Our unemployment insurance system was born in 1935 and, in some respects, little has changed. In particular, the work search requirement in most states has remained largely the same – contact a couple of employers each week and let the state know about it, proactively, or in many states, only if asked. But this approach has two major problems.
First, states rely mostly on claimants policing themselves, kind of like asking drivers to self-report when they break the speed limit. The national overpayment rate to those not complying with work search requirements is 4.5% of annual claims, costing employers over $1.5 billion for the year ending June 30, 2014. For context, that’s more than 15 times the cost of one of the Department of Labor’s more effective job search programs (the Reemployment Eligibility Assessment program).
Worse, the federal measure tends to understate what may really be happening. Evidence suggests 4.5% is a gross understatement and that one third or more of claimants are not willing to comply with work search requirements.
The second problem is that the required level of job search activity is low and can take just one hour to complete – that’s less than 1/4th the time the average person watches TV each day (4 hours). This is a low level of encouragement for someone who is unemployed and suddenly has a lot of time on their hands and needs work. Because the average UI claimant’s benefits are about half of their prior pay level, every week of added unemployment is costly in many ways.
Fortunately, there’s a better way – states can now use 100% verifiable work search activities that are equally or more valuable than contacting a couple of employers each week. For example, some states are requiring claimants to take online job search training because claimants rate their training at a C-/D+. States could require other similar online activities, such as inventorying their skills, building a resume and posting it, using online networking, etc.
How can employers help? UI agencies are sensitive to their Work Search Integrity rates. To see your state’s overpayment rates, click here. Then ask your state agency staff about the rate and whether they’ve considered moving to fully verifiable job search activities? Some would suggest they are about 1.5 billion reasons to do so.
Click here for more on this topic including a “by the numbers” look at the Odds of Getting Caught.