THE USES OF UNEMPLOYMENT INSURANCE CLAIMS INFORMATION

by: Xiaohong (Sherry) Yu

Starting this month, two additional pages will be added to the Wyoming Labor Force Trends. One page will release monthly information on Unemployment Insurance (UI) initial claims (or new jobless claims) and the other will present monthly information on UI weeks claimed (refer to the "Glossary of Commonly Used Terms"). Both data sets will be published by major industry and by county. For convenient comparison, the reference period will be consistent with other data series published in Trends such as nonagricultural wage and salary employment estimates.

What Can We Learn From the UI Claims Information?

The UI Initial Claim is the first form (or application) that a newly unemployed worker has to file in order to receive UI benefits. In our data, initial claims include both "new initial" and "additional initial" claims. The "new initial" is the first claim filed by an individual during his or her benefit year. The "additional initial" is the first claim an individual filed in the same benefit year in a job loss subsequent to his or her first time job loss.

Basically, the UI initial claims data tells readers how many workers who have just lost their jobs applied for UI benefits during a specific time period, which industry they worked in and in what geographic area they are located (refer to: "Unemployment Insurance Statistics: Economic Information for Policy Makers and the Public" in the April 1995 issue of Trends). Examining the UI initial claims data from a historical standpoint illustrates its usefulness as an intuitive economic indicator. The Figure, "Wyoming UI Initial Claims Historical Data", presents the history of UI initial claims in Wyoming from the third quarter of 1981 to the third quarter of 1995.

At the national level, the UI initial claims series "is a leading indicator when it comes to forecasting peaks in economic activity, a coincident indicator when it comes to predicting when the economy will bottom out, and a leading indicator overall. And because of the relatively uniform lead times for the turning point, the Bureau of Economic Analysis includes the series as one of the index of 11 leading indicators components."¹

Weeks Claimed (or Continued Claims) is the number of weeks that UI benefits were claimed by unemployed workers. After the initial claim, a claimant will receive a payorder every two weeks from the Wyoming Employment Resource Division (ERD), which includes the previous two weeks UI qualification information.

By the law, claimants should report income received from other sources for the weeks they claimed UI benefits. Based on this income information, ERD will decide whether or not the claimants still qualify for UI benefits. For continued UI eligibility, the law also requires claimants to report job-seeking activities for those weeks they claimed UI benefits. As soon as the claimant fills in the payorder and sends it back, the benefit payment will be mailed. The weeks claimed information is based on these benefit payorders.

Since the weeks claimed on the payorder may include one or two weeks, "weeks claimed" are always some multiple of the number of jobless people who are eligible for UI benefits. Therefore, weeks claimed data reveals how many weeks have been claimed by unemployed workers, which industries the benefits have been drawn from and where in the state the claimants are located. The "average weekly" weeks claimed number (obtained by dividing weeks claimed for any given month by the number of weeks in that month) indicates the current level of unemployed workers who claimed UI benefits in different industries and geographic areas.

In general, the number of weeks claimed will be directly affected by the number of initial claims. In other words, those two data sets should have increases or decreases in the same direction although there may be some time lags in between. However, not everybody who filed a UI initial claim is guaranteed to receive benefits because of qualification requirements. As a result, the percentage changes in the number of weeks claimed and initial claims could be very different. A small percentage increase (or no increase) in initial claims but a large increase in weeks claimed compared with the previous years level, could indicate that there were more unemployed workers qualifying for UI or more unemployed workers staying on UI longer because of the difficulty of finding a job or vice versa.

In addition, based on the research purpose, both UI initial claims and weeks claimed can be used with other economic information to create new economic measurement to explain different economic situations. As described in the April 1995 issue of Trends, for example, we can use the number of initial claims and annual UI covered employment to calculate the "Separation Rate", which indicates the probability of an individual being laid off by industry over a specific time period.

Xiaohong (Sherry) Yu is a Senior Economist specializing in UI Trust Fund projections in Research & Planning.

1 A Guide to Everyday Economic Statistics, Bureau of Labor Statistics publication.

Certain measures of the level of human resource use provide us with concise answers to relatively narrow questions. For example, the estimate of the number of unemployed (refer to Civilian Labor Force and Unemployment: National, Statewide, Regional, and Counties) provides us with an idea of the level of human resource under usage--but little indication beyond that as to why people are unemployed or whether or not the current level of unemployment can be considered usual, or a harbinger of more difficult times for the economy. To help better understand how efficiently the economy is using human resources relative to the supply of labor, we have decided to present measures of job loss and the current level of continued joblessness based on Unemployment Insurance records. This information is presented in Wyoming Unemployment Insurance Statistics: Initial Claims and Wyoming Unemployment Insurance Statistics: Continued Claims.

--Tom Gallagher, Manager of Research & Planning.

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