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As economy turns, unemployment insurance may once again play an important role

Posted on March 26, 2020

During the last recession, from 2007-2009, about half of the 15 million U.S. workers who lost their jobs received unemployment insurance benefits. As another potential recession looms because of COVID-19 (the coronavirus), unemployment insurance programs may once again play an important role in helping individuals and families make ends meet.

In today’s WatchBlog, we look at unemployment insurance benefits, new guidance from the Department of Labor, and how workers can apply for the program.

What is unemployment insurance?

Unemployment insurance provides temporary cash benefits to eligible workers who lose their jobs through no fault of their own. Benefits are funded primarily through state payroll taxes on employers. But, because state government revenues generally decline during economic downturns, the federal government has responded during past recessions by increasing funding to states for unemployment insurance.

New guidance from the Department of Labor encourages states to be flexible

The Department of Labor recently issued guidance stating that federal law allows states the flexibility to amend their own laws to provide unemployment insurance benefits in multiple scenarios related to COVID-19. For example, the new guidance says states are allowed to pay benefits where:

  • an employer temporarily ceases operations due to COVID-19 preventing employees from coming to work
  • an employee is quarantined with the expectation of returning to work after the quarantine is lifted
  • an employee quits due to a risk of exposure or infection or to care for a family member.

Why is it important to check with your state about eligibility?

Because unemployment insurance programs are state run, individuals should check with their own state for questions about eligibility.

After “the great recession” (2007-2009), we reported that workers who lost their jobs and were in the bottom 30% of earnings were half as likely to receive unemployment insurance benefits as those in the top 70%. We identified several possibilities for why lower-wage workers were less likely to receive benefits, including that they potentially did not meet minimum earnings requirements or had to quit a job due to a family hardship. We also noted that policies differed in some states. For example, some states had policies allowing individuals to be eligible for unemployment insurance benefits if they left a job to care for a family member while others did not.

For information on eligibility rules or how to apply for benefits in your state, please use to the following link and select your state from the dropdown menu.

To learn more about COVID-19 (the coronavirus) and what the U.S. government is doing to combat the pandemic, visit and For a Spanish translation, visit

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