The Unemployment Insurance (UI) system has served and continues to serve as a vital support system for families experiencing extended joblessness during the recession and current recovery. Now with the economy showing signs of strong, stable growth, including 26 straight months of private sector job gains, the Obama Administration is continuing its efforts to turn the unemployment program into a reemployment program.
Two months ago, the President signed the Middle Class Tax Relief and Job Creation Act of 2012. In addition to extending the payroll tax cut and federal unemployment insurance programs that are helping the economy lead to a stable recovery, the legislation also included major reforms to the UI system. These reforms provide states with more flexibility to respond to changes in the economy, provide employers with tools to avoid layoffs, help the unemployed get back to work faster and expand opportunities for the unemployed to start their own businesses.
One of the primary reforms was a greater focus on initiatives that combine Reemployment Eligibility Assessments (REA) with Reemployment Services. This initiative provides funds for states to better link the unemployed with the overall workforce system by bringing individuals receiving UI benefits into One-Stop Career Centers for personalized assessments and referrals to reemployment services. The goal of this program is to provide unemployed workers who receive UI benefits with early access to specific strategies that can help get them back into the workforce faster. The strategies include developing a reemployment plan, access to relevant labor market information and referrals to reemployment services and training, as well as assessing their on-going UI eligibility.
These programs are highly effective. Recent studies of REA programs in Florida, Minnesota, Idaho, Illinois, Nevada and North Dakota show that in most cases, participating in a REA program led to shorter durations of joblessness. These studies were conducted in 2009 and were particularly informative because they looked at the programs during a time when the national economy was experiencing weak demand. Even in those difficult circumstances, the research has found these programs are cost-effective for states as they save money to their unemployment insurance system.
A follow up study was commissioned to take a closer look at the Nevada model which more closely integrates the delivery of reemployment services with the eligibility assessments. The study found that by linking REAs to reemployment programs directly (in this case, the same Nevada staff conducted both programs), Nevada was even more effective than other states at getting the unemployed back to work faster and it also increased earnings for those participating in the program. At the same time, Nevada’s program was very effective at reducing costs to the state UI program. Nevada saved four times as much money using the REA program than it cost to run the program, showing clearly the cost-effectiveness of this program.
By conducting personalized reemployment assessments for UI claimants, states have reduced the time a person stays on UI, helped them connect to their next job more quickly, decreased the rate of improper payments made to ineligible claimants, and increased savings for state UI trust funds, saving states and employers a substantial amount of money.
The Obama Administration continues to look at every opportunity to create a more effective and efficient workforce system. The REA initiative is one step in this process. Expanding this program to more states and more UI-eligible claimants will ensure that the unemployed get back to work more quickly and that the Unemployment Insurance system remains strong into the future.
Jane Oates is the Assistant Secretary of Labor for Employment and Training.