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Unemployment Insurance Unemployment insurance is a joint federal-state program. Federal law sets broad requirements and levies a tax to cover program administration, the federal share of extended benefits, and loans to states. State taxes on employers build a trust fund to pay claims, and states — who, as the Department of Labor summarizes, “have developed diverse and complex formulas for determining workers’ benefit rights” — have wide leeway to set eligibility, generosity, and duration. State discretion is exercised in formal and informal ways. The generosity of benefits — both in terms of the weekly benefit and the number of weeks it is available— varies widely across the states. The maximum weekly benefit ranges from $235 in Mississippi to $1,234 in Massachusetts. The duration of benefits is twenty-six weeks in most states, but runs from twelve weeks in Florida to thirty weeks in Massachusetts. A six-month spell of unemployment, in other words, would yield a net benefit of over $37,000 for an unemployed worker in Boston, and less than one tenth of that (barely $3,000) in Biloxi or Boca Raton. Meager benefits discourage enrollment, as does the administrative burden of intentionally complex application systems. Florida’s online-only system — which until 2014 featured a mandatory forty-five-question math, reading, and research skills test — dissuades or disqualifies over half of those who start an application. As a result, the share of the unemployed who actually see a check also varies across states — from under 10 percent in North Carolina to almost 60 percent in New Jersey. This disparity can be seen in the graph below, which plots program inclusion (the share of the unemployed receiving benefits) against program generosity (the average benefit received, taking into account both the average weekly benefit level and average benefit duration in each state). The low-road (mostly Southern) states crowd the lower right corner of the graph, with inclusion rates under 30 percent and an average benefit of under $6,000. In times of exceptional need or demand — such as during a recession or disaster — the federal government typically steps in to supplement and backfill state unemployment insurance programs. Since 1970, high unemployment has triggered the payment of extended benefits — an additional thirteen weeks funded jointly by state and federal dollars. But because the “triggers” for extended benefits work slowly, the federal government has also offered more immediate extensions (as it did with the Emergency Unemployment Compensation program during the Great Recession). This time has been no different. The Families First Coronavirus Response Act (passed on March 18) pumped $1 billion into administering state unemployment insurance (UI) programs, in exchange for new state standards and conditions. In order to draw down these funds, states must improve their procedures for notifying workers of their eligibility, provide multiple (not just online) methods of filing, give prompt notice of the receipt of a claim, waive waiting periods for benefits, nix the requirement that recipients must be actively searching for work, and ensure that employers are held blameless for COVOID-19 layoffs (conventionally, UI is “experience-rated,” so employers with histories of layoffs are taxed at higher rates). The CARES Act (passed March 26) bolsters both benefits and coverage. Pandemic Unemployment Assistance (PUA) extends unemployment assistance to workers who are otherwise left out of state UI programs — including self-employed workers, “gig” workers, independent contractors, freelancers, workers seeking part-time employment, workers who do not have a sufficient employment history to qualify for state UI benefits, and those that have exhausted their benefits. These applicants will have to either demonstrate that they are unemployed or unable to work due to COVID-19-related illness, quarantine, caregiving, or layoff. PUA is available for thirty-nine weeks or until December 31, 2020 and will carry a minimum benefit equal to one-half the state’s average weekly UI benefit. The Pandemic Unemployment Compensation program adds $600 per week (through the end of July) to all unemployment claims paid under either the regular UI program or the Pandemic Unemployment Assistance program. The Pandemic Emergency Unemployment Compensation (PEUC) provides a thirteen-week extension of state UI benefits. All three of these programs are entirely covered by federal dollars. Such extended benefits have proven absolutely critical in delivering a modicum of financial security for workers (and state budgets) during prolonged or sudden economic crises. But they also highlight the weakness and inequity of state UI programs. States have made little effort to adapt their programs to changes in the labor market. The inclusion and generosity of state programs vary widely from state-to-state. State programs lack the fiscal capacity to respond to any substantial downturn in the economy. They lack the administrative capacity to interpret and launch the new federal programs in a timely and consistent fashion. And they don’t have the technical capacity (many state application systems rest on hardware and software dating to the 1980s) to process the avalanche of claims. Our fragile and uneven unemployment insurance system, in other words, is powerful evidence for the importance of both universal and uniform standards on eligibility and benefits, and for the sort of countercyclical fiscal capacity that only the federal government can provide. The alternative is scrambling for temporary fixes and infusions of federal money every time calamity strikes.