© Copyright 2005 by the Wyoming Department of Employment, Research & Planning

An Analysis of Wyoming Unemployment Insurance Monetary Eligibility, 1993 and 2003

by: Sherry Wen, Senior Economist

Abstract

Unemployment Insurance (UI) is a government program that offers financial assistance to workers who have lost their jobs through no fault of their own. This study examines how UI eligibility has changed from 1993 to 2003. We assume that all individuals who worked in Wyoming during second quarter 1993 (1993Q2) lost their jobs and applied for UI benefits in third quarter. We do the same thing for 2003Q2 and compare the results. In particular, what proportion of Wyoming employees would have been able to receive UI benefits? We present UI policy makers, legislators, and others with insights regarding the current UI system to assist them when faced with future UI decisions. 

Our findings show that over the decade the proportion of Wyoming workers who would qualify for UI benefits, maximum UI benefits, or maximum UI duration all decreased to some degree. Other results remained fairly constant:
 

• Lower paying industries had more workers who would be ineligible for UI benefits than higher paying industries. 
• Workers in lower paying industries also had a smaller chance of receiving maximum UI benefits than those working in higher paying industries. 
• Employees of prime working ages (25 to 54) were likely to qualify for UI benefits while workers older and younger were less likely.
• A much higher percentage of male than female workers would have been eligible for the maximum UI benefit.
• Seasonal workers were more likely to receive more UI benefits than non-seasonal workers, even if they earned the same total wages in the base period or had the same weekly wages before layoff. 
  
  Introduction
  
  UI plays an important role in Wyoming’s labor market. It aids workforce development because, theoretically, it retains skilled workers in the state, who are then available for future training and employment. Almost all employers pay UI taxes. In fiscal year 2003 (July 1, 2002 to June 30, 2003), 18,896 workers received UI benefits in Wyoming, which represents 7.7 percent of all persons who worked in the state 
  
  To qualify for UI benefits, an unemployed worker must meet monetary and nonmonetary eligibility criteria. Nonmonetary criteria require individuals to 1) have involuntarily separated from their employers or lost jobs through no fault of their own; 2) be able and available to work; and 3) be actively seeking work. To address the concerns raised about nonmonetary criteria in recent years, some states such as Kansas, Montana, and South Dakota have passed legislation allowing workers to qualify for UI benefits if they left their employment due to factors such as domestic violence, sexual harassment, pregnancy, and child care conflicts. We expect that women will be the primary beneficiaries of these changes. In general, individual workers can control nonmonetary eligibility to some degree. 
  
  Monetary criteria, more straightforward and easier to determine, require unemployed workers to have earned sufficient wage credits (a certain amount of wages) prior to losing their jobs. These criteria are less amenable to control by individual workers. 
  
  Wyoming applied two monetary eligibility criteria in 1993 and 2003. The first required an unemployed worker to have earned at least eight percent of the statewide annual average wage during the base period (Wyoming Employment Security Law, 2003). The base period is the first four of the last five completed calendar quarters preceding the one in which an unemployed worker filed an initial claim for UI benefits. The minimum base period wage was $1,650 in 1993 and $2,300 in 2003. The second required a worker’s total base period wage be at least 1.4 times his/her high quarter wages in the base period. 
  
  The research presented here only focuses on monetary criteria. Our purpose is to determine whether monetary criteria still function as they did 10 years ago and to answer the question of whether or not the UI system still provides a comparable level of support for the workforce. We compared data from 1993 and 2003 using UI Wage Records (Wage Records) and evaluated the impact of current UI laws on the eligibility of Wyoming workers for benefits. This study shows the comparative operational baselines when we assume that all employees who worked in Wyoming in the second quarter of 1993 or 2003 lost their jobs and applied for UI benefits in the third quarter. We seek to determine what has happened in terms of UI eligibility. In particular, what proportion of Wyoming employees would have been able to receive UI benefits? Additionally, we explore what their benefit levels may have been and how long they would have qualified. The wage replacement ratio and UI eligibility by industry, gender, and age are also examined. 
  
