Jobs Friday: The Broken Unemployment Insurance System : Planet Money In this week's edition of jobs friday, we look into why 72% of unemployed people do not have unemployment insurance.
NPR logo

Jobs Friday: The Broken Unemployment Insurance System

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Jobs Friday: The Broken Unemployment Insurance System

Jobs Friday: The Broken Unemployment Insurance System

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


Hey, everyone. This is THE INDICATOR FROM PLANET MONEY. I'm Cardiff Garcia. Today is Jobs Friday. The jobs report for the month of October is out. And last month, the economy created 128,000 new jobs. Now, those numbers were temporarily depressed because of the strike by workers at General Motors, which was going on when the data for this report was being collected. So those jobs of the workers who were striking did not show up in the report. But the strike is over now, so those jobs will show up in next month's report. All in all, this was a good, solid report. But as usual on Jobs Friday, THE INDICATOR is looking at a longer term trend in the labor market, not the month-to-month fluctuations.

And today's topic was brought to us by Martha Gimbel. She's a frequent Jobs Friday guest and now the manager of economic research at Schmidt Futures. And a topic she brought to us is about the unemployment insurance system, which is run by the states in which unemployed people rely on when they don't have a job. It's broken, she says, and it needs to be fixed. Martha has even brought us a specific indicator showing how many unemployed people are not actually getting unemployment insurance benefits now. My jaw dropped when she told me this indicator. And now you're going to get to hear it right after the break.


GARCIA: Martha Gimbel, welcome back to the show.

MARTHA GIMBEL: Thanks for having me back.

GARCIA: All right, so you brought us this kind of astonishing figure - an indicator, you might say. All right. Today's Planet Money indicator is 72%. What is that?

GIMBEL: So that is the percent of the unemployed who are not on unemployment insurance. So the way we get that number is we take the number of unemployed from the Bureau of Labor Statistics, number of continuing claims for unemployment insurance from the Employment and Training Administration and divide the one by the other. So you can look back at how this number has been evolving over time. And the percent of the unemployed who aren't on unemployment insurance has been increasing. So it was about 60% in the '60s and 70s.

GARCIA: OK, so let's talk about why this is happening. Why are there so many people who are unemployed that are not getting unemployment insurance, as many of them, presumably, are eligible for?

GIMBEL: So it's two things. The first is that we have had policy changes. You've seen states make some pretty big changes in how generous unemployment insurance is, how hard it is to qualify for unemployment insurance and, also, how difficult it is to just fill out the paperwork and stay on unemployment insurance.

GARCIA: So for example, there might be, like, stringent requirements for actually qualifying to get this insurance. Can you kind of fill in the details for us there?

GIMBEL: So some of it is about how filing works. So for instance, some states are now saying that you can only file for unemployment insurance online. To those of us who live our lives on Twitter, that may not seem like a big deal. But if you're poor, if you don't have access to Internet, that can make it really difficult for you to get the benefits that you're entitled to. You've also seen states cutting the number of weeks that people are eligible for. So you have around 10 states now where people can only get fewer than 26 weeks, which is usually considered, quote-unquote, "standard" for unemployment insurance. In North Carolina, it's only 12 weeks.

GARCIA: I guess the first question that comes to mind then is, why haven't states done anything about fixing this? Why have they made these policy changes that have made it harder to qualify for unemployment insurance?

GIMBEL: Some of it is about the fact that people don't want to give money to unemployed people. They think that it's not a good use of funds. And so you've seen some reluctance to pay out money to people who may not be...

GARCIA: It's a political decision is what you're saying.

GIMBEL: It is a political decision, yes...


GIMBEL: ...For a lot of states. You've also seen about half of states and jurisdictions - the reason I'm saying jurisdictions is that you have places like the District of Columbia, which is not a state but has its own unemployment insurance system, where they are considered to be underfunded. And so you are having states that are trying to pay out less in benefits because they don't have that much in their system.

GARCIA: So that if they were to make it easier to qualify, it would actually be a fiscal problem. They might not be able to afford paying out that unemployment insurance, even though, presumably, unemployment insurance is there for the people who might need it.

GIMBEL: Exactly. A lot of it hasn't been updated in a very long time. So for instance, only 16 jurisdictions have a taxable wage base that is indexed to inflation. And the federal unemployment tax base is $7,000. And that hasn't been changed since 1983.

GARCIA: Since 1983.


