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123 Monthly Lab. Rev. 21 (2000)
Why Are Many Jobless Workers Not Applying for Benefits

handle is hein.journals/month123 and id is 555 raw text is: Why are many jobless workers not applying for benefits? More than half of those meeting the official definition of unemployment do not file for unemployment insurance benefits-either because they think they are not eligible or because they are optimistic about finding a job Stephen A. Wandner and Andrew Stettner Stephen A. Wandner is an economist at the Employment and Training Administration (ETA), U.S. Department of Labor. Andrew Stettner formerly worked for ETA as a research analyst. he proportion of unemployed individuals receiving unemployment insurance (Ut) has dropped steadily over the past 40 years. Recipiency rates-the number of persons receiving unemployment insurance benefits (from administrative data) divided by the total number of unemployed persons (from Current Population Survey data)--have provided a consistent mea- sure of the tn program's scope. Recipiency rates averaged 49 percent in the 1950s, 42 percent in the 1960s, 40 percent in the 1970s, and 33 percent in the 1980s. The rate reached a low point of 28.5 percent in 1984, and since then it has stayed above 30 percent, reaching a recent high of 35.1 percent in 1996.1 (See table 1.) This trend has raised concerns among policymakers that the uTI program has become less responsive to U.S. workers. One explanation for the drop in recipiency rates is that fewer unemployed work- ers are filing for uI benefits. Unemployed work- ers cannot receive benefits if they do not apply. However, very little is known about these nonfilers, because they do not enter into the ut system. This article reports on the results of two recent supplements to the Current Popula- tion Survey (cPS) that were designed to measure the magnitude of nonfiling and to determine the reasons that many unemployed persons do not seek benefits. The supplements were jointly sponsored by the Bureau of Labor Statistics (BLS) and the Employment and Training Admin- istration (ETA) of the Department of Labor. In its Report and Recommendations, the Advisory Council on Unemployment Compen- sation reported that declines in Ut recipiency rates have raised particular concern, in large part because they threaten the primary functions of the U1 system.2 On the microeconomic level, the decline in recipiency means that the uI system is serving fewer workers as a temporary wage replacement system. The decline in reci- piency also has an impact on the macroeco- nomic function of unemployment insurance. If the recipiency rate does not increase substan- tially during a recession, the economy does not get a countercyclical infusion of consumer spending in response to an increase in total ut payments. The structure of the Extended Benefits pro- gram highlights the impact of the decline in recipiency on the macroeconomic function of U1 benefits. The insured unemployment rate (IuR)-- the total number of continued unemployment insurance claims divided by the total number of employed covered by unemployment insurance- is the statutory trigger used by the Extended Benefits program, which provides benefits be- yond the normal 26-week maximum benefit dura- tion period during times of economic downturn.3 The long-term decline in ut recipiency rates hampers the effectiveness of the Extended Bene- fits program because the trigger rate is less likely to cross the legal threshold during a recession. Understanding why individuals do not file for benefits may inform current policy discussions about reforming the Extended Benefits program of the ut system. While a fair amount of research has been published about the decline in recipiency rates, research on why individuals choose not to file Monthly Labor Review June 2000 21

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