A new CBO study finds that unemployment insurance is important in maintianing family income after a job-loss, and "the program has succeeded in preventing temporary poverty for a significant fraction of long-term UI recipients."

03-03-UnemploymentInsurance.pdf (application/pdf Object)

CBO's comparison of income suggests the following conclusions:

B UI benefits played a substantial role in maintaining the family income of recipients who experienced a long-term spell of unemployment in 2001 or early 2002--particularly those who did not have other wage earners in their family (see Table 1). Before becoming unemployed, recipients' average family income was about $4,800 per month.2 When recipients lost their job, that income--excluding UI benefits-- dropped by almost 60 percent. With UI benefits included, the income loss was about 40 percent.

B For sole earners in a family, the income loss was greater: almost 90 percent excluding UI benefits, or 65 percent including them. For such one-earner families, UI benefits represented two-thirds of their total income, compared with an average of about 20 percent for families with more than one worker.

B Former UI recipients who did not find work soon after their benefits ended--people for whom federal extensions of UI benefits are intended--continued to incur substantial income losses. For the 40 percent of long-term UI recipients who were not working three months after their benefits ended, average family income was about half of what it had been before they began receiving unemployment insurance (see Figure 1). By comparison, for long-term UI recipients who were working three months after their benefits ended, income loss was less than 10 percent.

In addition, more than one-third of the former longterm UI recipients who had not returned to work had an income below the poverty line (measured on a monthly basis), and about 40 percent lacked health insurance-- more than double the numbers before they became unemployed.