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Reform proposals related to unemployment insurance
| Unemployment insurance |
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| • Terms and definitions • Court cases • Unemployment insurance programs in the states • Reform proposals related to unemployment insurance • Reform activity in the states related to unemployment insurance • Index of articles about unemployment insurance |
| Click here for more coverage of unemployment insurance on Ballotpedia |
Unemployment insurance is a term that refers to a joint federal and state program that provides temporary monetary payments to laid-off workers who are actively seeking new employment. Qualifying individuals are eligible to receive a percentage of their lost wages in the form of weekly cash payments while they search for new employment.[1][2]
This is a selection of reform proposals related to the joint federal-state unemployment insurance program curated from policy white papers, scholarly articles, and statements from state officials. To learn more about unemployment insurance reform activities in the states, click here.
Ballotpedia has identified nine types of reform proposals related to unemployment insurance. Click through the list below to learn more about each type of reform:
- Reduce length or amount of benefits: This approach argues that state governments should reduce the benefit amounts unemployment insurance claimants can receive or reduce the maximum length of time for which claimants can remain eligible to claim benefits.
- Increase benefits or expand eligibility: This approach argues that states should extend benefits to more workers or provide a mechanism for increasing payment amounts over time.
- Require recovery of unemployment insurance overpayments: This approach argues state agencies administering the unemployment insurance program in a state should take additional steps to recover all unemployment insurance overpayments.
- Require employer reporting of activities that would disqualify a person from unemployment insurance eligibility: This approach argues that states should require employers to report unemployed workers for activities that would disqualify them from receiving unemployment insurance benefits.
- Cross-check unemployment insurance claims: This approach argues that state agencies administering the unemployment insurance program in a state should cross-check unemployment insurance claims and claimant identities against other data sets to help prevent fraud.
- Tighten requirements around work search activities and job referral systems: This type of approach argues that states should increase requirements around work search activities, participation in mandatory job referral systems, and other programs designed to motivate and help people to find work.
- Stop automatically accepting federal unemployment insurance funding: This approach argues that states should stop automatically accepting federal funding to expand the unemployment insurance program.
- Repeal experience tax rating mandate: This approach argues that states should repeal experience tax rating mandates.
Reduce length or amount of benefits
This approach argues that state governments can incentivize employment-seeking behaviors by reducing the benefit amounts unemployment insurance claimants can receive or reducing the maximum length of time for which claimants can remain eligible to claim benefits.
Index unemployment insurance benefit durations to prevailing economic conditions
- See also: Indexing unemployment benefits
This approach argues that states should index unemployment insurance benefits to the rate of unemployment, offering shorter maximum benefit lengths during times of low unemployment and longer maximum benefit lengths during periods of high unemployment.
- The Foundation for Government Accountability (FGA) argued, "Indexing unemployment benefits is a proven solution to growing problems in state unemployment programs. By indexing the time spent on unemployment to the state unemployment rate, states can increase employment, grow their economies, lower taxes, and build up their [unemployment insurance] trust funds."[3]
Flat unemployment insurance benefit amount or duration cut
This approach argues that states should reduce the maximum length of unemployment insurance benefits regardless of prevailing economic conditions such as unemployment rates to incentivize claimants to return to work.
- During a March 2024 floor debate on proposed legislation to reduce the duration of unemployment benefits from 26 weeks to 16 weeks, Nebraska Senator Merv Riepe (R) argued that 26 weeks of unemployment benefits may inadvertently discourage individuals from actively seeking employment, stating “[w]e have to ask ourselves at what point does it stop becoming a safety net and … start becoming a disincentive for participating in society,”[4]
Increase unemployment insurance benefits or expand eligibility
This approach argues that states should extend benefits to more workers or provide a mechanism for increasing payment amounts over time.
Expand unemployment insurance eligibility to striking workers
This approach argues that states should allow private and/or public workers who have gone on strike to claim unemployment insurance benefits.