GARCIA: What does that mean though?

GIMBEL: On the $7,000 of wages, the employer has to pay into the federal unemployment insurance system.

GARCIA: According to some formula.

GIMBEL: According to a formula - 0.6%, about.


GIMBEL: But then after they've paid out $7,000 in wages, they're done.

GARCIA: That's it.

GIMBEL: They don't have to pay in anything more.

GARCIA: And they haven't updated that since 1983.

GIMBEL: 1983.

GARCIA: That seems like a long time (laughter).

GIMBEL: It is a very long time to not have updated this number.

GARCIA: OK. And because of this, some states and jurisdictions simply may not have the money to pay out more than they already are in unemployment insurance.

GIMBEL: Yeah. There's been a lot of conversations about whether we are or are not going into a recession. And taking a step back from when a recession is or is not happening, we're going to go into that recession, at this point, with about 50% of jurisdictions having underfunded unemployment insurance systems.

GARCIA: So fixing the unemployment insurance system seems like it should be a priority. At the moment, it doesn't seem to be cutting it. Even if you agree with the political decisions that have been made in some places, there are other places where the problem is actually just the fact that it hasn't been updated, not anything to do with the democratic process or how these decisions are made.

GIMBEL: Think about the unemployment insurance system is in a recovery or an expansion. No one really pays that much attention to it because it's not top of mind for us, right? The unemployment rate right now is low.

GARCIA: Pretty low - it's 3.5%.

GIMBEL: It's very low. Right, yeah. So you don't think about it as much.

GARCIA: There's not pressure on politicians to get it done right now.

GIMBEL: Exactly. So, like, if you look back to conversations in 2009, 2010, there were a lot of debates about the unemployment insurance system and how we could support workers in a really bad recession. But now that we're out of that recession, everyone's kind of forgotten about it.

GARCIA: OK. And you mentioned that there were two reasons that so high a share of unemployed people are not getting unemployment insurance. The first one, which you just covered, are policy decisions and lack of updating an archaic system. What's the second reason?

GIMBEL: So - and stay with me here. Our economy is different than it was in the '60s and '70s.


GIMBEL: So one example of that is long-term unemployment, which is defined as being unemployed for basically more than six months. Right now, even with our unemployment rate as low as it is, about 20% of the unemployed have been out of work for more than six months.

GARCIA: And is that a historically pretty high share?

GIMBEL: Yeah. So if you look at, let's say, 2000, which is a time where we had around the same unemployment rate, it was about 10%; late 1960s, it was 5%.

GARCIA: Wow. So relative to the 1960s, as a share of the overall unemployed, four times as many people are long-term unemployed right now.

GIMBEL: Yeah. And you haven't seen the share of the unemployed who are long-term unemployed really improving over the last year. There's lots of other measures of labor market health that have been getting better, and that's really exciting. But something's going on with long-term unemployment. It looks like there may be some kind of shift in how our economy is working.

GARCIA: And you're saying that in terms of unemployment insurance, it's harder for unemployment insurance to reach those people because, by definition, they are past the point of eligibility, even in the most generous states and jurisdictions.

GIMBEL: Right. So we used to talk about 26 weeks as being really standard for unemployment insurance. But if 20% of the unemployed are going to have more than 26 weeks of unemployment, even in good times, that's something we really need to think about. Keep in mind that at the height of the Great Recession, almost 50% of the unemployed were long-term unemployed.

GARCIA: All right. Well, I got to say it's a depressing figure, but it seems like a really important thing for people to know and, also, for people to, like, maybe agitate their policymakers about. There's a lot of people that would benefit from a better-designed unemployment insurance system. And it doesn't exist right now.

GIMBEL: One thing I also want to say is that if you have left your job or have been let go from your job and you think that you're not eligible for unemployment insurance, you should actually check the rules in your state because they're often quite complicated. And you may, in fact, be eligible.

GARCIA: You just don't know it.

GIMBEL: Yeah. It's a complicated system. It can be hard to navigate.

GARCIA: You want to ring the air horn?


GARCIA: Blow the air horn, I mean.


GARCIA: Martha Gimbel, thanks so much.

GIMBEL: Thanks for having me.

GARCIA: Today's episode of THE INDICATOR was produced by Jared Marcell (ph). Our fact-checker is Nadia Lewis. Our editor is Paddy Hirsch. And THE INDICATOR is a production of NPR.


Copyright © 2019 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.