Unemployment Insurance Reform

Abstract

The Unemployment Insurance (UI) system is the largest general social insurance program for working-age individuals in the United States and currently insures more than 140 million workers against temporary income losses related to unemployment. UI has been the bedrock of U.S. social policy in recessions, but the system has remained largely unchanged since the mid-1970s despite substantial changes in the labor market that include deindustrialization, higher female participation, increases in wage inequality, and technological changes. This article summarizes existing empirical evidence on the state of the UI system and its effectiveness in achieving its stated goals. A range of reform proposals are discussed that aim to address both the well-known, long-term issues with UI, as well as UI’s readiness to support the workforce of the twenty-first century.