Between Contract and Charity: Federalism and Unemployment Insurance, 1935-2022

Colin Gordon, University of Iowa
Sarah K. Bruch, University of Delaware

Social provision in the United States is notoriously organized around two logics. Social insurance, valorized by labor market participation and contributory financing, rests on high federal standards. Means-tested programs, by contrast, are routinely stigmatized and their terms are largely left to state and local governments. Unemployment insurance, however, does not fit neatly into either of these boxes. As in other forms of social insurance (OASDI, Medicare), eligibility is “earned” through employment. Yet, unemployment insurance is also unlike other forms of social insurance: workers do not make direct contributions (the system relies on employer taxes); they must satisfy “nonmonetary” criteria (concerning the circumstances of job loss) to be eligible for benefits; program rules compel them to re-enter the labor market as soon as they are able; receipt of benefits is conditional and time-constrained, and the terms of receipt are left largely to state discretion. In this paper, we investigate the ways in which that discretion is structured and utilized, and the consequences of that discretion (over time, across jurisdictions, and across populations), with particular attention to the racial dynamics that influence and pattern state policy choices. Drawing on administrative records, archival and contemporary program data, secondary sources, and original population estimates, we create a long-run time series of state-level measures for both benefit generosity and the inclusiveness of receipt. Using these harmonized, comparable measures, we are able to examine trends in generosity and inclusion for almost a century (from the origin of the program in 1935 through 2022), the extent of cross-state variation in generosity and inclusion, and changes over time in this variation. In turn, we assess racial inequalities in both the generosity of benefits and inclusiveness of receipt, and their roots in state policy choices, occupational segregation and labor market discrimination.

No extended abstract or paper available

 Presented in Session 75. The Expansion/Contraction of Worker Categories