FGA Research Shows Unemployment Indexing Can Accelerate Economic Recovery Within States

|

Naples, FL—Recently, the Foundation for Government Accountability (FGA) published their findings on the impact of indexing the duration of unemployment insurance (UI) to economic conditions in state economies. The research shows that states have an enormous opportunity to restore trust fund balances, reduce taxes, and cycle individuals back into the workforce. 

Prior to the pandemic, states held a total of nearly $75 billion in their UI trust funds. But as of November 2021, collective trust fund balances had declined to $9 billion in the red, a 113 percent drop. Increases in pandemic-related claims and fraud are in large part to blame for the decline in trust fund solvency.  

Despite these obstacles, the research found that states utilizing UI indexing saw superior results relating to unemployment insurance tax rates, program duration, and trust fund balances compared to states with traditional unemployment systems. By implementing UI indexing, states could improve trust fund balances by $39 billion, reduce program dependency by more than 25 percent, and lower UI tax rates by 20 percent. Some states would see even more dramatic improvements in their UI systems. For example, Ohio’s trust fund balance could improve by nearly $1.8 billion alone, Oklahoma could see dependency drop by 35 percent, and Missouri and South Carolina could both see 33 percent reductions in UI tax rates. 

“Tying unemployment insurance benefits to economic conditions is a simple solution that will help states recover from the poor policy decisions made by Washington bureaucrats,” said Hayden Dublois, Senior Research Analyst at FGA. “States should adopt UI indexing to replenish state trust funds, empower individuals to return to work more quickly, and reduce taxes on small businesses.”  

###

The Foundation for Government Accountability is a non-profit, multi-state think tank that specializes in health care, welfare, work, and election reform. To learn more, visit thefga.org