Talking Points

Unemployment insurance (UI) is our nation's first line of defense in economic downturns, but millions of Americans are outside of the program's safety net.

• By assisting laid off workers experiencing financial hardship while searching for employment, UI boosts the economy.
• But because UI programs in many states pay inadequate UI benefits to a low proportion of unemployed workers, the UI safety net is insufficient.

With unemployment benefit claims reaching levels not seen since the recession of the early 1990s, UI reform is an urgent priority.

• The jobless rate is not expected to decline in coming months.
• State legislatures from California to Georgia have already taken steps to improve UI in response to worsening economic conditions.
• States need to improve benefit levels and expand eligibility now, while the need is greatest.

States with low trust fund balances must avoid cutting UI benefits in a recession.

• Some states, including IL, MN, MO, ND, NY, TX, and WV, will be under financial pressure to cut benefits in the coming months.
• Other states will join this list if the recession is long or deep.
• In these states, trust fund solvency may require UI payroll tax increases and/or federal loans to avoid benefit cuts or restrictions in eligibility.

Many states have UI trust funds sufficient to expand their UI safety nets and help the sinking economy.

• Regular state UI benefits are financed through state payroll taxes and paid from state trust fund accounts maintained in the U.S. Treasury.
• State trust fund levels were boosted by a $8 billion transfer of federal funds in 2002.
• Despite current unemployment rates, many state UI trust funds can adequately meet the needs of the unemployed in 2003.

Polling on UI

To see NELP's Unemployed Workers National Survey, click here.

The public strongly supports measures assisting laid off workers. A 2001 poll by Lake Snell Perry & Associates found that 76 percent of Americans supported increasing UI benefits for laid off workers.

The materials in this package come in large part from the Center for Policy Alternatives, the National Employment Law Project, the Center on Budget and Policy Priorities, the Economic Policy Institute, and the AFL-CIO .  ALICE would like to thank these groups for mapping the high road by reforming the Unemployment Insurance system in the states.

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