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Federal Programs Available to
Unemployed Workers
Katelin P. Isaacs, Coordinator
Analyst in Income Security
David H. Bradley
Analyst in Labor Economics
Janemarie Mulvey
Specialist in Aging and Income Security
John J. Topoleski
Analyst in Income Security
July 9, 2010
Congressional Research Service
7-5700
www.crs.gov
RL34251
CRS Report for Congress
P
repared for Members and Committees of Congress
c11173008
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Federal Programs Available to Unemployed Workers
Summary
Four groups of federal programs target unemployed workers: unemployment insurance, health
care assistance, job search assistance, and training. This report presents information on federal
programs targeted to unemployed workers specifically, but does not attempt to discuss means-
tested programs (such as Medicaid or SSI) that are available regardless of employment status.
When eligible workers lose their jobs, the Unemployment Compensation (UC) program may
provide up to 26 weeks of income support through the payment of regular UC benefits.
Unemployment benefits may be extended for up to 53 weeks by the temporarily authorized
Emergency Unemployment Compensation (EUC08) program—which is currently unavailable—
and additionally extended for up to 13 or 20 weeks by the permanent Extended Benefit (EB)
program if certain economic conditions exist within the state. Certain groups of workers who lose
their jobs on account of international competition may qualify for additional or supplemental
income support through Trade Adjustment Act (TAA) programs or, if they are aged 50 or older,
for Reemployment Trade Adjustment Assistance (RTAA). If an unemployed worker is not eligible
to receive UC benefits and the worker’s unemployment may be directly attributed to a declared
major disaster, a worker may be eligible to receive Disaster Unemployment Assistance (DUA)
benefits.
Two federal laws may aid unemployed workers in the purchase of health insurance. The first, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), allows unemployed
workers in certain circumstances to continue health insurance coverage from their employers. The
second, the Health Coverage Tax Credit (HCTC), allows certain TAA and RTAA participants to
receive an advanceable and refundable tax credit for purchasing health insurance.
Federal support for Americans seeking assistance to obtain, retain, or change employment is
undertaken by a national system of local One-Stop Career Centers (One-Stops) that were
established by the Workforce Investment Act (WIA) of 1998. A variety of services and partner
programs—notably including UC and TAA—are located within or linked to One-Stops, which
primarily provide job search assistance, career counseling, labor market information, and other
employment services. Core labor exchange services (matching job seekers and employers) are
provided by the U.S. Employment Service (ES), which was first established by the Wagner-
Peyser Act of 1933 and most recently amended under Title III of WIA. In addition to ES, Title I
of WIA authorizes resources for similar core and intensive employment services for youth, adults,
dislocated workers, and targeted populations.
WIA Title I is also the nation’s central job training legislation, providing funds for traditional, on-
the-job, customized, and other forms of training to individuals unable to obtain or retain
employment through other services.
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5, known as ARRA or the 2009
stimulus package), as amended, contains several provisions related to unemployment benefits.
ARRA provisions affect unemployment income support as well as health insurance (COBRA and
HCTC) programs.
This report will be updated with major new legislation.
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Contents
Unemployment Insurance for Unemployed Workers.................................................................... 1
Unemployment Compensation .............................................................................................. 2
Emergency Unemployment Compensation (Currently Unavailable) ................................ 3
Extended Benefits ........................................................................................................... 4
EUC08 and EB Interactions ............................................................................................ 5
Trade Readjustment Allowance: Unemployment Benefit Extensions for Workers
Unemployed on Account of International Trade.................................................................. 5
Other Benefits.................................................................................................................6
Job Training .................................................................................................................... 6
Older Workers and TAA.................................................................................................. 6
Disaster Unemployment Assistance....................................................................................... 6
Health Care Assistance for Unemployed Workers ........................................................................ 7
Consolidated Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272).............................. 7
Health Coverage Tax Credit .................................................................................................. 8
Job Search Assistance for Unemployed Workers.......................................................................... 9
Wagner-Peyser Act of 1933 ................................................................................................... 9
Employment Services.................................................................................................... 10
Wagner-Peyser Act Funding .......................................................................................... 10
Job Training Assistance for Unemployed Workers ..................................................................... 10
Workforce Investment Act of 1998 ...................................................................................... 10
WIA State Formula Grant Programs for Job Training and Related Services ................... 11
National Training Programs for Special Populations ...................................................... 12
Other Targeted Competitive Grant Programs ................................................................. 12
Workforce Investment Act Funding ............................................................................... 14
Targeted Federal Job Training Activities: Trade Adjustment Assistance and
Community Service Employment for Older Americans .................................................... 14
Trade Adjustment Assistance......................................................................................... 14
Community Service Employment for Older Americans ................................................. 15
Employer Education Assistance........................................................................................... 15
Tables
Table 1. Workforce Investment Act Title I FY2010 Appropriations ............................................ 14
Contacts
Author Contact Information ...................................................................................................... 16
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Federal Programs Available to Unemployed Workers
here are four groups of federal programs that target unemployed workers: unemployment
insurance programs, health care assistance, job search assistance, and training. On the
T following pages we describe these programs, how they interact with each other, and their
funding.
Unemployed workers and their families may experience substantial income loss. If the
unemployed worker’s family income is low enough, there are a number of means-tested benefits
and programs for which the unemployed worker’s family might qualify (e.g., Temporary
Assistance for Needy Families, SSI, or Medicaid). Eligibility for such benefits is not conditional
on one’s current employment status. This report does not attempt to discuss these means-tested
benefits and programs.
