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. 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. 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. 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). 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.