The Disgrace of Our Shredded Unemployment Insurance System

Robert B. Reich
Marketplace, July 9, 2008

Congress has extended unemployment benefits 13 additional weeks,
over and above the 26 weeks normally provided. That's good as far as it
goes. But most people who lose their job these days don't qualify for
any unemployment benefits at all.

How can this be? Simple. In order to be eligible, most states require you
to have been working in the job you lost full time, and for a certain
number of years.

These requirements made sense decades ago when labor markets were far
more stable. Then, most working people stayed in the same full-time job
for years, and only lost it temporarily during the downdraft of a
recession. They picked it up again when the economy rebounded. And back
then, one full-time breadwinner could keep a family whole.

In those days, unemployment insurance counter-balanced recessions by
keeping money in the pockets of working families.

But nothing is stable about today's labor market. Every time the economy
sinks, employers fire workers permanently. Even when the economy is
doing fine, pink slips proliferate -- although it's easier then to find a
new job.

As a result, a growing fraction of the labor force is in a job only a few
years.

Meanwhile, full-time jobs are vanishing. More companies are contracting
out their work. This means that more people than ever are doing several
part-time jobs, or are self-employed.

They're also more likely to be part of a couple whose family depends on
two sets of paychecks. Nowadays, over 80 percent of mothers with young
children are in the paid workforce.

So when times get tough, as they are now, many people lose jobs after
having them for only a few years, or lose a part-time job, or lose their
client. Or one member of a couple loses a job or loses earnings.

This is why so many American families are finding themselves in finiancial
trouble. But there's no safety net. They don't qualify for unemployment
benefits. They don't even qualify for partial benefits, reflecting the
portion of their earnings that have been lost.

Without anyone noticing, the unemployment insurance system has shrunk. Not
only does it now cover a small fraction of families who need it, but it no
longer functions as a counter-cyclical device to keep family incomes up
during economic downturns.

It's a disgrace that most Americans who lose their jobs don't qualify
for unemployment insurance. Congress should expand coverage so a
majority of American families have some security in these perilous
times.