When the Tide Goes Out: Unemployment Insurance Trust Funds and the Great Recession, Lessons for and from New England
The unemployment insurance (UI) program is a federal-state program aiming to: (1) provide temporary, partial compensation for the lost earnings of individuals who become unemployed through no fault of their own and (2) serve as a stabilizer during economic downturns by injecting additional resources into the economy in the form of benefit payments. Each state, plus the District of Columbia, Puerto Rico, and the Virgin Islands, operates its own UI program within federal guidelines.
Since the onset of the Great Recession in late 2007, two-thirds of state UI programs depleted their trust funds and borrowed from the federal government in order to continue paying benefits to unemployed workers. This research examines why some state UI programs experienced insolvency during the Great Recession or in its aftermath while others did not. It places special emphasis on New England, describing the key features of the region's UI programs and examining the solvency of their trust funds over time, as well reforms enacted in these states that impact solvency. It concludes by offering policy options for strengthening UI trust fund solvency in the future.