Association for Public Policy Analysis & Management

The last major reform of the unemployment insurance system was enacted in 1976.  In the intervening 40 years labor markets have changed, the structure of the UI system has not adapted to changing demographics, and some federal UI provisions that worked when enacted have not aged well.  This paper examines what the research suggests for reforming the federal-state UI program today.  It covers the benefit side of the program, examining what needs to be done to provide adequate benefits to experienced workers who become unemployed through no fault of their own.  It examines what has to be done to adequately fund the UI system, which has proved to be severely underfunded because of the federal UI wage base that has not been increased from $7,000 since 1983 and tax rates that have been eroded with the declining effectiveness of the UI experience-rated tax rate system.  This paper represents a rethinking of UI research and policy issues that the authors dealt with in their 1997 edited volume, Unemployment Insurance in the United States: Analysis of Policy Issues.