Unemployment Insurance for Unemployed Workers
A variety of benefits may be available for unemployed workers. When eligible workers lose their
jobs, the Unemployment Compensation (UC) program may provide income support through the
payment of UC benefits. Those who exhaust UC benefits may be eligible for additional weeks of
unemployment compensation through the temporary Emergency Unemployment Compensation
(EUC08) benefit (which is currently unavailable since the program expired on June 2, 2010) or
through the permanent extended benefit (EB) program. When authorized Tiers I and II of EUC08
are available in all states. If certain economic conditions exist in a state, workers may be eligible
for additional weeks of unemployment compensation through Tiers III and IV of EUC08 (again,
when authorized; all Tiers of EUC08 are currently unavailable due to a lapse in program
authorization). Certain groups of workers who lose their jobs on account of international
competition may qualify for additional or supplemental income support through Trade
Adjustment Act (TAA) programs. If an unemployed worker is not eligible to receive UC benefits
and the worker’s unemployment may be directly attributed to a declared major disaster, a worker
may be eligible to receive Disaster Unemployment Assistance (DUA) benefits.1
The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) contained provisions
affecting unemployment benefits.2 ARRA temporarily increased benefits by $25 per week
(Federal Additional Compensation, or FAC); extended the EUC08 program through January 1,
2010; provided for 100% federal financing of the EB program through January 1, 2010; and
allowed states the option of temporarily easing EB eligibility requirements. P.L. 111-92 expanded
the number of weeks available in the EUC08 program through the creation of two additional tiers.
P.L. 111-118 extended the EUC08 program, 100% federal financing of the EB program, and the
$25 FAC benefit through the end of February 2010. These same three measures were extended
through April 5, 2010, by P.L. 111-144 and through June 2, 2010, by P.L. 111-157. Although these
three provisions have expired, H.R. 4213 proposes to extend them through November 2010. H.R.
1 For a more comprehensive review of these income support programs, see CRS Report RL33362, Unemployment
Insurance: Available Unemployment Benefits and Legislative Activity, by Katelin P. Isaacs, Julie M. Whittaker, and
Alison M. Shelton; CRS Report RS22718, Trade Adjustment Assistance for Workers (TAA) and Reemployment Trade
Adjustment Assistance (RTAA), by John J. Topoleski; and CRS Report RS22022, Disaster Unemployment Assistance
(DUA), by Julie M. Whittaker and Alison M. Shelton.
2 For more information on provisions in the 2009 stimulus package that affected unemployment benefits, see CRS
Report R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, by
Alison M. Shelton and Julie M. Whittaker.
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5618 proposes to extend the EUC08 program and 100% federal financing of the EB program—
but not the FAC—through November 2010.3
Unemployment Compensation
The cornerstone of an unemployed worker’s income security is the joint federal-state UC
program,4 which provides income support through the payment of UC benefits. The underlying
framework of the UC system is contained in the Social Security Act (the Act). Title III of the Act
authorizes grants to states for the administration of state UC laws, Title IX authorizes the various
components of the federal Unemployment Trust Fund (UTF), and Title XII authorizes advances
or loans to insolvent state UC programs. UC is financed by federal taxes under the Federal
Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax
Acts (SUTA).
In 2009, states spent $75.3 billion on regular UC benefits. The federal government appropriates
funds for UC program administration ($4.32 billion in 2009), the federal share of EB payments
($4.12 billion in 2009), the EUC08 program ($32.66 billion in 2009), and federal loans to
insolvent state UC programs. The 2009 stimulus package provided $500 million in additional
funds (i.e., on top of the 2009 federal allocations for administration) for states to use to administer
UC programs.5
The UC program pays benefits to covered workers who become involuntarily unemployed for
economic reasons and meet state-established eligibility rules. The UC program generally does not
provide UC benefits to the self-employed, to those who are unable to work, or to those who do
not have a recent earnings history. States usually disqualify claimants who lost their jobs because
of inability to work, unavailability for work, or a labor dispute, who voluntarily quit without good
cause, who were discharged for job-related misconduct, or who refused suitable work without
good cause. To receive UC benefits, claimants must have enough recent earnings to meet their
state’s earnings requirements. The 2009 stimulus package provided up to a total of $7 billion in
incentive monies for states to modernize their UI programs to include a worker’s more recent
work history and two of four optional provisions relating to (1) part-time job-seekers,
(2) voluntary separations for “compelling family reasons,” (3) participation in qualifying training
programs, or (4) dependents’ allowances.
Weekly maximums in January 2010 ranged from $235 (Mississippi) to $629 (Massachusetts) and,
in states that provide dependent’s allowances, up to $943 (Massachusetts). In March 2010, the
average weekly benefit was $310. ARRA, as amended, provides for a temporary supplemental
weekly unemployment (FAC) benefit of $25 per week. The authorization for this FAC benefit
3 For a more comprehensive overview of proposed legislation to extend unemployment benefits, see CRS Report
RS22915, Temporary Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08), by
Katelin P. Isaacs, Julie M. Whittaker, and Alison M. Shelton.
4 For more information on UC, see CRS Report RS22538, Unemployment Compensation: The Cornerstone of Income
Support for Unemployed Workers, by Julie M. Whittaker, and CRS Report RL33362, Unemployment Insurance:
Available Unemployment Benefits and Legislative Activity, by Katelin P. Isaacs, Julie M. Whittaker, and Alison M.
Shelton.
5 For more information on provisions in the 2009 stimulus package that affect unemployment benefits, see CRS Report
R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, by Alison M.
Shelton and Julie M. Whittaker.
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expired on June 2, 2010. But there is legislation (H.R. 4213) being considered by Congress that
proposes to extend it through November 2010.
Regular UC benefits are available for up to 26 weeks (more in Massachusetts and Montana). The
average regular UC benefit duration in December 2009 was 19 weeks.6 In 2009, 40% of all U.S.
unemployed workers received UC benefits. In April 2010, approximately 5.0 million unemployed
workers received UC benefits.
