Unemployment Insurance Reform: Where do we go from here?
By Sander Levin, Patrick Cooney, and Poverty Solutions Staff
Introduction
During the COVID-19 pandemic, the federal government expanded the unemployment insurance system in unprecedented ways. As tens of millions of Americans lost work and the country faced the possibility of a deep recession, the federal government broadened and extended Unemployment Insurance (UI) coverage, and gave all workers a generous federal supplement on top of state benefits, pushing hundreds of billions of dollars into the system. The expansion has been credited with stabilizing individual households and the U.S. economy during a global pandemic and jumpstarting the economic recovery.
However, the reason such significant federal intervention was needed during the pandemic was because, under normal circumstances, our UI system fails to cover enough workers, pay out sufficient benefits, and meaningfully connect displaced workers with new opportunities for training and employment. If the existing system had remained in effect during the pandemic, it would have failed to achieve its central aims of stabilizing both individual households and the macro economy during economic downturns. And the U.S. economy almost certainly would have fallen into a deep and prolonged economic recession.
In June 2022, the University of Michigan’s Gerald R. Ford School of Public Policy held a two-day symposium on the future of the nation’s UI system, featuring some of the nation’s foremost experts on UI, to examine the foundations of the system and outline steps towards strengthening that foundation. The symposium was chaired by former U.S. Congressman Sandy Levin, a champion for strengthening the UI system over his 36 years in Congress and now a distinguished policymaker in residence at the Ford School. Symposium sessions focused on how to adequately fund a strong UI system, how to cover more workers and provide sufficient benefits, and how to transform UI into a hub of the workforce development system, where unemployed workers are connected with robust reemployment services.
This report aims to summarize central learnings from the proceedings, with the goal of finding substantive, common-sense reforms that can strengthen the system to better support U.S. households and the macro economy. Many of the reforms detailed below are not new ideas – in fact, many have been raised repeatedly by policymakers on both sides of the aisle over the past 30 years. We know what is needed to create a system that supports workers when they lose employment, provides support to more workers, and gets unemployed workers back to work quickly. The task now is to do it.