Unemployment Insurance Benefit Qualification Analysis

Part Two: Gender and Age Analysis

by: Xiaohong (Sherry) Yu

The Unemployment Insurance (UI) program's primary goal is to provide partial wage replacement for individuals who involuntarily experience job loss (see Footnote 1). Since the UI program began in 1935, it's purpose has been to help relieve financial hardship and maintain purchasing power until those who are unemployed obtain a job. However, during the past six decades of the UI program's operation, the industry structure of employment has changed a great deal, both nationwide and in Wyoming: Retail Trade and Services industry growth are much faster than other industries, more and more female workers are in the workforce, and part-time and contingent or temporary jobs have increased substantially. Given these changes, can the UI program still meet its primary goal for most covered employment? How does this program function for different demographic and industrial segments of the workforce? Do male and female workers have the same opportunity to receive UI benefits when they lose their jobs? Do different industries provide the same opportunity for their workers to receive UI? What kinds of people are more likely to receive better UI benefits? This article intends to answer these questions for Wyoming's UI program and workers covered by Unemployment Insurance.

Study Background

As explained in "Part One: Industry Analysis" (refer to the July 1996 issue of Wyoming Labor Force TRENDS), there are generally two groups of criteria (nonmonetary eligibility and monetary eligibility) which determine whether or not an unemployed worker qualifies for UI benefits. Nonmonetary criteria basically require that an individual has involuntarily lost a job and is now available for--and actively seeking--a job. Certain aspects of nonmonetary eligibility (such as actively searching for new work) are controllable by the individual worker, thus nonmonetary eligibility is not considered in this article.

Monetary criteria requires that an individual earn sufficient income in a covered industry during a specified length of time and is not controllable by the individual. UI monetary eligibility criteria vary from state to state. Wyoming's law requires an unemployed individual meet all of the following to be eligible for UI benefits:

1. worked at least two quarters of his or her base period (see Footnote 2) (two quarter's work requirement);

2. earned a total base period wage which is equal to or greater than eight percent of the statewide average annual wage. Currently, the total base period wage should be at least equal to $1,750. (Wage Credit Requirement 1);

3. had total base period wages equal to or greater than 1.4 times his or her highest quarter's wage (Wage Credit Requirement 2).

Four quarters of wage records (1994 Q4 - 1995 Q3) were matched into a database, which generated a total of 287,157 records. It was necessary to include four quarters of data in order to research an entire base period of covered employment. In other words, during the base period between the fourth quarter of 1994 and the third quarter of 1995, there were a total of 287,157 individual covered employees who worked in Wyoming. To obtain the additional information about gender, age and industry of employment, the study database was matched with the most recent Wyoming driver's license database and the employer Quarterly Unemployment Insurance (QUI) database. For details about the various databases (wage records, Wyoming driver's license and QUI), please refer to the May 1996 issue of TRENDS.

UI Benefit Eligibility Analysis

Overall, about one-third of the 287,157 covered employees who were studied were ineligible for UI benefits, had they become involuntarily unemployed (based on current UI monetary eligibility criteria). We also found that, of individuals working for at least two quarters during the base period, female workers were slightly more likely not to be monetarily eligible for UI than male workers (13% and 10%, respectively).

About two-thirds of workers studied would qualify for UI benefits if they lost their jobs. However, the amount and the number of weeks of UI eligibility varies as a function of each individual's base period wage. By law, an individual should receive a weekly UI benefit (weekly benefit amount) which equals four percent of his or her high quarter wage. The maximum and minimum weekly benefit amount changes every year based on the previous year's statewide average weekly wage. The current maximum weekly benefit amount (see Footnote 3) is $236 and the minimum is $17. The maximum benefit amount for a benefit year (see Footnote 4) is 30 percent of an individual's total base period wage. In addition, how long an individual could receive UI benefits (UI potential duration) for a benefit year is calculated by dividing the maximum benefit amount by the weekly benefit amount. For the regular UI program, an individual could receive a maximum of 26 weeks' UI benefit during his or her benefit year.

As was stated in "Part One: Industry Analysis", only 45,666 (23%) of workers qualifying for UI would also qualify for the maximum benefit ($236 per week for 26 weeks' UI duration). The differences between genders and ages are notable also: about 62 percent of male workers would qualify for the maximum weekly benefit amount while only 29 percent of female workers would be in this group (see Figure 1). The distribution of potential UI benefits by age group is significant too (see Table 1). For workers in the age group of 25 years or under, nearly half (47%) would qualify for a weekly benefit amount of only $100 or less. Only 10 percent of workers in the same age group would qualify for the maximum weekly benefit amount. Among older age groups, half or more workers would qualify for the maximum weekly benefit amount. This difference could be explained by the following factors:

1. low starting wage levels--young workers would most likely receive a low starting wage across industries due to lack of work experience;

2. this age group of workers also includes high school and college students who work summer jobs.

The distribution of potential UI duration between male and female workers was very similar, but it was quite different among age groups (see Table 2 and Table 3). Again, younger workers would have less possibility of qualifying for the longer UI duration than the older workers. Among workers who were 25 and under, 19 percent of these workers would qualify for 26 weeks of benefits compared with 50 percent of workers in all older groups qualifying for the same UI duration.

Wage Replacement Analysis

Wage replacement is the percentage of an individual's pre-unemployment weekly wage that would be replaced by the UI weekly benefit amount during unemployment. About 66 percent of the workers in this study who qualified for UI benefits would receive a wage replacement of over 50 percent of their pre-unemployment wages. Among female workers, nearly 80 percent would receive UI benefits which would replace over 50 percent of their wages; among male workers, only about half would receive the same replacement level (see Figure 2).

The higher replacement level would seem to be a positive point in favor of female workers. However, comparing the genders across all industries, this study also shows that over two-thirds of female workers are found in the low-paying Services and Retail Trade industries (47% and 22% of all female workers, respectively), while of all male workers, only 21 percent and 15 percent are found in these corresponding industries. Furthermore, the wages across industries are lower for females in Wyoming than for males (refer to the May 1996 and June 1996 issues of TRENDS).

In summary, while more female workers would receive UI benefits which would replace over 50 percent of their wages than males, more male workers would qualify for a higher UI benefit level than females. Also, young workers (age 25 or less) often qualified for a lower level of UI benefits than older workers.

For detailed information about UI Benefit Qualification by industry, please refer to Part One of this article, which appeared in the July issue of TRENDS.

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

Footnote 1: Report to the President and Congress by the Advisory Council on Unemployment Compensation, 1996.

Footnote 2: The base period is the first four of the last five completed calendar quarters immediately preceding the first day of an individual's benefit year or any other twelve month period specified by commission regulation. (Wyoming Employment Security Law, page 1.)

Footnote 3: At the time this study was done, the maximum weekly benefit amount was $233; however, on July 1, 1996, this amount increased to $236.

Footnote 4: The benefit year is the period of fifty-two consecutive calendar weeks beginning the first week of a claim series established by the filing of a valid initial claim for benefits. (Wyoming Employment Security Law, page 1.)

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