  Method
  
  This research explores the current UI system in terms of eligibility and to determine if the system functioned the same in 1993 as in 2003. Using the same structure, we built two longitudinal study databases. Each database matched five quarters of Wage Records by social security numbers (SSNs): second quarter 1992 (1992Q2) to 1993Q2 and 2002Q2 to 2003Q2. Using the same quarter throughout the study avoided possible seasonal variations. Different quarters of the year and different points in time may have resulted in different UI eligibility situations. 
  
  Industry information was obtained from the Quarterly Census of Employment & Wages (QCEW) database. We also matched the SSNs with the demographic database (mainly based on the driver’s license database) to obtain the age and sex of each Wyoming worker. Wyoming workers in this research include those who worked in Wyoming during the study periods whether they resided in Wyoming or another state. (Glover, 2001a & b). In order to create fair comparisons, the 1993 UI benefits were inflated to 2003 dollars based on the Consumer Price Index (U.S. Department of Labor, 2004). 
  
  A study on the Wyoming employment structure between 1993 and 2003 was also presented to give background on how Wyoming workers were distributed among industries and the major changes over the 10-year period. This information helps place the study of monetary eligibility in context, as monetary eligibility may be problematic in some industries. It is important to understand the share of total employment represented by these industries. 
  
  Results
  
  Employment Structure
  
  A total of 214,402 individuals worked in Wyoming in 1993Q2, while 232,229 worked in 2003Q2. Table 1 shows substantial differences in industry growth between 1993 and 2003. Individuals working in Construction, one of the most seasonally volatile industries and responsible for many UI claims, grew by 20.6 percent. Services grew by 15.2 percent, which comprises almost two-thirds of the statewide net growth. Employment fell in Mining (-2.2%); Manufacturing (-8.6%); Transportation, Communications, & Public Utilities (TCPU; -5.2%); and Finance, Insurance, & Real Estate (FIRE; -2.2%). However, the percentage distribution of individual workers across industries was similar (up or down within 1 percentage point) between 1993 and 2003, except Services, which gained 2.2 percentage points in 2003. Men make up over 70 percent of workers in Mining, Construction, and Wholesale Trade in both 1993 and 2003. On the other hand, women make up over 65 percent of workers in FIRE during the same period. Services, the largest industry, employed more than one-third of Wyoming workers in 2003. Retail Trade was second largest, providing jobs to more than 20 percent of Wyoming workers. Figure 1 shows that the age distribution of workers shifted to the right, indicating an aging of Wyoming’s workforce. Almost half (48.6%) of the workers in 1993 were between ages 16 and 34, but this age group decreased to 37.2 percent in 2003. In contrast, the number of workers between ages 35 and 54 increased from 22.7 percent in 1993 to 32.0 percent in 2003. 
  
  UI Eligibility
  
  The proportion of workers who would have qualified for UI benefits was almost the same in 1993 (77.5%) and 2003 (76.8%; see Figure 2). These results should be interpreted as a minimum percentage of workers who would qualify for UI. Some workers move between states and would qualify for UI based on a combined wage claim. However, the potential combined wage claim workers are outside the scope of this research. For each year studied, about 10 percent were new Wyoming workers during second quarter and had no base period wage credit at all; approximately 13 percent could not have met at least one of the two wage credit requirements, for a total of 23 percent who would have been ineligible for UI. Figure 3 shows the industry distribution of workers who would not have been monetarily eligible because they did not meet wage credit requirements. As Figure 3 indicates, UI eligibility varies significantly across industries. For example, 25.3 percent of Agriculture workers in 1993 would not have qualified for UI benefits. In contrast, only 5.0 percent of Mining workers in the same year would not have qualified. In general, low paying industries such as Agriculture, Retail Trade, and Services had a larger percentage of workers who would have been monetarily ineligible for UI if they had lost their jobs. However, these three industries accounted for more than three-fourths (77.2%) of the total growth in Wyoming workers from 1993 to 2003 and employed more than one-half (52.5%) of Wyoming workers in 2003. Mining and TCPU paid higher wages, which resulted in more individuals qualifying for UI. However, Mining had the most significant increase in the percentage of UI ineligible workers (from 5.0% to 8.9%), followed by Construction (14.3% to 16.6%), and TCPU (7.2% to 8.3%). The eligibility scenario improved for Agriculture (with the percentage of ineligible workers decreasing from 25.3% to 20.5%), FIRE (from 11.8% to 7.9%), and Wholesale Trade (from 9.7% to 7.3%). 
  