Emergency Unemployment Compensation (Currently Unavailable)
On June 30, 2008, the EUC08 program was created by P.L. 110-252.7 This is the eighth time
Congress has created a federal temporary program that has extended unemployment
compensation during an economic slowdown. On November 21, 2008, the President signed P.L.
110-449, the Unemployment Compensation Extension Act of 2008, into law. P.L. 110-449
expanded the potential duration of the EUC08 benefit from up to 13 weeks of EUC08 to a
maximum of 20 weeks. It also created a second tier of benefits for workers in states with high
unemployment of up to a maximum of an additional 13 weeks of tier II EUC08 benefits (for up to
a cumulative 33 weeks of EUC08 benefits).
On February 27, 2009, the President signed the 2009 stimulus package (ARRA), P.L. 111-5,
which authorized the EUC08 program through December 2009 and contained temporary
provisions for 100% financing of the EB program and the $25 FAC benefit.
On November 6, 2009, the President signed P.L. 111-92, the Worker, Homeownership, and
Business Assistance Act of 2009, into law. P.L. 111-92 expanded benefits available in the EUC08
program. Tier I benefits continue to be up to 20 weeks in duration and Tier II benefits are now 14
weeks in duration (compared with 13 previously) and no longer are dependent on a state’s
unemployment rate.8 The new Tier III benefit provides up to 13 weeks of EUC08 benefits to those
workers in states with an average unemployment rate of at least 6%. The new Tier IV benefit may
provide up to an additional six weeks of benefits if the state unemployment rate is 8.5% or higher.
When authorized ARRA’s $25 weekly FAC is available to beneficiaries of all tiers of EUC08. A
current listing of states that have triggered on for Tiers III and IV of the EUC08 program can be
found at http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp.
P.L. 111-118, P.L. 111-144, and P.L. 111-157 all extended the EUC08 program authorization. The
EUC08 program (and the weekly FAC) expired on June 2, 2010. Among legislative proposals to
extend EUC08 benefits, two bills have recently been passed in the House. H.R. 4213, which
passed the House on May 28, 2010, and now awaits action in the Senate, proposes to authorize
6 Tiers I and II of the temporary Emergency Unemployment Compensation (EUC08) program provide up to 34
additional weeks of benefits in all states. In states with unemployment rates above certain levels, tiers III and IV of
EUC08 benefits and/or the federal-state extended benefits (EB) program may offer additional weeks of benefits.
7 For a detailed explanation of the EUC08 program, see CRS Report RS22915, Temporary Extension of Unemployment
Benefits: Emergency Unemployment Compensation (EUC08), by Katelin P. Isaacs, Julie M. Whittaker, and Alison M.
Shelton.
8 Although EUC08 tier I and II benefits are not conditioned on unemployment conditions in the state, workers do have
to meet additional requirements.
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the EUC08 program (and FAC) through November 2010. On July 1, 2010, the House passed H.R.
5618, which would extend the availability of EUC08 (but not FAC) through November 2010.
Extended Benefits
The EB program, established by P.L. 91-373 (26 U.S.C. 3304 note), may extend UC benefits at
the state level if certain economic conditions exist within the state. The EB program is
permanently authorized, and is triggered when a state’s insured unemployment rate (IUR)9 or
total unemployment rate (TUR)10 reaches certain levels. All states must pay up to 13 weeks of EB
if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the
same 13-week period in each of the two previous years. There are two other optional thresholds
that states may choose. If the state has chosen a given option, they would provide the following:
• Option 1: an additional 13 weeks of benefits if the state’s IUR is at least 6%,
regardless of previous years’ averages.
• Option 2: an additional 13 weeks of benefits if the state’s TUR is at least 6.5%
and is at least 110% of the state’s average TUR for the same 13-week period in
either of the previous two years; an additional 20 weeks of benefits if the TUR is
at least 8%.
In addition to all state requirements for regular UC eligibility, the EB program requires claimants
to have at least 20 weeks of full-time insured employment or the equivalent in their base period,
and to conduct a systematic and sustained work search.11 A current listing of states that have
triggered on for EB can be found at http://www.workforcesecurity.doleta.gov/unemploy/
claims_arch.asp.
ARRA, as amended, made two temporary changes to the EB program. First, the federal
government financed 100% of the EB program through June 2, 2010 (under permanent law, the
federal government finances 50% of the EB program and states finance the other 50%; if passed,
either H.R. 4213 or H.R. 5618 would extend 100% federal financing of EB through November
2010). Second, states were given the option to change temporarily the eligibility requirements for
the EB program in order to expand the number of persons eligible for EB benefits, to end before
June 1, 2010. When authorized, ARRA’s $25 weekly supplemental unemployment is also
available to EB beneficiaries.12
9 The IUR is the ratio of UC eligible unemployed workers to all UC eligible workers (employed and unemployed) in
the labor force.
10 The TUR is the ratio of unemployed workers (without regard to UC eligibility) to all workers (employed and
unemployed) in the labor force.
11 The base period is the time period during which wages earned and/or hours/weeks worked are examined to determine
a worker’s monetary entitlement to UI. Almost all states use the first 4 of the last 5 completed calendar quarters
preceding the filing of the claim as their base period.
12 For more information on provisions in the 2009 stimulus package that affect the EB program, see CRS Report
R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, by Alison M.
Shelton and Julie M. Whittaker.
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EUC08 and EB Interactions
The EB program should not be confused with the similarly named EUC08 program (currently
unavailable). The EUC08 program is temporary and EUC08 Tiers I and II apply to all states,
while EUC08 Tiers III and IV apply to states with high and very high unemployment,
respectively. The EB program is permanently authorized and applies only to certain states on the
basis of state unemployment conditions.