- Senior Researcher and Policy Analyst Amy Traub of the National Employment Law Project on February 22, 2024, testified in support of Connecticut House Bill 5164, which proposed making striking workers eligible to collect unemployment benefits after 14 days. Traub argued, "Striking workers use the right to strike to challenge unsafe or unsuitable workplace conditions, low wages, and other unfair employment practices. This aligns with the intended purpose of the UI program. Striking workers are temporarily disconnected from their employers and paychecks. Many workers in similar situations are currently supported by the UI system, including workers on temporary layoff and workers participating in the Connecticut Department of Labor’s Shared Work Program. Striking workers and their families deserve the same financial support and should not be pushed into poverty for exercising their legally protected right to strike."[5]
- Oregon State Senator Kathleen Taylor (D) in March 2025 spoke in favor of Senate Bill 916, which would make Oregon the first state to extend unemployment benefits to striking public workers like teachers and nurses. “They make it so that every day we have clean water, safe roads, safe everything. We owe them the respect of allowing this provision.”[6]
- Washington State Representative Beth Doglio (D) in April 2025 spoke in favor of Senate Bill 5041, which became law on May 19, 2025 and made Washington the third state to extend unemployment benefits to striking private workers, joining New York and New Jersey. "Fundamentally, this takes a step to level the playing field for striking workers.”[7]
Index weekly payments to states' average wages, not individual earnings
This approach argues that states should increase weekly payments in tandem with increases in a state's average wages and the cost of living.
- The National Employment Law Project in a 2023 policy brief argued, "Indexing the maximum weekly benefit amount, as most states already do, allows benefits to grow in line with a state’s wage growth and to keep pace with increases in the cost of living."[8]
Require recovery of unemployment insurance overpayments
- See also: Unemployment insurance fraud recovery
This approach argues state agencies administering the unemployment insurance program should take additional steps to recover all fraudulent and non-fraudulent overpayments to protect taxpayer dollars. Federal law requires that state governments engage in unemployment insurance overpayment recovery efforts, but individual state laws vary based on how and when they attempt to recover overpayments.
- The 2021 FGA paper "Top 10 Examples of Outrageous Unemployment Fraud in 2020—And How to Fix It" proposed state legislatures could require state workforce agencies to recover all fraud and non-fraud overpayments and report any cases where recovery was not attempted or impossible to aid legislative oversight.[9]
Require employer reporting of activities that would disqualify a person from unemployment insurance eligibility
This approach argues that states should require employers to report unemployed workers for activities that would disqualify them from receiving unemployment insurance benefits. Disqualifying activities include refusal of work (where an employer offers work to an unemployed person and the offer is refused) and claimant failure to attend scheduled interviews.
Require employers to report refusals to work
- See also: Refusal of work
This approach argues that states should require employers and prospective employers to report unemployed workers who are offered jobs and refuse or do not accept the offer.
- The Foundation for Government Accountability (FGA) published a 2020 paper titled "Reporting Employee Work Rejections" proposing states could require employers to report unemployed workers who refuse job offers. The paper argued, "Individuals aren’t returning to work after being laid off, and are refusing new jobs as well. Instead, they continue to draw taxpayer-funded unemployment insurance benefits. Continuing to collect unemployment after refusing to work is fraud. ... States should set up simple, easy-to-use processes where employers can report employees who have refused an offer of suitable work."[10]
Require employers to report unemployed workers who fail to show up for scheduled interviews
This approach argues that states should require employers to report unemployed workers who fail to attend scheduled interviews.
- Kansas State Director of the National Federation of Independent Business Dan Murray in February 2024 testified in a state legislative committee in support of a bill that proposed creating a process for employers to report claimaint failure to attend interviews, claiming the bill "[a]ddresses the problem of claimant 'ghosting' by creating an audit process for employers to submit work search reports when applicants accept interview appointments but fail to show up or notify the employer."[11]
Cross-check unemployment insurance claims
This approach argues that state agencies administering the unemployment insurance program should cross-check unemployment insurance claims and claimant identities against the Integrity Data Hub and other data sets to help prevent errors and fraudulent payments.
Maintain unemployment insurance program integrity through the national Integrity Data Hub
This approach argues that state agencies administering the unemployment insurance program should be required to use national Integrity Data Hub resources and datasets to cross-check unemployment insurance claims and verify their legitimacy.