  A comparison by gender shows that 15.1 percent of female workers in 1993 would not have qualified for UI had they lost their jobs, compared with 11.8 percent of male workers (see Figure 4). The proportions fell to 13.8 percent for female workers and 11.2 percent for male workers in 2003. 
  
  Figure 5 shows that both younger and older workers were more likely to have been ineligible for UI benefits than the middle age groups. For example, in 1993 and 2003 a little over 11 percent of workers between ages 16 and 24 would not qualify for UI benefits. For those who were 65 or older, 82.6 percent in 1993 and 49.9 percent in 2003 would have been ineligible for UI benefits. On the other hand, less than seven percent of the workers between ages 35 and 44 would have been ineligible. The differences across age groups were consistent, with the exception of those 65 or older. Part of the workers between ages 16 and 24 were probably students, who typically work part-time, and were more likely to be paid low wages. Some of the workers ages 65 or older are likely retirees and may only choose to work part-time. The large changes between 1993 and 2003 for this age group could be due to economic conditions during 2000 to 2003. Many workers who planned to retire during that time period lost their retirement money in the stock market, and chose to come back to work full time or to delay their retirement.
  
  Potential UI Benefits Analyses 
  
  The research shows the benefit level for which Wyoming UI eligible workers would likely qualify and the differences across industry, age, and sex. 
  
  Our study shows that Wyoming had 166,044 workers (77.5%) in 1993Q2 and 178,590 (76.8%) in 2003Q2 who would have qualified for UI benefits if they had lost their jobs (see Figure 2). However, UI benefits vary depending on how much a worker earned during the base period. By law, the weekly UI benefit that an eligible individual could receive is equal to four percent of his/her high quarter wage during the base period. The law limits the maximum weekly benefit to 55 percent of the previous year’s statewide average weekly wage, so it changes every year. The maximum weekly benefit was $220 in 1993 and $306 in 2003. The maximum benefit an individual could receive for one year starting with the effective date of the initial claim is 30 percent of his/her base period wage, or 26 times his/her weekly benefit, whichever is less. The potential UI duration (the number of weeks an individual is able to receive UI benefits) is determined by the maximum benefit divided by the weekly benefit, up to a maximum of 26 weeks in a benefit year. Table 2 gives two examples of how base period wages determine an individual’s UI benefits. 
  
  Generally, the greater the weekly benefit amount and the longer the duration of eligibility for receiving UI benefits, the easier it is for workers to overcome the financial difficulties of unemployment. Increased benefits also afford more flexibility to attend reemployment services and look for jobs. 
  
  To facilitate comparison, we converted the 1993 benefits to 2003 dollars using the Consumer Price Index (U.S. Department of Labor, 2004). As a result, the maximum UI benefit in Wyoming was $281 per week with 26 weeks duration in 1993 and $306 per week with 26 weeks in 2003. This represents an 8.9 percent real increase over 10 years. 
  
  Table 3 shows the distribution of Wyoming UI eligible workers by sex and potential UI benefits. Approximately 40 percent would have qualified for the maximum UI benefit in 1993 or 2003. About 56 percent of male workers and only about 25 percent of female workers would have been able to receive the maximum UI benefit (see Table 3 and Figures 6, 7, and 8). Eligibility would have also varied by industry and age. In Mining, 77.0 percent of workers would have been eligible for the maximum UI benefit in 2003, while only 14.8 percent of workers in Retail Trade would have been eligible (see Table 4 and Figures 9, 10, and 11). The proportion of workers who would have qualified for the maximum UI benefit in each industry changed only slightly between 1993 and 2003, with the exceptions of Public Administration (up from 48.8% to 59.3%), TCPU (down from 68.4% to 60.6%), and Mining (down from 84.6% to 77.0%). Across all industries, it decreased by 1.7 percent (from 42.2% to 40.5%). Workers in the middle age groups would qualify more often than other age groups (see Figure 12). More than one-half of the workers between ages 35 and 54 would have qualified for the maximum UI benefit, while less than one-quarter of those 55 or older would have been at this level.
  