When it is available, the EUC08 program allows states to determine which benefit, EB or EUC08,
is paid first. Most states have opted to pay EUC08 benefits before EB. Alaska has opted to pay
EB before EUC08 benefits.
An exception to the payment order may be made if an individual claimed EB for at least one
week of unemployment after exhausting the first two tiers of EUC08 and prior to the enactment
of P.L. 111-92, which created the new EUC Tiers III and IV. P.L. 111-92 gives states the option of
paying EB to an otherwise eligible individual prior to the payment of any EUC08 benefits that are
payable on account of the Worker Assistance Act amendments to the EUC08 program (or vice
versa in the case of Alaska).
Trade Readjustment Allowance: Unemployment Benefit Extensions
for Workers Unemployed on Account of International Trade
The Trade Adjustment Act (TAA)13 program, established by the Trade Expansion Act of 1962
(P.L. 87-794) and now authorized by the Trade Act of 1974 (P.L. 93-618), as amended, extends
unemployment and training benefits for workers dislocated by international trade. To gain TAA
eligibility, a group of workers (or a state or firm on behalf of a group of workers) petitions the
Department of Labor (DOL), who investigates whether import competition “contributed
importantly” to their job loss or whether their firm has shifted production of like articles or
services overseas. The reauthorization of TAA by the ARRA (P.L. 111-5) extends eligibility to
service and public sector workers and authorizes the program through December 31, 2010.
TAA funds are appropriated as an entitlement out of the federal government’s general fund (not
out of the Unemployment Trust Fund) to workers who meet the eligibility requirements, although
training funds are subject to annual funding caps. At the federal level, TAA is administered by
and is part of the federal budget for DOL. Claims for TAA benefits by individual workers are
administered by the state UC agencies under agreements and contracts with DOL.
The income support portion of the TAA is a Trade Readjustment Allowance (TRA) benefit, which
is identical to the UC benefit the worker would have received under the regular UC program of
the worker’s state. The Basic TRA benefit available to a worker is equal to 52 times the worker’s
weekly unemployment benefit and is reduced by any regular UC, EB, or EUC08 benefits the
worker receives. Workers must be in training or have a waiver from training to receive Basic
TRA. Up to 104 weeks (two years) of Additional TRA may be available as follows: (a) claimants
still in approved job training after the basic TRA is exhausted may receive up to 78 further weeks
of benefits; and (b) those in need of remedial education may receive up to 26 further weeks of
13 For more information on TAA, see CRS Report RS22718, Trade Adjustment Assistance for Workers (TAA) and
Reemployment Trade Adjustment Assistance (RTAA), by John J. Topoleski.
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benefits. Therefore, the total period of unemployment benefit receipt for a TAA certified
unemployed worker—including any regular and extended UC benefits, such as EB or EUC08
payments, that the worker receives and that offset TRA benefits—may last as long as 156 weeks
(three years). ARRA provides for a temporary supplemental weekly benefit of $25 per week for
recipients of unemployment insurance including TRA. This provision has been extended several
times until the week ending on or before June 2, 2010. H.R. 4213 would extend this benefit.
DOL estimates that 373,000 workers will be covered by TAA certifications in FY2010 and
approximately 137,000 workers in training. Approximately $1.1 billion was appropriated for
Basic, Additional, and Remedial TRA benefits in FY2010.
Other Benefits
An allowance of up to $1,500 may be paid to eligible workers who must search for work outside
their commuting area. Another $1,500 allowance may be paid for the cost of relocation to another
job market.
Job Training
TAA eligible workers may be provided job training through the TAA. This assistance is discussed
in the section below entitled “Trade Adjustment Assistance.”
Older Workers and TAA
Reemployment Trade Adjustment Assistance (RTAA) for older workers was first established by
the Trade Act of 2002 (P.L. 107-210). It replaces up to 50% of the difference (up to $12,000)
between the wages in a new job and the old job for up to two years for an older worker who has
been displaced by import competition.
The RTAA program went into effect on August 6, 2003, and is intended to shorten transitions into
new occupations or industries without requiring older workers to participate in training programs.
Eligibility is limited to those over age 50 whose incomes are less than $55,000 annually and who
work full time or who work part-time and are in an approved training program.
Disaster Unemployment Assistance
The Disaster Unemployment Assistance (DUA) program provides monetary assistance to
individuals unemployed as a direct result of a major disaster who are not eligible for regular UC
benefits.14 DUA is funded through the Federal Emergency Management Agency (FEMA) and is
administered by DOL through each state’s UC agency.
First created in 1970 through P.L. 91-606, DUA benefits are authorized by the Robert T. Stafford
Disaster Relief and Emergency Relief Act (the Stafford Act), which authorizes the President to
issue a major disaster declaration after state and local government resources have been
14 See CRS Report RS22022, Disaster Unemployment Assistance (DUA), by Julie M. Whittaker and Alison M. Shelton
for details on the DUA program.
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overwhelmed by a natural catastrophe or, “regardless of cause, any fire, flood, or explosion in any
part of the United States” (42 U.S.C. 5122(2)). On the basis of the request of the affected state’s
governor, the President may declare that a major disaster exists. The declaration identifies the
areas in the state eligible for assistance. The declaration of a major disaster provides the full range
of disaster assistance available under the Stafford Act, including, but not limited to, the repair,
replacement or reconstruction of public and non-profit facilities, cash grants for the personal
needs of victims, housing, and unemployment assistance related to job loss from the disaster.
In FY2006, DUA benefit payments totaled $401 million. This was an atypical outlay and
reflected the severity of the Hurricane Katrina disaster. DUA benefit payments totaled $9 million
in FY2007, $7 million in FY2008, and $17.3 in FY2009.15 ARRA, as amended, provided a
temporary supplemental weekly (FAC) benefit of $25 per week through June 2, 2010, for
recipients of unemployment insurance, including DUA. H.R. 4213 proposes to extend this benefit
through November 2010.
