Varied unemployment insurance criteria make for uneven worker experiences

Unemployment insurance (UI) has a unique role among American labor market policies: it is a backstop against the financial harm that can accompany job loss, but it only comes into play for certain workers in certain circumstances. Indeed, most unemployed workers do not receive UI and many are not eligible for it under state rules. In general, UI is available only up to a maximum number of weeks and is limited to workers with sufficient earnings history who were laid off without cause and who subsequently search for new employment. However, states differ in how long individuals can receive UI, what they consider as sufficient earnings history, what they consider a qualifying reason for losing a job, and what they consider sufficient job search.

Eligibility criteria are central to the design of UI policy because of the key trade-offs associated with providing UI. Although UI can help keep families and the local economy afloat during downturns, financial support during unemployment can reduce workers’ search activity. UI eligibility criteria seek to balance these trade-offs, but the optimal balance is not obvious, and state policymakers make widely varying choices.

Examining unemployment insurance

This article is the fifth in Community Development and Engagement’s series examining unemployment insurance (UI) policies and programs and their impact on low- and moderate-income workers. Our first article provides an overview of the purpose and scope of the series. Subsequent articles explore the effects of state-level UI program variations and administrative burdens, and low-income women’s experiences with UI.

To better understand implications of these choices, we and others in Community Development and Engagement (CDE) at the Federal Reserve Bank of Minneapolis have been conducting research to illuminate aspects of the UI system. This work not only aligns with the Federal Reserve’s mandate to promote maximum employment, but also aligns with a specific mission of the CDE team to inform policymakers as they seek to understand outcomes for workers—especially low- and moderate-income workers. In this article, drawing largely from a longer working paper we released earlier this year, we show how rising long-term unemployment and falling state caps on benefits duration have contributed to declining UI eligibility. We also use survey data to show that many workers believe they have insufficient earnings history to qualify for UI benefits. Throughout, we emphasize the range of state policy choices and how they matter for worker access.

UI serves the same basic need across the country, but recipiency rates vary widely

Previous analysis from the Minneapolis Fed highlighted how widely the UI recipiency rate, defined as the number of unemployed workers receiving UI benefits at a given time divided by the number of workers identified through surveys as being unemployed at that time, varies among states: in 2025 it ranged from 8 percent to 55 percent, as shown in Figure 1. At first glance, this seems surprising: isn’t UI serving pretty much the same need everywhere?

To think carefully about this, it’s helpful to keep in mind two possibilities. The first possibility is that labor market conditions in a state can vary in ways that affect recipiency. The simplest factor among these conditions is just how many of a state’s unemployed have been so for a long time. In every state, there is a maximum duration of potential UI benefits, and when beneficiaries reach the maximum, they exhaust their eligibility. Purely in a mechanical sense, having a higher share of long-term unemployed will tend to reduce both UI eligibility and recipiency. Indeed, we find that a rising share of long-term unemployment in the country as a whole has tended to reduce average eligibility. More broadly, differences among states in how many of their unemployed satisfy standard eligibility criteria can account for some but not most recipiency variation.

The second possibility is that state policymakers make different choices about who is eligible and how accessible their UI systems will be.

Variation in maximum UI durations

One such choice that states make about UI eligibility criteria is how many potential weeks of benefits to provide. All states prior to 2000 had allowed for a maximum of at least 26 weeks of UI, but since then more than a dozen states have reduced their UI maximum durations, with states such as Florida and North Carolina reducing them to 12 weeks. These reductions have implications for the share of unemployed who are eligible for UI.

Figures 2 and 3 demonstrate how changes in UI maximum durations might affect overall eligibility. The figures use a rough proxy for eligibility based on the duration of unemployment and reason for unemployment, as described in our recent working paper. In gray, Figure 2 shows the share of unemployed individuals in each state who were eligible for UI in 2024. In blue, the figure shows the shares of unemployed individuals who would be eligible if the maximum durations in their states had remained at 2000-era caps (typically 26 weeks). The blue bar segments show that eligibility is as much as 17 percentage points lower in the states that reduced their maximum durations, relative to what it would have been if they had maintained their original cutoffs.

Figure 3 quantifies the implications of reductions in maximum weeks across all states and how that relates to declines in overall UI eligibility over time. In gray, it shows that the proxy for overall UI eligibility declined by 5.4 percentage points between 2000 and 2024. In blue, it shows that if every state had kept the maximum weeks at their 2000 levels, the drop in overall eligibility rate would only have been 2.8 percentage points.

Variation in earnings requirements

To receive UI, individuals must earn a minimum amount during a specified period of time prior to their UI application. This requirement determines an individual’s monetary eligibility and entitlement for UI.

States vary in how they specify the period of time used to determine monetary eligibility, known as a base period. Most states define the base period as the first four of the last five completed calendar quarters preceding the filing of the UI claim, but some states differ. For example, Minnesota typically defines the base period as the last four completed calendar quarters.

Because standard base periods do not always cover the most recent earnings of individuals who file for UI, many states allow individuals to qualify under an alternative base period that covers more recent earnings history. Some states also allow individuals who were injured or had an illness to qualify under an extended base period that uses an older earnings history.

There is further variation in how earnings during the specified base periods qualify workers for UI and translate into the amount of UI those workers receive. For example, workers need to earn at least $3,500 during the base period to qualify for UI in Minnesota. In Michigan, they need to have worked for at least two quarters, earn at least $3,919 in their highest quarter, and earn at least $5,879 during the base period. States then translate these earnings to different UI benefit amounts. More details are available in a state-by-state comparison document from the U.S. Department of Labor (DOL).

