'I'm alarmed': With recession fears rising, jobless benefits still fall short: Report
'I'm alarmed': With recession fears rising, jobless benefits still fall short: Report
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Can you get unemployment if you quit? What to know about benefits.
Being out of work doesn't mean you automatically qualify for unemployment benefits. Here's what to know before applying.
During the COVID-19 recession, 22 million laid-off workers sought unemployment benefits, sparking chaos in the payment system and compounding the financial woes of jobless Americans.
Five years later, with many forecasters predicting another downturn is likely in 2025, a far less burdened benefits system remains plagued by myriad problems that could hamper payments to Americans who lose their jobs in an economic slump, according to a new report.
Nearly 1 in 5 unemployment insurance recipients say their benefits were inadequate, with a third complaining they've struggled with food insecurity despite the payments, according to a survey and study by the National Employment Law Project.
Large shares of beneficiaries also lament delayed payments, jammed phone lines, hard-to-navigate websites and incorrectly denied benefits, among other issues, according to the survey, which was conducted in partnership with online polling firm YouGov in September.
The firms surveyed 1,480 workers who were unemployed at some point from 2019 to 2024 and the results were provided exclusively to USA TODAY.
'I'm alarmed,' said Amy Traub, senior researcher and policy analyst for NELP and a co-author of the study. 'The unemployment insurance system is really falling far short in its function of supporting unemployed workers.'
The gaps exist even though Congress provided $1 billion in the American Rescue Plan of 2021 to shore up jobless benefits. Traub said the money did foster more timely payments and website improvements but there are still shortcomings in those and other areas.
States finance unemployment payments themselves while the federal government bankrolls the system's technology and infrastructure. Both are funded by payroll taxes that are generally paid by employers.
Why do we have unemployment insurance?
Besides helping workers make ends meet when they lose their jobs, jobless benefits bolster consumer demand, helping avoid – or dig the economy out of – a recession, the NELP report says. And the payments ensure that workers have enough time to find a job that best suits their skills, improving the efficiency of the labor market and economy.
Economists surveyed say there's a nearly 50% chance of a recession because of President Donald Trump's sweeping tariffs on imported goods, according to a survey by Wolters Kluwer Blue Chip Economic Indicators. JPMorgan Chase has put the odds at 60%.
Among the lingering trouble spots with the system:
Benefits fall short
Nineteen percent of the unemployment recipients polled said the money they received wasn't enough to meet their financial needs, the survey showed.
To be sure, the checks go a long way toward helping laid-off workers stay afloat. Of unemployment applicants who didn't receive benefits, 51% experienced hunger, 40% struggled to pay their rent or mortgage and 37% had a hard time paying medical bills, according to the survey. By contrast, among those obtaining payments, 33% went hungry at times, 29% had issues with housing payments and 30% couldn't pay medical costs.
Yet it's troubling that about a third of beneficiaries still had difficulty covering basic expenses, Traub said.
'During the next recession, if we have large numbers of workers who lose their jobs, we want to be sure they're not going hungry or losing their homes,' she said.
A big reason many recipients can't cover such necessities is the wide disparities among states in their benefit disbursements, Traub said.
In early 2024, for example, Alabama workers received an average benefit of $252 a week, replacing 29% of their prior wage on average, while workers in Washington state got an average $721 a week, or 49% of their previous pay.
On average across the U.S., unemployment covered 36% of a worker's previous pay.
Also, most states provide up to 26 weeks of benefits – a standard that's typically expanded in a recession – but 13 states dole out checks for 12 to 21 weeks, including Arkansas, Iowa, Michigan, Oklahoma, South Carolina, Alabama, Kansas and Florida, according to the Center on Budget and Policy Priorities.
Jammed phone lines, uncooperative websites, late payments
During the COVID-19 pandemic, an unprecedented surge of applicants struggled to obtain payments. Surprisingly, freshly laid-off workers nowadays, numbering about 200,000 each week, still face obstacles.
From 2022 to 2024, about 22% of applicants said they couldn't reach their state unemployment office by phone, the same share as during the pandemic (2020-2021); 20% complained of hard-to-navigate websites vs. 23% during the health crisis; and 17% pointed to delays receiving payments, compared to 21% during the crisis.
Many states beefed up staffing during the COVID-19 pandemic, shifting workers from other parts of state unemployment agencies to customer service, but moved them back to their old positions as the spike in applications ebbed, Traub said. In many cases, that left a reduced but still sizable share of workers struggling to access benefits.
Employers discourage workers from applying
Nearly 1 in 5 workers said an employer tried to deter them from applying for benefits, with 14% saying such steps included telling them they weren't eligible and 5% threatening retaliation if they applied.
Employers may have the incentive to dissuade staffers from filing for unemployment because the taxes they pay to support the benefits system are based on the number of their workers who successfully file claims.
'It's not really up to the employer who's eligible and who's not,' Traub said.
Incorrectly denied benefits
About 17% of applicants polled said they were improperly denied benefits since the pandemic. The question of whether applicants are entitled to payments can get thorny, hinging on whether they were laid off or fired for cause, and whether they met thresholds for the number of hours they worked and the wages they earned in previous months, Traub said
Discrimination
About 7% of applicants said they faced discrimination because of race or other reasons when they sought benefits, the survey showed.
In a related issue, a growing number of states are using new ID verification systems to detect fraud, according to the report, which was coauthored by researchers Alexander Hertel-Fernandez and Sanjay Pinto. Twelve percent of Black workers report trouble verifying their identity, more than twice the share of white employees, according to NELP's survey.
The NELP report pointed to facial recognition technology that's less accurate for people with darker skin and questions that rely on data from credit bureaus. Black workers are less likely to have substantial credit histories on file, the report said.
Workers in Southern states face more hurdles
Broadly, workers in Southern states are far more likely than those in other regions to complain of discrimination, delayed payments, low payment levels and inadequate duration of payments, the report said. It cited racism and a 'lack of adequate support for social infrastructure' that may more prevalent in the South.
Among NELP's recommendations to bolster the system:
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'Now we can go forward to try to do positive trade, growing trade,' he said. As part of the deal, Beijing has promised to speed up shipments of rare earth metals, a crucial component for global auto and defense industries. Washington will ease export controls. This marks the first sign of movement on key issues. The proposal will now be presented to President Trump and China's Xi. Still, the discussions also did little to resolve a long-standing issue: China's trade surplus with the US. 'Markets will likely welcome the shift from confrontation to coordination,' said Charu Chanana, chief investment strategist at Saxo Markets. 'We're not out of the woods yet — it's up to Trump and Xi to approve and enforce the deal.' The meeting was set up after a phone call between the two leaders, following weeks of each side accusing the other of breaking the Geneva commitments. Both countries had used chips, rare earths, student visas and ethane as bargaining tools. Josef Gregory Mahoney, a professor at East China Normal University, said trust, not money, has been the biggest casualty of the trade war. 'We've heard a lot about frameworks,' he said. 'But the fundamental issue remains: Chips versus rare earths. Everything else is a peacock dance.' Bloomberg reports: Read more here. Sign in to access your portfolio