Evaluation of the Unemployment Compensation Provisions of ARRA

Prepared for
U.S. Department of Labor
Office of the Assistant Secretary for Administration and Management

The recession that began in 2007 brought extensive unemployment and led to the longest average joblessness durations seen since the 1940s. Long-term joblessness remained higher than any other point during the post-war period for another five years after the recession officially ended in 2009. Over the course of the recession, a growing number of unemployed workers exhausted all of the benefits to which they were entitled through the unemployment insurance (UI) program, which provides up to 26 weeks of benefits in most states. This prompted Congress to increase the number of weeks of benefits available to UI recipients by enacting the temporary Emergency Unemployment Compensation Act of 2008 (EUC08) program. In addition, states made changes to their program rules that increased payment activity through the permanent Extended Benefits (EB) program, which automatically makes available additional weeks of benefits in states with unusually high unemployment rates. By the end of 2009, up to 99 weeks were available in high-unemployment states through the UI, EUC08, and EB programs combined—the longest potential duration of benefits in the history of the unemployment compensation system. Furthermore, the American Recovery and Reinvestment Act of 2009 (ARRA) offered states financial incentives to broaden access to the UI system and increase the generosity of benefits. More generally, the recession and the Federal legislation in response to it raised anew questions about how best to meet the needs of unemployed workers during both recessionary and nonrecessionary time periods.

Mathematica is conducting an evaluation of these expansions to the unemployment compensation system. The evaluation team also includes the Urban Institute. For this research, Mathematica conducted a survey of UI administrators around the nation. Mathematica also collected individual-level UI claims and wage records data from a large set of states, fielding a survey to recipients of unemployment benefits in a subset of those states. These data will be used to produce two study reports. The first is an assessment of states’ decisions about whether to adopt (1) an option that facilitated the payment of EB program benefits to unemployed workers for a longer period of time than would otherwise have been the case; and (2) provisions specified by ARRA that were intended to increase the generosity of benefits and to make it easier for unemployed workers to qualify and retain eligibility for benefits. The second study report is an assessment of who received EUC08 and/or EB benefits, how they compared with those collecting UI benefits only, and how the availability of additional benefits was related to recipients’ reemployment outcomes and financial well-being.