Unemployment Insurance:

Program's Ability to Meet Objectives Jeopardized

HRD-93-107: Published: Sep 28, 1993. Publicly Released: Sep 28, 1993.

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Pursuant to a congressional request, GAO reviewed the Unemployment Insurance (UI) program, focusing on the: (1) factors contributing to the decline in UI beneficiaries; and (2) effect of this decline on the program's ability to meet its objectives.

GAO found that: (1) the deteriorating financial solvency of state trust funds has led to changes in state laws affecting eligibility and compensation levels and adversely affected the percentage of unemployed persons receiving unemployment benefits; (2) changes in the workforce such as long-term unemployed workers, fewer manufacturing workers, more service-sector workers, and more temporary and part-time workers have adversely affected the percentage of unemployed persons receiving UI benefits; (3) employers' circumvention of UI eligibility laws and misclassification of employees has contributed to the decline in UI beneficiaries; (4) the UI program no longer meets its original program objectives of stabilizing the economy and providing an income safety net to unemployed persons; (5) the reduction in the percentage of unemployed persons receiving UI benefits has contributed to the increase in the poverty population; and (6) Congress has established an advisory council to evaluate the UI program and determine what role the program should play in eliminating the adverse effects of unemployment and recession.

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