FINAL REPORT Additional Unemployment Compensation Benefits During the Great Recession: Recipients and Their Post-Claim Outcomes MARCH 02, 2016 Heinrich Hock Walter Nicholson Karen Needels Joanne Lee Priyanka Anand Submitted to: U.S. Department of Labor Chief Evaluation Office 200 Constitution Ave NW, Suite S-2312 Washington, DC 20210 Project Officer: Jonathan Simonetta Submitted by: Mathematica Policy Research 1100 1st Street, NE 12th Floor Washington, DC 20002-4221 Telephone: (202) 484-9220 Facsimile: (202) 863-1763 Reference Number: 40232.940 This page has been left blank for double-sided copying. ADDITIONAL UC BENEFITS DURING THE GREAT RECESSION MATHEMATICA POLICY RESEARCH DISCLAIMER This report was prepared for the U.S. Department of Labor (DOL), Office of the Assistant Secretary for Policy, Chief Evaluation Office by Mathematica Policy Research, under contract number DOLU139634580. 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. ADDITIONAL UC BENEFITS DURING THE GREAT RECESSION MATHEMATICA POLICY RESEARCH ACKNOWLEDGEMENTS We would like to thank the Deputy Chief Evaluation Officer at the U.S. Department of Labor (DOL), Jonathan Simonetta, who provided guidance throughout this study. In addition, Rob Pavosevich, Ron Wilus, and other staff at the Employment and Training Administration’s Office of Unemployment Insurance (OUI), provided important feedback at critical junctures. The design of this study also benefited greatly from comments from a technical working group that included Richard Hobbie, Doug Holmes, Stephen Woodbury, George Wentworth, and Till van Wachter. We also wish to thank the many individuals who helped ensure the availability of high- quality data for this study. At OUI, the Administrator, Gay Gilbert, and the State Conformity and Compliance Team established the basis for this study’s use of confidential administrative unemployment compensation (UC) data. Technical and program staff in 20 states worked with us extensively to fulfill our request for their administrative data, while legal staff help refine data- sharing agreements permitting use of it for this study. We also owe a debt of gratitude to the UC recipients who patiently answered our survey questions about their experiences. A large number of staff at Mathematica also made important contributions to this study. Grace Roemer and Brandon Kyler worked tirelessly to secure administrative data from the states. A team of statisticians led by Frank Potter, with support from Sheng Wang and Yuhong Zheng, helped thoughtfully design and adapt the study’s approach to selecting analysis samples and calculating analytic weights. The survey 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 was the systems analyst who managed the sample release, and Alice Ng managed the survey information system. Tong Li programmed the complex logic of the multimode survey instrument, with the able 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/coding of the final survey data. We are also grateful to the many 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 programmers contributing to this effort included Mike Brannan, Adele Costigan, Margaux Evans, Eric Lundquist, Owen Schochet, Mark Timms, and Raúl Torres. Aravind Moorthy also helped validate administrative data related to benefit collection, and he provided substantive input on key study measures of potential benefit availability. Sheena McConnell provided critical feedback that helped shape our development of the main analysis results, and her helpful comments improved the initial draft of this report. We also received excellent production support from Betty Teller, Jane Retter, and Bill Garrett, who edited the report, as well as Colleen Fitts, who assisted with formatting. v This page has been left blank for double-sided copying. ADDITIONAL UC BENEFITS DURING THE GREAT RECESSION MATHEMATICA POLICY RESEARCH CONTENTS ABSTRACT ................................................................................................................................................ xv EXECUTIVE SUMMARY ......................................................................................................................... xvii I. INTRODUCTION .............................................................................................................................. 1 A. Economic and policy context ..................................................................................................... 2 B. The UC policy response ............................................................................................................ 5 C. Study research questions and data used to answer them ........................................................ 8 D. Prior research on extended UC benefits ................................................................................... 9 E. Roadmap for the rest of this report .......................................................................................... 15 II. DATA SOURCES AND STUDY STATES ...................................................................................... 17 A. Data collected for the study ..................................................................................................... 17 B. Description of the study states ................................................................................................ 20 C. Description of the survey respondents .................................................................................... 22 III. PATTERNS OF BENEFIT COLLECTION AND POST-CLAIM EMPLOYMENT ........................... 25 A. Benefit collection ..................................................................................................................... 25 B. Post-claim labor market outcomes .......................................................................................... 28 IV. WHO COLLECTED RECESSIONARY BENEFITS AND HOW DID THEY FARE? ...................... 31 A. Characteristics of recipients before collecting UI .................................................................... 31 B. How UC recipients fared after the initial UI claim .................................................................... 34 C. How recipients fared at the time of the survey (four to six years after their initial UI claims) ..................................................................................................................................... 38 V. HOW WERE POTENTIAL BENEFIT DURATIONS RELATED TO OUTCOMES? ....................... 41 A. Measuring potential UC benefit durations ............................................................................... 41 B. Patterns of potential UC benefit durations for survey respondents ......................................... 46 C. Measuring the association between potential duration and outcomes ................................... 47 D. Potential benefit durations and labor market outcomes .......................................................... 49 E. Potential benefit durations and economic well-being at the time of the survey ...................... 54 VI. HOW MUCH MONETARY SUPPORT DID RECIPIENTS DERIVE FROM THE FAC PROGRAM AND THE ARRA INCOME TAX EXEMPTION? ......................................................... 57 A. Monetary support derived from the FAC program ................................................................... 57 B. Monetary support derived from the ARRA income tax exemption .......................................... 58 vii ADDITIONAL UC BENEFITS DURING THE GREAT RECESSION MATHEMATICA POLICY RESEARCH C. Likely effects of the ARRA UC monetary enhancements on the duration of unemployment ......................................................................................................................... 60 VII. CONCLUSIONS ............................................................................................................................. 61 A. Who collected EUC08/EB benefits and how did they fare? .................................................... 61 B. How was the availability of additional recessionary UC benefits related to recipients’ outcomes? ............................................................................................................................... 63 REFERENCES ............................................................................................................................................ 67 APPENDIX A. STATE SAVINGS FROM THE ARRA WAIVER ON UNEMPLOYMENT TRUST FUND LOAN INTEREST ............................................................................................................................ A.1 APPENDIX B. DEVELOPMENT OF MAIN ANALYSIS DATA FILES .......................................................