Accessing Federal Stimulus Money for Unemployment Insurance

Like many states in the nation, Washington is facing the problem of growing unemployment. Over the next year, the Economic and Revenue Forecast Council has projected that the state unemployment rate will rise to ten percent, the highest level since 1983.

As the economy falters, the need for a robust state Unemployment Insurance (UI) program grows. In recognition of this need, the American Recovery and Reinvestment Act includes provisions (a.k.a. the UI Modernization Act) to update and improve state UI programs. Here in Washington, the new federal dollars could bring in over $150 million, money that would provide a direct boost to the state economy.

States have to meet certain criteria in their UI policies in order to draw down the extra federal money. Currently, Washington is eligible for one-third of its total allotment. In order to access the rest of the money – nearly $100 million - Washington must make two meaningful improvements to our state policies.

The Legislature is already moving to adopt one reform – allowing unemployment benefits for workers who must leave their job in order to follow a spouse who has obtained new employment. There are two options being considered in the Legislature for the other policy change that would allow us to receive the remaining federal funding. They are:

• Expanding eligibility for people who can only work part-time hours
• Extending benefits to all UI recipients who participate in worker training programs

Part-time

Washington currently allows eligibility for some unemployed workers who are seeking part-time work, but the state’s policies are too restrictive to meet the federal criteria. As it stands, Washington only allows benefits for workers seeking part-time work if they were previously employed for 17 hours or less per week. Laid-off workers that were previously employed for more than 17 hours per week must be available to work full-time hours or lose their UI eligibility.

In order to qualify under the federal criteria, Washington would need to change its part-time eligibility rules to include workers who seek employment of 20 hours per week or more. This change is expected to particularly benefit lower income and women workers.

Worker Training

The extension of UI benefits while recipients are in worker training programs is important because it enables people to develop skills in areas of employment with high demand and it can set them on a path for higher wages in the future. The state has already committed to some policy changes regarding extended benefits for UI recipients in worker training programs. As of September 2009, eligibility will not only include those who work in declining occupations, but also honorably discharged military veterans, people who have been injured and can no longer do their previous work, and lower income workers.

But in order to meet the federal criteria, our program will have to be even more inclusive and easier for UI recipients to navigate. The changes would mean many more unemployed workers would have access to twice the number of weeks of benefits – up to a year as long as they remain in a training program.