- The FGA argued in a 2021 paper, "Fraud overpayments cost taxpayers nearly a billion dollars in 2018 alone. With a few simple data checks, states can ensure that those receiving unemployment payments are eligible and can protect and restore program integrity, preserving resources for the truly needy and saving tax dollars."[12]
Cross-check claims against state and Social Security Administration death records
This approach argues that states should check all unemployment insurance applications against state death records and the Social Security Administration's database of death records to prevent fraudulent use of deceased individuals' information.[13]
- The FGA proposed model legislation in 2022 that recommended state labor departments should "[o]n a monthly basis, cross-check the unemployment insurance rolls against state death records."[14]
Cross-check claims against state and national directories of new hires
This approach argues that states should cross-check all unemployment insurance claims against state and national directories of new hires.[15]
- The FGA proposed model legislation in 2022 that recommended state labor departments should "[o]n a weekly basis, cross-check the unemployment insurance rolls against the National Directory of New Hires."[14]
Review claims with matching characteristics
This approach argues that states should review unemployment insurance claims with duplicate mailing addresses, IP addresses, bank accounts, and other personal data.[13]
- The FGA proposed model legislation in 2022 that recommended state labor departments should perform a full eligibility review of suspicious claims, such as duplicate claims originating from the same I.P. address or mailing address or when multiple claims are associated with the same bank account.[14]
This approach argues state agencies should share data with other agencies within the state (for example, that the department of motor vehicles should share data with the department overseeing unemployment benefits) and with agencies in other states to allow for effective cross-checking of unemployment insurance claims.[13]
- The FGA proposed model legislation in 2022 that recommended state agencies share data for cross-checking purposes. The model legislation stated, "Any welfare agency, upon receipt of notification that an enrolled individual has become employed, shall notify the department of labor in order that the department may determine whether a claimant remains eligible for unemployment compensation."[14]
Require multi-factor authentication
This approach suggests that state unemployment insurance claimant portals should require multi-factor authentication, such as a code sent to the claimant's cell phone or email, to log in and manage benefit accounts.
- The New Mexico Department of Workforce Solutions Secretary Sarita Nair in June 2023 argued in a press release, “Multi-Factor Authentication is another tool that enhances our robust security measures that continuously work to protect sensitive data from unauthorized access, potential threats, and vulnerabilities in this time of an ever-changing digital landscape."[16]
Tighten requirements around work search activities and job referral systems
This type of approach argues that states should increase requirements and verification around work search activities, participation in mandatory job referral systems, and other programs designed to motivate and help people to find work.
Verify work searches
This approach argues that states should take additional steps to verify the work search activity that unemployment insurance claimants report in order to help reduce overpayments and fraud.
- In a letter to state workforce agencies on February 10, 2020, Assistant Secretary for the Department of Labor John Pallasch argued, "Requirements for documentation of work search activities support the state’s ability to verify that the claimant completed the required work search activities. If feasible, the most efficient and effective way to capture work search activities is to integrate capturing work search activities with the state’s on-line weekly certification process. This enables the state to immediately know whether the claimant has completed the correct number of activities prior to payment of benefits for the week and presents an opportunity to prevent improper payments."[17]
Strengthen work search activity requirements
This approach argues that existing work search activity requirements in some states are not rigorous enough to motivate claimants to find employment and that states should require claimants to report more work search activities, such as filling out job applications or attending interviews, to the state each week to remain eligible for benefits.
- In a letter to state workforce agencies on February 10, 2020, Assistant Secretary for the Department of Labor John Pallasch argued, "States are encouraged to have aggressive work search policies to support the claimant’s rapid reemployment. Many states’ work search requirements rely solely on employer contacts or applications that, while important, do not fully reflect how hiring occurs in the modern labor market and do not effectively connect claimants to workforce system services that will help them become reemployed. In establishing the types of acceptable work search activities to be included in states’ laws or policies, the most important consideration is whether the activities are designed to result in the claimant’s rapid reemployment. The quality of the work search activity is critical. The range of work search activities available to claimant job seekers should, as a best practice, be broad and include any activity that supports finding suitable employment. Resources outside of the workforce system can be leveraged, including private sector online job search tools, social media and networking sites, libraries, community-based organizations, and any other resources that will assist claimants in finding suitable employment."[17]
Create mandatory job referral system
This approach argues that states should create systems for unemployed workers that help them find suitable jobs. Participation in the system and acceptance of suitable employment offers through the system should be mandatory for unemployment insurance claimants, according to the proposal.