Survey data from the Current Population Survey suggest that many individuals feel as if their earnings histories do not qualify them for UI, with that share varying across states. Although these data reflect survey respondents’ perceptions and may not correspond with actual eligibility, they provide useful insight. Figure 4 presents reasons reported for UI ineligibility by individuals who were not employed but had worked at some point during the prior 12 months and believed themselves to be ineligible for UI.

Not earning enough is the most-cited reason why individuals believe they are ineligible for UI. This pattern holds true across regions. Among workers who lived in the Northeast and Midwest regions and who believed themselves to be ineligible, a majority said that they had not earned enough to be eligible and roughly 20 percent said that they had quit their job or been fired for cause. Not earning enough was also a large component of ineligibility beliefs in the South and West, but was relatively less cited in these regions, with 45 and 42 percent of those who believed themselves ineligible stating they did not earn enough, respectively.^*

Variation in qualifying reasons for job separation

Typically, UI benefits are only available to individuals who were laid off and not those who quit or were fired for cause. However, there are certain circumstances that may be difficult for individuals to predict or control that could cause them to leave their jobs. Under “good cause” provisions, many states offer UI to help support individuals who leave their jobs for these select reasons but are later able to search for and take new employment.

Some examples of good cause provisions include workplace harassment, illness, family caregiving responsibilities, domestic violence, enlistment in the armed forces, an employer’s breach of a collective bargaining agreement, or resignation in order to relocate with a spouse who has taken a new job. States vary considerably as to what circumstances they designate as being good cause for leaving a job. For example, in the Ninth Federal Reserve District, Minnesota and Wisconsin provide good cause for separation to perform marital, domestic, or other family obligations, while Michigan, Montana, North Dakota, and South Dakota do not. More details on which states recognize which good cause provisions are available in a DOL state-by-state comparison document.

The DOL document also lists information on how voluntarily separating from a job for unexceptional reasons or being fired for misconduct factor into UI eligibility across different states. In certain states and circumstances, individuals may not only be barred from using UI during their current unemployment spell, but their eligibility during future unemployment spells may be affected, too. For example, individuals who voluntarily left their job without good cause or were discharged for misconduct may see their earnings from that job excluded from consideration for their monetary entitlement or have their benefits postponed, or both.

Variation in job-search requirements

Across the United States, workers must be “able to work, available to work, and actively seeking work” to be eligible for UI. But as described by the DOL, states differ in what they consider as actively seeking work.

Among states, the number of work-search activities claimants are required to carry out each week varies, with a typical minimum being somewhere between one and four. What is considered a work-search activity can vary across states as well, with common activities including direct contacts with employers, creation of résumés, use of online career tools, and participation in work-related networking events. For example, for direct contacts with employers, Montana requires UI recipients to log the business name, person contacted, date of contact, position applied for, telephone number of the business, URL (if an online job posting), and result of the contact for at least one contact each week. Minnesota requires a specified number of job-search activities and allows for a range of activities beyond direct job contacts, including networking, researching companies, and maintaining contact with professional organizations.

In some states, searching for a part-time job is allowed, and in other states it is not. In Montana, seeking only part-time work is allowed if an individual either has a history of part-time work or has medical or disability-related restrictions. In contrast, in Minnesota and South Dakota, part-time work search is only allowed for those with a history of part-time work, and Michigan, North Dakota, and Wisconsin do not allow only part-time work search.

States implement different kinds of job-search monitoring. Some do random audits, others do targeted audits, and others do systematic eligibility reviews. States also have different requirements for specific categories of claimants to participate in reemployment services as a condition of benefits receipt. For example, some states require just one meeting with reemployment services staff, while other states can have three or more meetings for certain UI recipients. Some states typically hold remote meetings, and other states hold the meetings in person. Requirements for reemployment services change over time as well. A 2025 working paper by our team examines the impacts of a change in how Montana provided its reemployment services.

The optimal level of job-search requirements is not obvious from existing studies. Research suggests that stricter search requirements can lead to increased claimant search activity, but it is less clear that this increased searching leads to substantially higher rates of reemployment, either for individual claimants or in the labor market as a whole.

Connecting variation in UI eligibility to UI recipiency

Differences in eligibility criteria across states may be contributing to the stark variation in UI recipiency across states. Related research indicates that some variation in recipiency rates can be explained by differences in states’ eligibility criteria, like maximum duration of benefits.

Eligibility criteria may have especially large implications for certain groups of people. For example, we showed above that earnings-history requirements (as perceived by workers) matter to a varying degree across the country. Research finds that variation across states in eligibility rules contributes to racial gaps in UI receipt, as Black individuals are more likely to live in states with more stringent eligibility criteria. Good cause provisions related to family caregiving or flexibility for part-time job search may be more likely to affect women, a group that frequently cited care obligations as a challenge for accessing UI in separate research by our team.

This article highlights the substantial variation across states in their eligibility criteria, but other factors, like economic conditions that lead to more individuals experiencing long-term unemployment, or administrative burdens that create hassles for completing the UI application, can also affect UI recipiency. Better understanding how eligibility criteria interact with UI recipiency and for which types of individuals can help policymakers make more informed decisions when modifying UI policies.

Endnote

* That said, the survey responses do not help one understand the relative importance (for determining eligibility) of monetary eligibility factors and “non-monetary” factors (i.e., those unrelated to earnings history, including duration of benefits receipt and the circumstances of job loss). A key non-monetary factor we address in this article—benefits exhaustion—is excluded from this analysis, which is limited to those who believed themselves ineligible from the start and never applied for UI.