Options for Addressing Long-Term Unemployment as the Economy Recovers

The recent recession and its aftermath have once again demonstrated the importance of the unemployment insurance system as a vital part of the nation’s safety net. But some facets of the program are in need of repair, including the high rate at which recipients run out of regular benefits, even in a strong labor market. Since the mid-1970s, the exhaustion rate has increased by three to four percentage points per decade, after adjusting for cyclical variation and temporary benefit extensions. This brief, drawing on an extensive review of research on the secular rise in UI exhaustions and programs designed to reduce long-term unemployment, considers what federal and state policymakers could do to more effectively address this problem. The challenge to policymakers is to devise efficient ways of helping UI recipients become reemployed rapidly and, if necessary, supporting them while they search for new jobs. The author concludes that the Worker Profiling and Reemployment Services program already in place provides a good framework for helping to ensure that UI benefits go to workers who comply with the rules and that claimants who need reemployment assistance can get it, but these programs are badly in need of strengthening. In particular, too few of the claimants likely to exhaust are being referred to employment-related services, especially intensive services such as retraining