Exhaustees of Extended Unemployment Benefits Programs: Coping with the Aftermath of the Great Recession
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FINAL REPORT Exhaustees of Extended Unemployment Benefits Programs: Coping with the Aftermath of the Great Recession June 16, 2016 Karen Needels Walter Nicholson Joanne Lee Heinrich Hock Submitted to: U.S. Department of Labor Employment and Training Administration Office of Policy Development and Research 200 Constitution Ave NW, Suite N-5641 Washington, DC 20210 Project Officer: Richard Muller Submitted by: Mathematica Policy Research P.O. Box 2393 Princeton, NJ 08543-2393 Telephone: (609) 799-3535 Facsimile: (609) 799-0005 Reference Number: 40098.320 This page has been left blank for double-sided copying. UC EXHAUSTEES STUDY MATHEMATICA POLICY RESEARCH DISCLAIMER This report was prepared for the U.S. Department of Labor (DOL), Employment and Training Administration, Office of Policy Development and Research, by Mathematica Policy Research, under contract number DOLQ121A21886/DOLU121A21914. The views expressed are those of the authors and should not be attributed to DOL, nor does mention of trade names, commercial products, or organizations imply endorsement of same by the U.S. Government. iii This page has been left blank for double-sided copying. UC EXHAUSTEES STUDY MATHEMATICA POLICY RESEARCH ACKNOWLEDGEMENTS We would like to thank the study’s contracting officer’s technical representative at the U.S. Department of Labor (DOL), Richard Muller, who provided guidance throughout this study. In addition, Rob Pavosevich, Ron Wilus, Mike Miller, and other staff at the Employment and Training Administration’s Office of Unemployment Insurance (OUI) provided important feedback at critical junctures. We would also like to thank the Deputy Chief Evaluation Officer, Jonathan Simonetta. In addition to providing feedback for this study, he provided guidance for a DOL-sponsored study, titled the Evaluation of the Unemployment Compensation Provisions of the American Recovery and Reinvestment Act of 2009 (“the UCP study”), which generated much of the data used by this study. We also wish to thank the many individuals who helped ensure the availability of high- quality data for both the UCP study and this one. At OUI, the Administrator, Gay Gilbert, and the State Conformity and Compliance Team facilitated access to confidential administrative unemployment compensation (UC) data. Technical and program staff in 17 states worked extensively to provide administrative data, while legal staff help refine data-sharing agreements permitting use of the data for this study. We also owe a debt of gratitude to the UC recipients who patiently answered survey questions about their experiences. A large number of staff at Mathematica also made important contributions that facilitated the success of this study, either directly or through their efforts for the UCP study. Grace Roemer and Brandon Kyler worked tirelessly to secure administrative data from the states. A team of statisticians led by Frank Potter, and including Sheng Wang and Yuhong Zheng, designed and adapted the approach to select analysis samples and calculate analytic weights. The UCP study survey of UI recipients was skillfully directed by Patricia Nemeth, who led efforts to develop the questionnaire and design the fielding methodology. She also oversaw the implementation of the survey and day-to-day survey operations, along with Linda Mendenko, the deputy survey director, and Ryan McInerney. April Villone managed the sample release, and Alice Ng managed the survey information system. Tong Li programmed the logic of the multimode survey instrument, with the assistance of Ann Ponti. Hugo Andrade and Mike Smith supervised the telephone interviewing effort, and they developed and refined strategies for locating hard-to- reach respondents. Hong Zhang created survey operations reports and led the programming and coding of the final survey data. We are also grateful to the telephone interviewers who were involved in the data collection effort. Liz Potamites, Emma Kopa, Chris Rankin, and Joseph Mastrianni each led critical components of the effort to validate, clean, and analyze the survey and administrative data. Key staff contributing to this effort included Mike Brannan, Margaux Evans, Eric Lundquist, Adele Rizzuto, Owen Schochet, Mark Strayer, Mark Timms, and Raúl Torres. Aravind Moorthy helped to validate administrative data related to benefit collection and provided input on key study measures of potential benefit availability. Priyanka Anand developed important analysis constructs using data from the survey of UI recipients. Cheryl Jiras contributed through her assistance managing the project, and Cindy Castro contributed in many ways in her role as the main secretary for the study. Sheena McConnell provided critical feedback that helped to shape the development of the main analysis results, and her comments improved the initial draft of this report. We also received excellent support from Jennifer Littel, who edited the report, as well as Stephanie Barna, who produced it. v This page has been left blank for double-sided copying. UC EXHAUSTEES STUDY MATHEMATICA POLICY RESEARCH ABSTRACT The Great Recession and the time period following it were characterized by the longest average unemployment durations seen since World War II. To extend support to unemployed workers, policymakers implemented initiatives that, in conjunction with benefits available during nonrecessionary times, offered up to 99 weeks of unemployment compensation (UC) benefits to eligible recipients in some states, representing the longest potential duration of benefits in the history of the UC system. This study examines the extent to which recipients collected all of the benefits to which they were entitled (“exhausting” their benefits) and assesses the outcomes experienced by those who exhausted their entitlements relative to (1) recipients who did not exhaust all of the benefits to which they were entitled and (2) UC nonrecipients. For the analyses, we used survey and administrative data from 10 states on UC recipients who filed claims from January 2008 through September 2009, as well as data from the Displaced Worker Supplement to the Current Population Survey. We had several important findings. Twenty-six percent of recipients in our main analysis file—recipients who collected benefits from only one claim during a three-year period—exhausted all of the UC benefits to which they were entitled. Overall, these exhaustees collected an average of 87 weeks of benefits compared to 28 weeks of benefits for nonexhaustees. Four to six years after their initial claims, and compared to nonexhaustees, exhaustees were statistically significantly less likely to be employed and more likely to be out of the labor force. They also experienced greater losses in household income and had higher rates of participation in the Supplemental Nutrition Assistance Program, Social Security retirement, and disability-related income support programs. Relative to recipients with long jobless spells, nonrecipients with long jobless spells were less likely to become reemployed in the subsequent few years following their layoff and had lower household incomes. Key words: unemployment insurance (UI) benefits, unemployment compensation (UC) benefits, EUC08, Extended Benefits (EB), exhaustees, displaced workers, Great Recession, benefit exhaustion, reemployment, labor force participation vii This page has been left blank for double-sided copying. UC EXHAUSTEES STUDY MATHEMATICA POLICY RESEARCH CONTENTS EXECUTIVE SUMMARY ...........................................................................................................................xvii I. INTRODUCTION .............................................................................................................................. 1 A. Economic and policy context ..................................................................................................... 2 B. Data sources, research questions, and methods ...................................................................... 4 C. Prior research on UC exhaustion .............................................................................................. 7 D. Road map for the rest of the report ......................................................................................... 11 II. DATA SOURCES AND RECIPIENTS’ CHARACTERISTICS ....................................................... 13 A. Data files focused on UC recipients ........................................................................................ 13 1. The merged survey respondent data file .......................................................................... 13 2. The administrative-only data file ....................................................................................... 17 3. Comparability of the states in the study’s recipient analysis files to states nationwide ......................................................................................................................... 18 4. Comparability of UC recipients in the study’s recipient analysis files to UC recipients nationwide......................................................................................................... 22 B. The DWS data file containing UC nonrecipients and recipients.............................................. 24 III. BENEFIT COLLECTION AND EXHAUSTION RATES .................................................................. 25 A. Defining and constructing measures of UC benefit experiences ............................................ 25 1. Benefit exhaustion............................................................................................................