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State Unemployment Insurance Reserves Are Not Adequate, Christopher J. O'Leary, Kenneth J. Kline
State Unemployment Insurance Reserves Are Not Adequate, Christopher J. O'Leary, Kenneth J. Kline
Upjohn Institute Working Papers
Regular unemployment insurance (UI) benefits are paid from reserves held in state accounts at the U.S. Treasury. The Great Recession exhausted the majority of UI reserve accounts, and not all states have rebuilt reserves. We examine the adequacy of current state and systemwide UI reserves to weather a mild, moderate, or severe recession in the coming months. Our results suggest that a recession as severe as the average of those occurring since 1975 would cause 18 states to exhaust UI reserves. Our simulations account for the fact that several states have cut benefit generosity since the Great Recession ended. Results …