Magazine article Economic Trends

Unemployment Insurance

Magazine article Economic Trends

Unemployment Insurance

Article excerpt

The U.S. Unemployment Insurance (UI) program, launched by the Social Security Act of 1935, gives monetary assistance to the unemployed. The program is also a countercyclical tool that helps sustain income levels in difficult economic times.

As a byproduct, the UI program furnishes statistics on the number of insured unemployed people. The number differs from the total unemployed for several reasons: The program excludes certain groups such as the self-employed; it also excludes workers who do not qualify for the program for various reasons, including misconduct and exhaustion of benefits.

The number of initial claims is a timely (weekly) statistic that provides national or statewide information on the number of people laid off during the week. Although initial claims do not exactly equal jobs lost, the number of initial claims provides insight into future labor market fundamentals such as the unemployment rate.

After peaking in November 2001, the month the most recent recession ended, the number of initial claims has continued to trend downward. The number of initial claims improved over the past year, although the four-week moving average--for which a value greater than 400,000 is considered a sign of recession--increased by 16,000 over the past two months to 323,000. Compared to last year, the percent change in initial claims for Fourth District states has been similar to the nation's--with the exception of Kentucky, which has 5. …

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