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HRD-92-34R 1 (1992-04-28)

handle is hein.gao/gaobackbl0001 and id is 1 raw text is: (3A(I) United states General Accounting OMce M Washlngton, D.C. 20548 Human Resources Division April 28, 1992 The Honorable Lloyd Bentsen 146748 Chairman, Committee on Finance United States Senate Dear Mr. Chairman: Although 97 percent of all wage and salary workers are covered under the Unemployment Insurance (UI) program, the proportion of the unemployed who receive UI benefits has declined by one-fifth between 1975 and 1991. The decline in UI recipiency has been widely reported, raising fears that the UI program no longer acts as a4n effective economic stabilizer or maintains the purchasing power of the unemployed. At your request, we are conducting a study of certain aspects of the UI program. Specifically, we are examining the decline in the proportion of the unemployed who receive UI benefits, the factors contributing to the decline, and the effect of the decline on the program's objectives. As requested by your office, this letter provides some preliminary results from our work on the decline in the recipiency rate and its effect on the program's overall objectives. Our forthcoming report will address the reasons for the decline in the proportion of the unemployed who receive benefits, focusing on federal and state UI law changes. BACKGROUND The primary objectives of the UI system are to (1) provide temporary and partial wage replacement to those who lose their jobs through no fault of their own and (2) act as an economic stabilizer during economic downturns. The system, which is operated as a partnership between the federal government and the states, provides for the payment of regular benefits as well as extended benefits during periods of high unemployment. A state UI payroll tax on employers finances regular UI benefits and one-half of the extended benefits program. 1 The federal IThe extended benefits program gives unemployed workers additional benefits once they exhaust their regular benefits, which occurs after 26 weeks in most states. Extended benefits are paid on a state-by-state basis during periods of high unemployment. GAO/HRD-92-34R Declining UI Recipiency os544(6e/f4?6

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