More of the Jobless are Receiving Unemployment Benefits

Not only does unemployment in the United States remain high several years into our current historic “great recession,” but the percentage of the unemployed who are actually receiving unemployment benefits is at a 50-year high.

The number of the unemployed who are taking advantage of benefits provided by unemployment insurance – what economists call the “takeup rate” – never rises to anywhere near 100 percent. In fact, in 1986 the takeup rate was only 31 percent, meaning more than two-thirds of the unemployed population then did not receive benefits.

Takeup rates spiked in the two most recent past recessions, but even then the rates rose only to the 50-55 percent range. The current recession, on the other hand, has seen takeup rates as high as 68 percent. Casey B. Mulligan, a University of Chicago economics professor writing for the New York Times, says that the takeup rate in 2009 may have been the highest ever.

The reason that takeup rates spike in recessions is obvious to economists – the unemployed population during a recession includes a much higher proportion of people who were laid off, and probably qualify for benefits, as compared to people who voluntarily quit, and thus do not qualify.

Other variables that are thought to increase unemployment compensation takeup rates include:

  • offering higher levels of benefits
  • streamlining the process of filing for and receiving benefits (putting some of the application and certification process online, for instance)
  • higher levels of household financial distress (families’ lack of a savings cushion or home equity)
  • greater pessimism about the job market and the length of time it will take to find another job
  • reduced stigma about receiving benefits through a government-administered program

With so many payroll deductions to comply with such as unemployment insurance, social security and workers compensation, even small business payroll processing can be complicated. Padgett Payroll Services can simplify the life of a small business owner with our expert knowledge and efficient performance of employee payroll administration. Call Padgett Payroll Services today at (706) 548-1040 to begin getting the benefits of professional payroll processing for your company.

Do you have the support you need to manage your small business bookkeeping? Contact us to schedule an appointment to speak with a local small business advisor.