  The proportion of workers eligible for the maximum UI duration fell by 5.6 percentage points (62.0% to 56.4%) from 1993 to 2003 (see Table 3 and Figure 8). This decrease took place in all industries with larger decreases occurring in Mining (-7.9%), TCPU (-7.4%), and Services (-7.2%; see Table 4). 
  
  The potential average weekly benefit amount varies greatly across industries (see Table 4). For example in 2003, the average weekly benefit was $293 in Mining but only $181 in Retail Trade. The average weekly benefit amount increased in all industries from 1993 to 2003, but the pace of growth was different among industries. After adjusting the 1993 amounts for inflation, the smallest growth was 6.6 percent (from $255 per week to $272 per week) in TCPU and the largest was 13.4 percent (from $239 per week to $271 per week) in Public Administration. 
  
  Wage Replacement Rate
  
  The wage replacement rate shows the proportion of the unemployed workers’ pre-unemployment weekly wage that would have been replaced by the weekly UI benefit. A higher wage replacement rate means more stable purchasing power during unemployment. We used the average weekly wage during 1993Q2 and 2003Q2. 
  
  Only about 20 percent of Wyoming UI eligible workers would have been able to obtain a 70 percent or higher wage replacement rate had they lost jobs in 1993Q3 or 2003Q3 (see Figure 13). More than one-half of the workers in Mining in 1993 would have had less than a 30 percent wage replacement rate. This proportion decreased in 2003, but still exceeded 40 percent. Only about 20 percent of Mining workers would have had a wage replacement rate of 50 percent or higher. In contrast, more than 70 percent of workers in Retail Trade or Agriculture would have received a 50 percent or higher wage replacement rate and close to 30 percent would have obtained a wage replacement rate of 70 percent or higher. Nearly 60 percent of male workers, compared with 35 percent or fewer female workers, would have wage replacement rates of less than 50 percent (see Figure 14). More younger and older workers would have obtained higher wage replacement rates than the middle age groups (see Figure 15). Of workers 65 or older, 62.6 percent of them in 1993 and 37.6 percent in 2003 would have received a 70 percent or higher wage replacement rate, but only about 12 percent of those between ages 35 to 44 could have matched this replacement rate each year. 
  
  In general, the higher the weekly wage a worker earned before being laid off, the lower the wage replacement rate the individual would be able to receive and vice versa (see Figure 16). However, this was not always the case. As shown in Figure 16, some workers earned the same level of pre-unemployment weekly wages as other workers but would receive totally different wage replacement rates (varies from less than 20% to 100%). One of the main reasons for this difference is that the weekly benefit amount an individual would qualify for is based on 4% of his/her high quarter wage in the base period. In other words, those who worked in a more seasonal industry earning large unevenly distributed quarterly wages throughout the year would likely receive a higher weekly UI benefit amount than those who worked in a less seasonal industry with stable quarterly wages, even if they earned the same amount of wages in the base period or had the same weekly wages before layoff. The two examples in Table 5 show the differences in terms of UI eligibility based on current UI benefit formulas for seasonal and non-seasonal workers with the same wage level. In Example 1, Worker A is a non-seasonal worker who earned the same quarterly wage of $2,500 during each of the four quarters in the base period. Worker B is a seasonal worker (only worked two quarters a year) who earned $2,500 in the second quarter and $7,500 in the third quarter. Both had the same total base period wage of $10,000 and the same weekly wage of $192. If they lost their jobs, seasonal Worker B would be eligible for a $300 UI benefit per week, resulting in a 100 percent weekly wage replacement rate; while Worker A would only be eligible for $100 per week, which amounts to a 52 percent wage replacement rate. Worker B would only be eligible for 10 weeks of UI benefits while Worker A would be eligible for 26 weeks. Worker B would still get $400 more than Worker A in terms of maximum UI benefits for the benefit year under the regular UI program. Example 2 tells a story similar to Example 1, only at a higher wage income level ($24,000 total base period wage). The results show that seasonal Worker B would collect $66 more in UI benefits per week and $960 more in UI benefits in the benefit year than Worker A. If the Temporary Extended Unemployment Compensation (TEUC; U.S. Department of Labor) program is in effect as in 2003 (or another extended benefits program), seasonal Worker B in Example 1 above would likely collect another 13 weeks of benefits or $3,900 ($300 * 13) before Worker A even finishes collecting regular UI benefits. As shown in these examples, the current UI system favors seasonal workers. 
  