Health Care Assistance for Unemployed Workers
Two federal laws may aid unemployed workers in the purchase of health insurance. The first, the
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), allows unemployed
workers in certain circumstances to purchase continued health insurance coverage from their
previous employers. The second, the Health Coverage Tax Credit (HCTC), allows certain TAA
and RTAA participants to receive an advanceable and refundable tax credit for purchasing health
insurance.
Consolidated Omnibus Budget Reconciliation Act of 1985
(P.L. 99-272)
Title X of COBRA16 requires certain employers who offer health insurance to continue to make
coverage available for their former employees under certain circumstances. Congress approved
the legislation to expand access to coverage at group rates to qualified employees and their
families who are faced with loss of coverage due to certain events, including termination or
reduction in hours of employment (for reasons other than gross misconduct). Although the law
allows employers to charge 102% of the group plan premium, for some this can be less expensive
than comparable coverage available in the individual insurance market.
COBRA coverage generally lasts 18 months but, depending on the circumstances, can last for
longer periods. COBRA requirements also apply to self-insured firms. An employer must comply
with COBRA even if it does not contribute to the health plan; it need only maintain such a plan to
come under the statute’s continuation requirements. State and local workers are also covered by
COBRA.
However, not all individuals who lose their jobs have access to COBRA. For example, firms with
fewer than 20 employees are exempt from federal COBRA, but some states do have special
15 Data provided by the U.S. Department of Labor.
16 For more information on COBRA, see CRS Report R40142, Health Insurance Continuation Coverage Under
COBRA, by Janet Kinzer and Meredith Peterson.
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programs for small employers. Additionally, firms that do not provide access to health insurance
to current employees (including those that previously provided access but went out of business)
are not required to provide access to COBRA coverage. Among those individuals with access to
COBRA, the cost of the COBRA premiums may be prohibitive. Since most employers subsidize
health insurance premiums for their workers, the 102% COBRA premium may not be affordable
for the unemployed, especially when compared to unemployment compensation. In 2008, an
average COBRA premium was about $400 per month for individual coverage ($4,798 annually)
and $1,078 per month for family coverage ($12,934 annually).17 Average weekly unemployment
benefits were $297 in 2008.18 When converted to a monthly basis of $1,237 a month, these
premiums may consume a large share of one’s monthly unemployment benefits, especially for
those purchasing family coverage. These premium costs are most likely the reason for low
COBRA participation. According to surveys of the unemployed eligible for COBRA, the
participation rate ranges from 18% to 26% (or about 1 in 4 workers).19
ARRA helps to mitigate the financial barriers of COBRA coverage to certain unemployed
workers20 by providing COBRA premium subsidies of 65% to help the unemployed afford health
insurance coverage from their former employers. The subsidy is provided in the form of a 65%
credit that employers use to offset payroll taxes they would otherwise pay. Eligible individuals are
to pay the remaining 35% of the premium. The subsidy is available for up to 15 months to those
individuals who meet the income test and are involuntarily terminated on or after September 1,
2008, and before May 31, 2010. The subsidy is also available for qualifying affected federal
workers and workers covered under state COBRA laws targeted to employers with less than 20
employees (often referred to as mini-COBRA laws).
The full subsidy is available for individuals whose modified adjusted gross income (AGI) during
the tax year is no more than $125,000 for single filers (or $250,000 for joint filers). The subsidy
is phased-out for higher income individuals with a reduced subsidy for individuals with modified
AGI less than $145,000 for single filers (and $290,000 for joint filers). If individuals receive the
subsidy and their income exceeds the levels specified above, the amount of the subsidy will be
recaptured when they file their income taxes. To avoid recapture they may waive their rights to
the subsidy and still enroll in COBRA and pay the full premium. However, waiving their right is a
permanent decision, and they would not be allowed to take the subsidy in the future.
Health Coverage Tax Credit
Workers eligible for Trade Adjustment Assistance or receiving a pension paid by the Pension
Benefit Guaranty Corporation (PBGC) may be eligible to receive an advanceable, refundable tax
credit (the Health Coverage Tax Credit, HCTC)21 to purchase certain types of insurance. The
17 CRS estimate based on data from Kaiser Family Foundation, Worker and Employer Contributions for Premiums,
Employer Health Benefits 2008 Annual Survey.
18 CRS estimate based on average weekly unemployment compensation for 2008 of $297 from Department of Labor,
Employment and Training Administration, Unemployed Insurance Data Summary for 2008.
19 Spencer’s Benefits Reports, 2006, COBRA Survey: More Were Eligible, More Elected, Cost Was 145% of Active
Employee Cost (Chicago: CCH a Wolters Kluwer Company, 2006).
20 See CRS Report R40420, Health Insurance Premium Assistance for the Unemployed: The American Recovery and
Reinvestment Act of 2009, coordinated by Janemarie Mulvey.
21 For more information on the HCTC, see CRS Report RL32620, Health Coverage Tax Credit, by Bernadette
Fernandez.
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HCTC is a refundable and advanceable tax credit for 80% of health insurance premiums,
increased from 65% through December 31, 2010, by ARRA.
The HCTC is available to TAA and RTAA eligibles as well as individuals aged 55 and older
receiving a PBGC pension payment. Recipients cannot be enrolled in certain other health
insurance, including Medicaid or employment-based insurance for which the employer pays at
least half the cost, nor can they be entitled to Medicare.
The HCTC equals 80% of the premiums the taxpayer pays for qualifying insurance. Up to 10
types of coverage are specified in the statute, although most require state action to become
effective. The credit is payable in advance to insurers, allowing workers to benefit before they file
their tax returns. It is also refundable—workers can receive the full credit even if they have no
regular tax liability.
