Why Most Who Lose Their Jobs Don’t Get Unemployment Benefits

The great American jobs machine is grinding to a halt. In response, Congress has just extended unemployment benefits 13 additional weeks, over and above the 26 weeks normally provided. That’s good as far as it goes.

But most people who lose their job these days don’t qualify for any unemployment benefits at all.

How can this be? Simple. In order to be eligible, most states require you to have been working in the job you lost full time, and for a certain number of years.

These requirements made sense decades ago when labor markets were far more stable – when most working people stayed in the same full-time job for years, and only lost it temporarily during the downdraft of a recession, picking it up again when the economy rebounded. And back then, one full-time breadwinner could keep a family whole. In those days, unemployment insurance counter-balanced recessions by keeping money in the pockets of working families.

But nothing is stable about today’s labor market. Every time the economy sinks, employers fire workers permanently. Even when the economy is doing fine, pink slips proliferate — although under these circumstances it’s easier to find a new job. All of which means a growing fraction of the labor force is in a job only a few years.

Meanwhile, full-time jobs are vanishing. More companies are contracting out their work. As a result, more people are doing several part-time jobs, or are self employed. They’re also more likely to be part of a couple whose family depends on two sets of paychecks.

So when times get tough, as they are now — and people lose a job after having it for only a few years or lose their part-time job or lose their client, or one member of a couple loses earnings — a family can be in real trouble. And there are no unemployment benefits, not even partial benefits based on the proportional loss of income from a part-time job, to help them. Or to help counter-balance the economy as a whole.

It’s a disgrace that most Americans who lose their jobs don’t qualify for unemployment insurance. It’s also bad for the economy because unemployment insurance is less effective as a counter-cyclical device. Congress should expand coverage (condition federal UI funding of states) so a majority of American families have some security in these perilous times.


Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.Related RGE Content:1) U.S. Loses 62,000 Jobs in June Signaling Severe Economic Downturn

2) Where is the U.S. Economy Headed? A Look at the Latest Data

9 Responses to "Why Most Who Lose Their Jobs Don’t Get Unemployment Benefits"

  1. villager   July 21, 2008 at 8:43 am

    Good advice! Unfortunately, it comes late!! Without saying it, the commentary by Robert Reich draws into question: ‘who and what interests does the politician represent’.

  2. Anonymous   July 25, 2008 at 3:08 pm

    Whatever happened to saving for a rainy day?

    • Anonymous   April 16, 2009 at 11:12 am

      It’s been raining for a year and a half now.

  3. Anonymous   October 22, 2008 at 12:59 pm

    I agree with you. In NY I was denied unemployment because they said I quit without good cause. Now, it has been seven months and I can’t find a job. They should grant unemployment benefits to people such as myself. There are no jobs out there.

  4. Dave   January 7, 2009 at 2:01 am

    Yes this country is really going down hill, when you see that we dont even take care of the hard workers we have in hard times. American companies have always lead the developed world in screwing their employees, it’s capitalism, has to be good right, you worked 10 years for company XYZ and now are entitled to 5 more vacation days per year for your loyalty…well sorry to say Joe these are hard times your fired… go get a job at ZYX company and start on a low wage with 5 days vacation a year and no health benefits!Regards Mr Overpaid CEO!The unemployment rules are just another mess, if your old employer isnt screwing you why not the government too! Something drastic has to be done, like you said.I would also suggest a mandatory 5-6 weeks vacation for all American workers per year, hopefully that would create a need for new workers and we can fund it with a $500 billion stimulous package. Getting everyone back to work, and giving them some time with their families to boot.

  5. unemployed new grad   January 27, 2009 at 6:34 pm

    I couldn’t agree more. Throughout college I contracted graphic design work thus I did not qualify for unemployment insurance.Then I got lucky in May because I scored an entry-level job. However, I got laid off this month (January).Now I do not qualify for unemployment until April, unless I find a job, because I was a contract worker for most of the past year, and because I didn’t earn enough from my previous job.Plus, who wants to hire a fresh-college graduate? I’m out of options now.And I’d like to reply about “saving for a rainy day.” I paid for college myself, and I worked my support myself through college, so I was living way below the poverty level then. There was no saving. Then when I did have my entry-level job, I was paying off debt I accumulated throughout college such as credit card debt and student loans. I know many people who don’t have the option of saving.

  6. St. Petersburg, FL.   March 7, 2009 at 9:27 am

    My store closed after my fiancee’s salary position got cut down to 40 hrs a week, and i can’t get unemployment…its just not right.

  7. Anonymous   April 13, 2009 at 2:43 pm

    My husband was laid off from a retreat and conference center run by Catholics. He cannot get unemployment insurance because religious institutions can opt out of providing it. Furthermore, religious institutions can opt out of COBRA, too.How do you like that for hypocritical?! Those who preach about caring for their neighbors actually, technically, actively CHOOSE to leave them out in the cold when they out-source their jobs and lay them off. (Btw, all of the Church’s money is tied up in trusts and real estate.) Pretty sad reality.

  8. Anonymous   May 21, 2009 at 7:31 am

    I was denied unemployment insurance because I didn’t make enough at my last job. Wouldn’t that be MORE of a reason to pay me benefits? If I barely made anything the last time I worked, what are the odds I’d have any money hanging around to support myself while looking for a new one?