  Discussion
  
  Our study shows that in both 1993 and 2003 nearly 77 percent of Wyoming workers would qualify for UI benefits if they lost their jobs involuntarily. However, only 20 percent of them would receive a 70 percent or higher wage replacement rate. In general, low paying industries had a larger percentage of workers who would not qualify for UI benefits than high paying industries. Workers in lower paying industries also had a much smaller chance of receiving the maximum UI benefit than those working in higher paying industries. Individual workers with high wages generally receive lower wage replacement rates due to the limitation of the weekly benefit amount. Statewide, the proportion of workers who would have been eligible for the maximum UI benefit decreased slightly from 1993 to 2003. The proportion of workers eligible for the maximum UI duration fell in all industries, with the largest decreases in Mining, TCPU, and Services. In addition, the current UI system appears to support seasonal workers more than non-seasonal workers. In other words, those who worked in a more seasonal industry earning unevenly distributed quarterly wages throughout the year would more likely receive a higher weekly UI benefit amount and total UI benefits than those who worked in a less seasonal industry with stable quarterly wages, even if they earned the same amount of wages in the base period or had the same weekly wages before layoff. 
  
  The UI program has been in operation since 1935. The primary purpose is to provide temporary financial support to unemployed workers if they involuntarily separate from their employment. Unfortunately, the same benefit amount may have different consequences among unemployed workers since their living standards could vary largely based on their pre-unemployment wage levels. For example, while the current maximum weekly UI benefit amount of $305 may take care of a large part of one worker’s basic living expenses (rent, food, gas, etc.), that amount may not even cover another’s monthly house payment. This research does not judge whether the current UI system functions well or not, or determine a reasonable benefit level. It provides information on the potential outcomes under the current UI system, the proportion of Wyoming workers eligible for UI and for various UI benefit levels, and differences among industries, age groups, and sex of workers. We present UI policy makers, legislators, and others with insights into the current UI system to assist them when faced with future UI decisions. For a complete picture, UI eligibility studies may need to be conducted periodically in the future.
  
  References
  
  Glover, T. (2001a, April). Enhancing the quality of Wage Records for analysis through imputation: Part one. Wyoming Labor Force Trends. Casper, WY: Wyoming Department of Employment, Research & Planning.
  
  Glover, T. (2001b, June). Enhancing the quality of Wage Records for analysis through imputation: Part two. Wyoming Labor Force Trends. Casper, WY: Wyoming Department of Employment, Research & Planning.
  
  U.S. Department of Labor, Bureau of Labor Statistics. (2004, October 19). Consumer Price Index, all urban consumers, U.S. city average, all items [Table]. Retrieved March 24, 2004, from ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt 
  
  U.S. Department of Labor, Employment and Training Administration. (n.d.) Temporary Extended Unemployment Compensation. Retrieved March 24, 2004, from http://workforcesecurity.
  doleta.gov/unemploy/factsheetteuc.asp 
  
  Wyoming Employment Security Law, W.S. § 27-3-306(d)(i) (1993).

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