In addition to increasing the increasing the HCTC from 65% to 80%, ARRA also expands the
eligibility criteria for TAA assistance (which, in turn, expands HCTC eligibility) to include
service sector and public agency workers.
The Joint Committee on Taxation projected approximately $500 million in HCTC expenditures
for FY2009-FY2012.22 In addition, ARRA provisions are projected to result in an additional $457
million in HCTC expenditures over FY2009-FY2011.23
Job Search Assistance for Unemployed Workers
Federal support for Americans seeking assistance to obtain, retain, or change employment is
undertaken by a national system of local One-Stop Career Centers (One-Stops). One-Stops were
established by law under the Workforce Investment Act of 1998 (WIA, P.L. 105-220), but had
been encouraged by the DOL since it began awarding states One-Stop development grants in
1993. Although One-Stops bring together employment and training services of approximately 20
required partners, the central component of all One-Stops is a labor exchange system that is
universally accessible to job seekers and employers. This labor exchange system is undertaken by
the U.S. Employment Service (ES), first established by the Wagner-Peyser Act of 1933.
Wagner-Peyser Act of 1933
The Wagner-Peyser Act established the Employment Service24 as a system jointly operated by
DOL and the state employment security agencies. The central mission of the ES is to facilitate the
match between individuals seeking employment and employers seeking workers. Services are
open to all without fees.
22 Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2008-2012, October 31, 2008.
23 Joint Committee on Taxation, Estimated Budget Effects of the Revenue Provisions Contained in the Conference
Agreement for HR 1 The American Recovery and Reinvestment Tax Act of 2009, February 12, 2009. This estimate
includes indirect revenue effects of expanding Trade Adjustment Assistance Reauthorization to service sector workers;
estimate does not include outlay effects of TAA. Estimate also assumes that the HCTC sunsets on December 31, 2010.
24 For more information on ES, see CRS Report RL30248, The Employment Service: The Federal-State Public Labor
Exchange System, by Alison Pasternak and Ann Lordeman.
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Employment Services
Local ES offices are known by many names, such as Employment Service, Job Service, One-Stop
Career Center, and Workforce Development Center. These offices offer an array of services to job
seekers and employers, including career counseling, job search workshops, labor market
information, job listings, applicant screening, and referrals to job openings. States provide ES
services through three tiers of service delivery: self-service, facilitated self-help, and staff-
assisted. As the names of the tiers imply, progressively more active staff involvement is required
as services range from internet job postings to career counseling.
Upon the establishment of the Unemployment Compensation program in 1935, ES offices also
began to administer the UC “work test” requirements. These offices monitor UC claimants to
ensure that they are able to work, available for work, and actively seeking work. For the recently
unemployed, the ES processes UC income support claims while helping the individual find new
employment.
Wagner-Peyser Act Funding
Total funding for the Wagner-Peyser activities is $796.7 million for FY2010. These activities
include grants to states, technical assistance and training/state workforce agencies retirement, and
workforce information. Also, ARRA provided an additional $400 million for ES operations in
FY2009.
Job Training Assistance for Unemployed Workers
The nation’s central workforce development legislation is the Workforce Investment Act of 1998
(WIA). In addition, the act established linkages between WIA training activities and three other
populations targeted by federal programs: workers eligible for TAA, military veterans, and
workers over the age of 55 covered under the Older Americans Act of 1965.25
Workforce Investment Act of 1998
WIA includes titles that authorize programs for job training, adult education and literacy (the
Adult Education and Family Literacy Act), vocational rehabilitation (the Rehabilitation Act of
1973), and the Employment Service (the Wagner-Peyser Act of 1933). Title I of WIA26 provides
employment and training services for unemployed and underemployed individuals through three
state formula grant programs (adults, dislocated workers, and youth) and a number of national
programs. WIA programs operate on a program year (PY) of July 1 to June 30. FY2010
appropriations fund programs from July 1, 2010, until June 30, 2011. Although WIA authorized
funding through September 30, 2003, WIA programs continue to be funded through annual
25 Although not discussed here, it should be noted that other federal education and training programs provide support
that could assist the unemployed in reaching career goals, even though these programs do not explicitly target an
unemployed population (e.g., student financial assistance authorized under Title IV of the Higher Education Act of
1965 and the Lifetime Learning Credit).
26 For more information on WIA, see CRS Report R41135, The Workforce Investment Act and the One-Stop Delivery
System, by David H. Bradley.
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Federal Programs Available to Unemployed Workers
appropriations. Table 1 provides detailed national funding information for WIA Title I programs.
The WIA programs are briefly described below.
WIA State Formula Grant Programs for Job Training and Related Services
The three formula grant programs for youth, adult, and dislocated workers provide funding for
employment and training activities provided by the national system of One-Stop Career Centers.
Statutory formulas distribute funds to states on the basis of measures of unemployment and
poverty status for youth and adult allocations and unemployment measures only for dislocated
worker allocations. States in turn distribute funds, again by formula, to local workforce
investment boards.
Employment Services for Adults
This formula grant program provides sequential training and related services to both unemployed
and employed individuals ages 18 and older. Any individual may receive “core” services (e.g., job
search assistance). To receive “intensive” services (e.g., individual career planning), an individual
must have received core services and need intensive services to become employed or to obtain or
retain employment that allows for self-sufficiency. To receive job training (e.g. occupational skills
training), an individual must have received intensive training and need training services to
become employed or to obtain or retain employment that allows for self-sufficiency. In FY2010,
funding for state grants for adults is $862 million. Also, ARRA provided an additional $500
million for adult activities in PY2009.
