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Declining Number of Jobless Americans Helped by the Unemployment Insurance System
New GAO Study Made Public at Chairman Jim McDermott’s Subcommittee Hearing
September 19, 2007
For Immediate Release

A new Government Accountability Office (GAO) study requested by Rep. Jim McDermott (D-WA) in his role as Chairman of the Income Security and Family Support Subcommittee revealed disquieting new data about the number of jobless Americans excluded from the Unemployment Insurance system.

Testifying before the subcommittee on Capitol Hill today, the GAO publicly released a new report that shows that low-wage workers are only one-third as likely to receive unemployment benefits as higher wage workers, even though they are much more likely to be unemployed. 

“This is not a gap but a gaping hole in the social safety net that is intended to catch Americans if they fall on economic hard times,” Rep. McDermott said, adding: “Missing those workers most in need of help is cause for quick and decisive action by the Congress.” Rep. McDermott noted that two-thirds of the part-time work force is comprised of women and so they are especially vulnerable and hard hit if they lose their job.

The GAO study, formally presented to the subcommittee by Cynthia Fagnoni, Managing Director for Income Security Issues, found that low-wage workers were almost two-and-half times more likely to be unemployed than higher-wage workers, but only about one-third as likely to receive unemployment benefits.  According to GAO, this disparity has gotten worse since the early 1990s and it remains even when low-wage workers had similar work tenures as higher-wage workers.  The GAO study also revealed a significant disparity in part-time workers receiving UI benefits, regardless of income.  Ms Fagnoni explained that “low-levels of UI receipt among low-wage workers may be explained by the circumstances of low-wage workers coupled with state UI eligibility rules.” 

The GAO is a non-partisan, independent arm of Congress that produces reports that routinely become benchmarks that the American people and congressional watchdogs like the news media use to judge the effectiveness and responsiveness of the federal government.

Unemployment insurance was created in the aftermath of the Great Depression when economic misery took a terrible toll on the American people.  President Franklin Delano Roosevelt called for Congress to weave an economic social safety net and create unemployment insurance as part of his New Deal, according to McDermott. “FDR vowed that America would stand together, protect one another and live in a nation that understood the power of we versus me,” McDermott said.

“When we recognize that every American suffers economically when one American suffers, we acknowledge our responsibility to abide by the common good, and act upon the wisdom and faith President Roosevelt had in his and every future American generation,” McDermott said.  

“The unemployment insurance safety net was woven over 70 years ago.  It represented America at its best at a time when America had just emerged from perhaps its worst economic downturn. That’s the kind of positive vision and unwavering commitment FDR had, and it is our responsibility to renew the New Deal by adjusting it to protect all American workers in the 21st century,” McDermott said.   

Following the hearing, McDermott vowed to seek swift action in the House on his legislation (H.R. 2233) to modernize the unemployment insurance program.

Late last week, a letter co-signed by groups representing millions of Americans called on every Member of Congress to support and quickly pass McDermott’s bill and its companion legislation in the Senate (S. 1871).  The New York Times editorially supported the legislation and called on Congress to act.