Have  Received Cash Assistance Since the 1990s, and the Recession’s Impact  on Caseloads Varies by State. GAO-10-164. Washington, D.C.: February  23, 2010.
Support for Low-Income Individuals and Families: A Review of Recent  GAO Work. GAO-10-342R. Washington, D.C.: February 22, 2010.
Unemployment Insurance: Low-Wage and Part-Time Workers Continue  to Experience Low Rates of Receipt. GAO-07-1147. Washington, D.C.:  September 7, 2007.
Unemployment Insurance: More Guidance and Evaluation of Worker- Profiling Initiative Could Help Improve State Efforts. GAO-07-680.  Washington, D.C.: June 14, 2007.
Unemployment Insurance: Factors Associated with Benefit Receipt.  GAO-06-341. Washington, D.C.: March 7, 2006.
Unemployment Insurance: Better Data Needed to Assess Reemployment  Services to Claimants. GAO-05-413. Washington, D.C.: June 24, 2005.
Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is  Limited. GAO-01-181. Washington, D.C.: December 29, 2000.