- In a letter to state workforce agencies on February 10, 2020, Assistant Secretary for the Department of Labor John Pallasch posited, "States and American Job Centers should have business processes in place to proactively refer all suitable jobs to claimants throughout the life of the claim and, as a best practice, may require that claimants apply to all referred jobs as a condition of continued eligibility, and accept employment in suitable jobs, if offered."[17]
Stop automatically accepting federal unemployment insurance funding
This type of approach argues that states should not automatically accept federal funding to expand the unemployment insurance program because increased federal unemployment insurance funding disincentivizes returning to work.
- South Carolina Governor Henry McMaster (R) in May 2021 argued, "What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace."[18]
Repeal experience tax rating mandate
- See also: Unemployment insurance experience rating
This approach argues that states should repeal experience tax rating mandates because the U.S. experience rating system for unemployment insurance tax is outdated and discourages both layoffs and hiring.
- The Niskanen Center in April 2024 argued, "The experience rating system for unemployment insurance in the United States, while well-intentioned, has proven to be detrimental both to the economy and to workers. The attempt to reduce layoffs by penalizing firms with higher taxes has inadvertently led to a more stagnant labor market, discouraging layoffs with one hand and discouraging hiring with the other. This has contributed to a less dynamic and adaptable economy, especially during downturns, when flexibility and resilience are most needed."[19]
See also
- Unemployment insurance
- Unemployment insurance fraud
- Unemployment insurance fraud recovery
- Indexing unemployment benefits
- Unemployment insurance experience rating
- Refusal of work
- Integrity Data Hub (unemployment insurance)
Footnotes
- ↑ The Wall Street Journal, "How Does Unemployment Work?" February 22, 2021
- ↑ Employment Law Firms, "How Unemployment Works," accessed May 18, 2021
- ↑ FGA, "Indexing Unemployment Insurance to Economic Conditions," accessed January 26, 2023
- ↑ Unicameral Update, "Shortened unemployment eligibility discussed," accessed April 4, 2024
- ↑ NELP, "TESTIMONY OF AMY M. TRAUB IN SUPPORT OF H.B. 5164 AN ACT CONCERNING UNEMPLOYMENT BENEFITS," accessed April 17, 2023
- ↑ Oregon Public Broadcasting, "Oregon bill to give striking workers unemployment pay passes Senate," accessed May 6, 2025
- ↑ Washington State Standard, "WA House OKs unemployment benefits for striking workers, but adds four-week limit," accessed May 16, 2025
- ↑ NELP, "Benefit Amounts," November 6, 2023
- ↑ Foundation for Government Accountability, "Top 10 Examples of Outrageous Unemployment Fraud in 2020—And How to Fix It," accessed July 9, 2021
- ↑ Foundation for Government Accountability, "Reporting Employee Work Rejections," accessed July 9, 2021
- ↑ Kansas State Legislature, "Testimony in Support of HB2570," accessed April 17, 2024
- ↑ Foundation for Government Accountability, "Unemployment Insurance Program Integrity," accessed September 7, 2021
- ↑ 13.0 13.1 13.2 U.S. Department of Labor, "UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 28-20," accessed June 29, 2021
- ↑ 14.0 14.1 14.2 14.3 Foundation for Government Accountability, "Unemployment Insurance Program Integrity Model Bill," accessed April 17, 2024
- ↑ U.S. Department of Labor, "Unemployment Insurance Program Letter No. 13-19," accessed January 10, 2023
- ↑ New Mexico Department of Workforce Solutions, "Latest News," June 14, 2023
- ↑ 17.0 17.1 17.2 Department of Labor, "Training and Employment Notice," accessed April 17, 2024
- ↑ CNN, "Republican governors are refusing aid from Democrats in Washington," May 15, 2021
- ↑ Niskanen Center, "Creating a More Dynamic Unemployment Insurance System: The Case for Eliminating Experience Rating," April 23, 2024
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