ABSTRACT
This chapter acknowledges why the proportion of unemployed workers who receive unemployment compensation benefits has declined over time. It explains whether weekly unemployment compensation benefits are adequate in most states and the major reasons why certain claims are disqualified for unemployment compensation benefits. The chapter examines why millions of unemployed workers exhaust their benefits during periods of extended unemployment and identifies the defects now found in the permanent extended-benefits (EB) program. It analyzes whether the states have adequate trust fund reserves for the payment of unemployment compensation claims. The chapter describes the major arguments for a higher taxable wage base in financing of unemployment compensation benefits. It reviews the problem of misclassification of employees in the administration of unemployment compensation programs and the disincentive effects now present in unemployment compensation programs. Empirical studies suggest that unemployment compensation programs increase the unemployment rate and the duration of unemployment and create disincentives to work.
