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How A Decades-Old Unemployment Insurance System Is Measuring Up In The Pandemic


One sobering figure has become a weekly fixture in this pandemic - new unemployment claims. Today's numbers brought the total to 38.6 million. That's more than 1 in 5 American workers using an unemployment insurance system first established more than 80 years ago. The workforce has changed a lot since then, so to tell us more about how the program started and how it matches up to present-day needs, we've reached Indi Dutta-Gupta. He is executive director of the Georgetown Center on Poverty and Inequality.


INDI DUTTA-GUPTA: Thank, you Ari. I'm delighted to be here.

SHAPIRO: When unemployment insurance was established in 1935, what was going on? Who was it designed to serve?

DUTTA-GUPTA: Well, 1935, we were still struggling to come out of the Great Depression. We had millions of workers, a large share of the workforce completely out of work. The unemployment insurance system was really intended to serve a worker who worked at modest- or larger-sized manufacturing or trade industry job. Policymakers were clear that they wanted partial wage replacement for workers who were laid off through no fault of their own.

But policymakers also recognized that unemployment insurance would have the effect of stabilizing the economy and helping keep workers attached to the labor force. It's hard to really look at any trend since then and argue that unemployment insurance isn't, if anything, more important today than it was then.

SHAPIRO: So let's talk about what's been happening this spring. Tens of millions of Americans lost their jobs. And this system has never had to support this kind of an event before. So how is it doing?

DUTTA-GUPTA: Honestly, Ari, on the one hand, the unemployment insurance system is absolutely struggling under the weight of the claims that it's experiencing. But on the other hand, what we're seeing gradually is that, really, the supermajority of folks have been getting claims paid. And it's quite painful, of course, when you have to wait a week or two weeks, never mind six weeks for a payment. But I think that we're seeing the system slowly turn around as states step up and take the measures that they really, in many cases, should have always taken but now finally feel the pressure to take.

Unemployment insurance administration was not a topic that was attracting much attention except when states wanted to reduce spending during what was really the longest economic expansion in modern U.S. history. And here we are in a crisis paying the price for that.

SHAPIRO: Well, as part of the response to this crisis, the federal government has expanded benefits to include people who aren't typically eligible, like freelancers, gig workers, self-employed people. And also, unemployed people are getting $600 a week more than before. How have those steps helped, and do you think they've gone far enough?

DUTTA-GUPTA: One of the key concerns with - of the unemployment insurance system over the decades has been how many workers it actually leaves out. Many people would be surprised to know that only about 27% of unemployed workers in 2019 actually accessed unemployment insurance benefits.

Now, what Congress recognized in this crisis was that that percentage would be just unacceptable today. And so Congress created not only a number of incentives and offered funding for states to somewhat expand the unemployment insurance program, but they also established what's called a Pandemic Unemployment Assistance program to help pick up some of the very workers you mentioned.

Unfortunately, I'm concerned that the pandemic unemployment assistance is still going to leave out a lot of workers. Just think about all the people exiting school, exiting jails and prisons, exiting long-term caregiving responsibilities and will have no access to unemployment insurance and, in many cases, no access to the Pandemic Unemployment Assistance program either.

SHAPIRO: You know, we often think of the people benefiting from this program as low-income earners, but a lot of people who make higher salaries are being laid off or have their hours cut or they're being furloughed. I mean, do you think those people should have any hesitation about taking these benefits?

DUTTA-GUPTA: Absolutely not. I mean, the fact is that the program is a contributory social insurance program. A lot of workers don't know that employers are paying taxes on their behalf. Many of those taxes, to be clear, are actually just passed on to the workers by reducing their compensation overall. So the fact is workers have a right to this, like they do to Social Security retirement or disability benefits should they be eligible. In fact, the higher paid you are, the more likely you're going to face a real income loss, which is going to be harmful to the economy.

SHAPIRO: Indi Dutta-Gupta is co-executive director of the Center on Poverty and Inequality at Georgetown Law.

Thank you for talking with us.

DUTTA-GUPTA: Thank you, Ari. And I appreciate your attention to this issue. Transcript provided by NPR, Copyright NPR.