Employment Services for Dislocated Workers
A majority (approximately 80%) of WIA dislocated worker funds are allocated by formula grants
to states (which in turn allocate funds to local entities) to provide training and related services to
individuals who have lost their jobs and are unlikely to return to those jobs or similar jobs in the
same industry. The remainder of the appropriation is reserved by DOL for a National Reserve
account, which in part provides for National Emergency Grants to states or entities (as specified
under Section 173 of WIA). Grants under this section are for employment and training assistance
to workers affected by major economic dislocations, such as plant closures or mass layoffs. In
FY2010, funding for state grants for dislocated worker training activities is $1.2 billion and is
$226 million for the National Reserve. Also, ARRA provided an additional $1.3 billion for state
formula grants for dislocated workers and an additional $200 million for the National Reserve in
PY2009.
Employment Services for Youth
This formula grant program provides training and related services to low-income youths aged 14-
21 who face barriers to employment. Services prepare both in-school and out-of-school youth for
employment and post-secondary education by linkages between academic and occupational
learning. In FY2010, funding for state grants for youth activities is $924 million. Also, ARRA
provided an additional $1.2 billion for youth activities in PY2009.
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Federal Programs Available to Unemployed Workers
National Training Programs for Special Populations
WIA authorizes several national grant programs that provide training funds to targeted
populations. Job Corps and programs for Native Americans and migrant and seasonal farm
workers are generally found in all states.
Job Corps
This primarily residential job training program, first established in 1964, provides services to
low-income individuals aged 16-24 primarily through contracts administered by DOL with
corporations and nonprofit organizations. Currently, there are 123 Job Corps centers in 48 states,
the District of Columbia, and Puerto Rico. A new center is scheduled to open in PY2010
(Wisconsin) and three additional centers are under construction, including the first centers in each
of the remaining two states, New Hampshire and Wyoming. In FY2010, funding for Job Corps is
$1.7 billion. Also, Job Corps received an additional $250 million in the ARRA for PY2009.
Native Americans Program
This competitive grant program provides training and related services to low-income Indians,
Alaska Natives, and Native Hawaiians through grants to Indian tribes and reservations and other
Native American groups. In FY2010, funding for the Native Americans program is $52.8 million.
Migrant and Seasonal Farmworker Program
This competitive grant program provides training and related services, including technical
assistance, to disadvantaged migrant and seasonal farmworkers and their dependents through
discretionary grants awarded to public, private, and nonprofit organizations. This program is also
referred to as the National Farmworker Jobs Program and is funded in FY2010 at $84.6 million.
Other Targeted Competitive Grant Programs
Additional competitive grant programs are specified in either the WIA legislation itself or in
appropriations language for WIA.
Veterans’ Workforce Investment Program
This program provides training and related services to veterans through competitive grants to
states and nonprofit organizations. It has been administered by DOL’s Veterans’ Employment and
Training Service since FY2001. In FY2010, funding for the Veterans’ Workforce Investment
Program is $9.6 million.
Green Jobs Innovation Fund
Authorized under Section 171 of WIA, this competitive grant program will fund a variety of
entities to train individuals to work in green occupations and sectors and to provide access to
green career pathways. The approaches to training that DOL’s Employment and Training
Administration (ETA) is likely to pursue will be based on the experiences of the various ARRA
competitive grantees for energy efficiency and renewable energy activities and may include
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apprenticeship programs, career pathways programs, and targeted programs for individuals with
multiple barriers to employment. In FY2010, funding for the Green Jobs Innovation Fund is $40
million.
Workforce Data Quality Initiative
Authorized under Section 171 of WIA, this competitive grant program will provide resources to
up to 12 states to implement the Workforce Data Quality Initiative (WDQI), which is a joint
initiative started in FY2010 between ETA and the U.S. Department of Education (ED). The
WDQI is intended to enable state workforce agencies to build longitudinal data systems to merge
workforce and education data. The WDQI complements the ARRA-funded State Longitudinal
Data System program in the ED. In FY2010, funding for the WDQI is $12.5 million.
Ex-Offender Reintegration
This competitive grant program combines two previous demonstration projects, the Prisoner
Reentry Initiative (PRI) and the Responsible Reintegration of Youthful Offenders (RRYO). PRI,
which was first funded in FY2005, supports faith-based and community organizations that help
recently released prisoners find work when they return to their communities. RRYO, first funded
in FY2000, supports projects that serve young offenders and youth at risk of becoming involved
in the juvenile justice system. In FY2008, the Reintegration of Ex-Offenders program combined
the PRI and RRYO into a single funding stream. In FY2010, funding for this single program is
$108 million.
Community-Based Job Training Grants/Career Pathways Innovation Fund
This competitive grant program, also known as the Community College Initiative, funds entities
to strengthen the capacity of community colleges to train workers in the skills required to succeed
in high-growth, high-demand industries.http://www.crs.gov/Pages/Reports.aspx?Source=search&
ProdCode=R41135 - fn54 Community-Based Job Training (CBJT) grants were first funded in
FY2005, with funds drawn from the Dislocated Worker National Reserve. The Consolidated
Appropriations Act, 2010 (P.L. 111-117) changed the name of this program to the Career
Pathways Innovation Fund but the purpose remains the same as the CBJT program. In addition,
P.L. 111-117 changed the source of funding for the Career Pathways Innovation Fund from the
Dislocated Workers’ National Reserve fund to a separate budget line within DOLETA. In
FY2010, funding for the Career Pathways Innovation Fund is $125 million. The Administration’s
FY2011 budget proposal does not include a request for this program.
YouthBuild
This competitive grant program funds projects that provide education and construction skills
training for disadvantaged youth. Since its inception in 1992, the program was administered by
the Department of Housing and Urban Development, but was moved to DOL by the YouthBuild
Transfer Act (P.L. 109-281), effective FY2007. Participating youth gain work experience, job
training, education (a GED or preparation for secondary education), and leadership development
by working to rehabilitate and construct housing for homeless and low-income families. Funding
in FY2010 for YouthBuild is $102.5 million and the program received an additional $50 million
in funding through the ARRA in PY2009.
