As administered in subsequent years (when it became known as Aid to Families With Dependent Children or AFDC), the welfare program evolved into an open-ended entitlement program, providing cash assistance to people with children, usually single parents, who earned little income. The legislation put a maximum 5-year limit on the availability of federal cash assistance under TANFand required adults to work or participate in work-related activities after receiving assistance for 24 months as a condition for continuing to receive benefits. Certain Economic and Policy Factors Parallel Long-Term UI Decline

Although there is no agreement about the causes of the general decline in the rate of UI filing,certain factors are commonly considered significant, including (1) the decrease in the number of workers employed in manufacturing jobs; (2) the decline of union membership in the workforce; (3) increasingly tighter state requirements for UI eligibility; (4) federal taxation of UI benefits beginning in 1979; (5) population shifts, starting in the 1970s, of workers from northeastern states to southern states, where unemployed workers are less likely to apply for UI benefits; and (6) changes in the survey methodology of the CPS during the 1980s that increased the number of unemployed who were counted (changing the denominator used in calculating the recipiency rate).Of these factors, the first three affect the entire period of decline. Unemployed Low- Wage Workers Were Less Likely to Receive UI Than Other Unemployed Workers in the 1990s

Unemployed low-wage workers were less likely to collect UI benefits than other unemployed workers in the early 1990s, and the most recent evidence suggests that this trend continued throughout the decade. Little Change to UI Since Welfare Reform

Since welfare reform in 1996, the welfare rolls have dropped and large numbers of people have joined the labor force, many in low-wage jobs. Since then, the U.S. economy and the composition of its labor force have changed, while the UI program has been slow to adapt to these changes. Both the advisory council and the stakeholder workgroup proposed that states should not reject claimants simply because they are looking for part-time, rather than full-time, work. Scope and Methodology

We used a variety of data sources to examine the role of unemployment insurance (UI) as part of the safety net for low-wage workers.
Why GAO Did This Study

The welfare and unemployment insurance (UI) programs have been part of the nation's social safety net since 1935. The welfare program provides cash assistance to needy families without means of support, while UI provides cash assistance to people temporarily unemployed. In 1996, welfare reform put time limits on how long most people can receive cash assistance and generally required recipients to engage in work activities to qualify for income support. Since then, the welfare rolls have dropped dramatically as large numbers of welfare recipients have started working, many in low-income jobs. With this shift, the UI program has become a more significant part of the social security net. GAO examined the use of the UI program by low-wage and unemployed workers.

What GAO Found

GAO found that low-wage workers are less likely to receive UI benefits than are other unemployed workers even though they are twice as likely to be unemployed. Low-wage workers are less likely to receive UI benefits because of (1) their tendency to quit work voluntarily, (2) restrictive state eligibility requirements, and (3) their lack of union memberships. Several UI reform proposals to expand the availability of UI benefits to these workers are being discussed by the Advisory Council on Unemployment Compensation.