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Losing your job doesn’t always gain you unemployment benefits

Requirements and trends behind unemployment insurance

Being unemployed does not guarantee that you’ll receive benefits from your local unemployment insurance program. Typically, there are eligibility criteria, such as previous work requirements, waiting periods, eligibility periods, and asset tests. These criteria can be stringent, depending on the political choices behind them. The graph above compares the U.S. unemployment rate with the segment of the labor force receiving unemployment insurance benefits. It is very clear that, most of the time, only a minority of the unemployed receive benefits.

The graph below focuses on that segment, showing the proportion of the unemployed that receives insurance benefits. Obviously, there are cyclical variations: At the start of a recession, proportionally more unemployed haven’t yet run out of eligibility. There also appears to be a longer-run trend that has been decreasing the segment of those eligible for benefits.

Update: The insurance claim numbers cover those who get regular state unemployment insurance benefits. There are also those who get benefits under the extended benefit and the emergency unemployment compensation programs, whose proportions tends to be higher during recessions. See this article for an analysis of these details.

How these graphs were created: Search for “unemployment insurance claims” and click on the series. From the “Edit Graph” section, add the “civilian labor force” series and click on “Apply.” Then enter formula a/b/10 (where the 10 makes it a percentage). Then open the “Add Line” tab and search for the unemployment rate; take the monthly, seasonally adjusted series. That’s the first graph. For the second, remove the line you just added, but add that series to the first line and apply formula a/b/c*10.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CCSA, CLF16OV, UNRATE

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