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Federal Programs Available to Unemployed Workers
Workforce Investment Act Funding
Appropriations for WIA totaled $5.5 billion in FY2010. From that amount, nearly $3.0 billion
was allotted to states through programmatic formula grants. These dollars flow through the state
workforce investment board and then, by formula, to local boards to serve as the central funding
for One-Stop centers. Although unemployed persons are the target population for WIA Title I
programs, particularly for training, currently employed individuals also benefit from many WIA
services. Table 1 provides program-by-program funding information for FY2010.
Table 1. Workforce Investment Act Title I FY2010 Appropriations
FY2010 Appropriation
Program
($ millions)
WIA Grand Total
5,545.0
Adult Activities
861.5
Dislocated Worker Activities
1,413.0
Job Corps
1,708.2
Native Americans
52.8
Migrant and Seasonal Farmworkers
84.6
Veterans’ Workforce Investment
9.6
Ex-Offender Activities
108.5
YouthBuild 102.5
Career Pathways Innovation Fund
125.0
Workforce Data Quality Initiative
12.5
Green Jobs Innovation Fund
40.0
Pilots, Demonstrations, and Research
93.5
Evaluation 6.9
Source: Table compiled by CRS from the Consolidated Appropriations Act, 2010 (P.L. 111-117).
Note: Total for Job Corps includes construction, operations, and administration.
Targeted Federal Job Training Activities: Trade Adjustment
Assistance and Community Service Employment for Older
Americans
As discussed above, the WIA statute mandates connections between the nation’s One-Stop system
and a number of other employment, education, and social service programs. Two of these One-
Stop partners also specifically fund employment and training activities for their particular
populations: workers affected by trade-related layoffs and low-income older Americans.
Trade Adjustment Assistance
Trade Adjustment Assistance (TAA) provides eligible workers with employment and training
assistance. TAA training is authorized by the Trade Act of 1974 (P.L. 93-618), as is the Trade
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Federal Programs Available to Unemployed Workers
Readjustment Allowance (TRA) previously described in the income support section of this report.
In order for workers to receive TAA benefits, they generally must have lost their jobs due to
import competition or shifts to overseas production. Older workers who opt for the
Reemployment Trade Adjustment Assistance (RTAA) program are excluded from retraining
assistance but may receive employment services (ES) assistance.
TAA employment and training services include reemployment services (similar to Employment
Services described above); up to 26 weeks of remedial education; and up to 130 weeks of
classroom training, on-the-job training, or other kinds of education.
TAA funds are appropriated as an entitlement out of the general fund (not out of the
Unemployment Trust Fund) to workers who meet the eligibility requirements, although training
funds are subject to annual funding caps. The amount appropriated for TAA training is $575
million per year in FY2009 and FY2010.
Community Service Employment for Older Americans
Title V of the Older Americans Act of 1965 (OAA, P.L. 89-73, as amended) authorizes the
Community Service Employment for Older Americans (CSEOA) program, also known as the
Senior Community Service Employment Program (SCSEP).27 Administered by DOL, its purpose
is to promote part-time employment opportunities in community service for unemployed low-
income persons aged 55 or older and who have poor employment prospects.28 The program is the
primary job creation program for adults since the elimination of public service employment
previously authorized under WIA’s predecessor legislation. While CSEOA aims to move
participants into subsidized employment, it also recognizes that older people who have special
needs may need to remain in subsidized employment. The program also supplements the income
for some workers who cannot find jobs in the private economy.
For FY2010, CSEOA funding of $825.4 million represented 35% of OAA funds. These funds are
awarded to both states and national sponsor organizations.
Employer Education Assistance
Education assistance from employers generally must be included in employee’s gross income for
federal income tax purposes. However, Section 127 of the Internal Revenue Code allows up to
$5,250 in tuition reimbursements and other forms of education assistance (e.g., payments for
books, supplies, and equipment) to be exempt from income and employment taxes even if the
education does not qualify as a deductible business expense (e.g., even if the education is not job-
related). 29 Employers who have established qualified education assistance plans as required under
Section 127 have the option of extending the tax exclusion to laid-off employees among others.
27 For more information on CSEOA, see CRS Report RL33880, Older Americans Act: Funding, by Angela Napili and
Kirsten J. Colello, and U.S. Department of Labor, Senior Community Service Employment Program,
http://www.doleta.gov/seniors/.
28 Participants’ incomes must be no greater than 125% of the federal poverty guidelines. Enrollees work part-time in a
variety of community service jobs, such as in day care centers, libraries, schools, and hospitals, as well as “green”
assignments such as recycling and tree planting.
29 For more information on the tax treatment of employer education assistance, see CRS Report RS22911, Tax
Treatment of Employer Educational Assistance for the Benefit of Employees, by Linda Levine.
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Federal Programs Available to Unemployed Workers
The temporary tax provision is set to expire on December 30, 2010, unless Congress reauthorizes
it. The Joint Committee on Taxation estimated that the tax expenditure attributable to the Section
127 exclusion would be approximately $4.4 billion in FY2009-FY2013.
Author Contact Information
Katelin P. Isaacs, Coordinator
Janemarie Mulvey
Analyst in Income Security
Specialist in Aging and Income Security
kisaacs@crs.loc.gov, 7-7355
jmulvey@crs.loc.gov, 7-6928
David H. Bradley
John J. Topoleski
Analyst in Labor Economics
Analyst in Income Security
dbradley@crs.loc.gov, 7-7352
jtopoleski@crs.loc.gov, 7-2290
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