Foreword

Multiple recent crises, including the COVID-19 pandemic and rising living costs, have highlighted the crucial role of income transfers and associated employment support for jobseekers. Benefit systems help individuals and families to manage labour-market risks, and they play a key stabilising role for the overall economy. Effective income support is particularly relevant in the current context of heightened economic uncertainties, and the acceleration of hires and layoffs that is likely to accompany the green transition and the adoption of new technologies.

In the United States, the COVID-19 pandemic highlighted the crucial role of the Unemployment Insurance (UI) programme for cushioning earnings losses. It also revived the debate on unequal access to income support, with potentially sizeable coverage gaps for some labour market groups, including women and workers of colour. Early in the pandemic, the US Government expanded access to Unemployment Compensation to self-employed workers, to those looking for part-time jobs, as well as to workers with a short employment history and/or low past earnings. The resulting extensions of entitlements to previously uncovered groups made the programme more inclusive and may have lessened the extent to which UI coverage reinforces existing labour-market inequities.

In this context, the US Department of Labor has asked the OECD to examine how the United States compares with other countries in terms of benefit entitlements and provisions for jobseekers. This report first assesses the accessibility of income support for jobless individuals with past “standard” employment (full-time continuous wage or salaried work), for different groups of “non-standard” workers (self-employed, part-time, and workers with short employment histories or unstable earnings), and workers with different racial and ethnic backgrounds, as well as men and women. In a second step, the report considers to what extent coverage gaps for disadvantaged labour market groups could be alleviated if some of the UI extensions adopted during the pandemic would remain in place, by quantifying the effects of extensions on income security in a non-pandemic labour market.

The report concludes that, given the low levels of out-of-work support in the United States in the international comparison, as well as robust in-work tax credits, there is space for carefully expanding out-of-work supports without unduly weakening work incentives. Building on the analysis and reform experiences in other OECD countries, it presents reform options for strengthening support for jobseekers, including extending UI to self-employed workers, softening the requirement of involuntary unemployment, “levelling up” benefit amounts and maximum durations across states, and considering the introduction of an unemployment assistance benefit for jobseekers without a recent history of employment.