UI as a Safety Net for Former TANF Recipients

Do State-Level Trends in UI Benefit Receipt Help Explain Trends in TANF Caseloads?

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Summaries of state level trends in numbers of TANF caseloads, UI beneficiaries, and those who are low income and unemployed are presented in Table 18 and Figures 12, and 13. Counts for each quarter are listed by state over the full range of data available; some data series are longer than others. Numbers of those who are low income and unemployed are counted among UI beneficiaries. Low-income unemployed are defined as having earnings of less than $2,500 in the quarter before the starting date of the UI benefit year.(1)

Trends in UI beneficiaries and the low-income unemployed are illustrated graphically in Figures 12 and 13. To eliminate seasonal fluctuations, the figures present data smoothed by four-quarter moving averages. Numbers of TANF caseloads declined steadily over the years observed, with rates declining faster before the year 2000 than after. Influenced by trends in aggregate business activity, counts of UI recipients tended to rise in the quarters leading up to the start of 2002 then gradually declined.(2) The numbers of low-income unemployed rose in two of the states up to the start of 2002, but were flat or declining in all states after that time.

Table 18.
TANF Caseloads, UI Beneficiaries, and Low Income Jobless (*1) Over Time
Year/
Quarter		 Florida Michigan Ohio Texas
TANF
Caseloads		 UI
Beneficiaries		 Low
Income
Jobless		 TANF
Caseloads		 UI
Beneficiaries		 Low
Income
Jobless		 TANF
Caseloads		 UI
Beneficiaries		 Low
Income
Jobless		 TANF
Caseloads		 UI
Beneficiaries		 Low
Income
Jobless
1996:3 86,208     164,865           202,604 88,783 25,191
1996:4 82,022     158,393           199,815 93,810 29,062
1997:1 73,560     150,269           197,831 98,836 25,100
1997:2 67,261     144,134           170,118 89,251 26,361
1997:3 62,968     140,185           176,275 86,223 24,388
1997:4 57,114     135,401           169,213 83,517 23,859
1998:1 56,327     128,759           154,395 91,068 20,676
1998:2 48,911     120,438           135,010 86,751 22,150
1998:3 46,469     110,549           124,463 91,190 20,819
1998:4 45,021 47,454 17,212 101,651           117,027 101,795 24,780
1999:1 41,666 50,642 16,852 92,967           111,003 96,632 19,460
1999:2 36,395 59,193 19,929 88,382           102,200 100,506 24,612
1999:3 35,657 58,340 20,822 83,844           99,037 87,395 21,100
1999:4 35,422 44,719 16,689 78,988           98,391 87,342 21,954
2000:1 24,626 47,020 16,846 74,901     108,954 61,293 14,987 95,464 83,357 18,239
2000:2 21,218 57,099 23,121 71,412     106,312 36,380 11,328 94,746 79,813 18,188
2000:3 19,636 65,246 30,976 68,592     103,918 45,478 11,157 98,852 75,101 15,778
2000:4 20,012 52,123 21,298 68,428     100,383 85,564 15,865 102,287 88,442 20,029
2001:1 17,291 64,453 20,515 69,400 129,575 20,215 95,344 87,745 18,455 100,059 97,826 17,744
2001:2 16,515 80,201 26,372 70,855 74,569 16,712 92,858 56,514 15,798 95,809 122,047 21,396
2001:3 18,241 93,551 31,673 72,473 136,625 20,631 93,604 60,952 15,575 96,605 135,685 22,726
2001:4 20,050 91,155 32,452 75,669 174,453 29,247 94,670 91,903 21,925 100,941 148,831 27,854
2002:1 19,348 80,870 43,072 77,217 130,758 30,868 94,724 70,188 41,011 101,643 144,747 36,315
2002:2 17,743 86,491 40,220 74,572 102,415 24,998 93,255 51,843 33,695 96,057 142,933 35,854
2002:3 19,127 83,766 37,064 69,720 86,027 17,768 93,117 37,360 19,891 96,678 132,006 27,973
2002:4 19,840 71,735 27,135 70,333 157,160 23,842 94,061 81,625 25,985 98,758 132,170 29,305
2003:1 18,092 77,763 28,943 72,644 121,782 24,145 93,227 74,280 28,384 98,355 82,792 15,752
2003:2 16,371 86,699 35,491 74,610 113,856 19,526 93,056 63,941 29,472 93,161 105,860 29,215
2003:3 18,150 81,828 37,219 76,806 103,231 17,305 94,542 60,704 24,293 91,257 161,146 64,746
2003:4 17,905 65,552 29,850 77,837 141,973 24,112 94,937 94,238 28,947 72,693 162,496 68,768
2004:1 15,357 69,940 30,404 77,483 113,637 23,586 94,406 88,846 28,597 63,414 120,934 23,887
2004:2   75,023 33,608 78,808 77,591 17,790 93,708 59,483 23,687 54,907 115,906 26,057
2004:3   94,514 63,005 78,761 112,215 17,317 94,225 52,651 17,906 54,119 106,264 21,079
2004:4       79,503 132,402 20,009 94,529 79,472 20,282 53,120 88,641 18,148
2005:1       78,340 120,968 21,861 92,423 77,812   47,290 99,121 17,898
2005:2       78,140 76,761   90,194 50,584   39,565 100,157 19,975
2005:3       78,523 109,038   90,648 51,665   37,951 115,567 23,698
2005:4       79,128 132,097   90,704 77,441   37,506 85,105 17,756
2006:1       77,630 122,592   88,265     32,799 70,794 10,810
2006:2             80,030     27,898 68,305 10,896
20063                   27,024 66,016 9,910
2006:4                   27,570 66,943 10,227
Note:  (*1) Earnings of less than $2,500 in the quarter prior to BYB.

Figure 12.
UI Beneficiaries Over Time from Florida, Michigan, Ohio, and Texas Using a Four-Quarter Moving Average

Figure 12. UI Beneficiaries Over Time from Florida, Michigan, Ohio, and Texas Using a Four-Quarter Moving Average. See text for explanation.

Figure 13.
Low-Income Jobless Over Time from Florida, Michigan, Ohio, and Texas

Figure 13. Low-Income Jobless Over Time from Florida, Michigan, Ohio, and Texas. See text for explanation.

State trends in UI benefit receipt do not help explain trends in TANF caseloads. There is no identifiable link between aggregate declines in TANF caseloads and trends in total UI recipients at the state level. A regression was run on the counts data listed in Table 18 for Florida, Michigan, and Ohio. As reported in Table 19, there was no measurable influence of the aggregate level of UI beneficiaries on the TANF caseload. The parameter estimate on the number of beneficiaries is not statistically significantly different from zero.

Table 19.
Macro Model of TANF Caseloads Over Time
Using Pooled Data from Florida, Michigan and Ohio
Variable Parameter Estimate Standard Error T-statistic
Intercept 36,982 5,721 6.46
 
Number of UI Beneficiaries -0.004 0.031 -0.14
 
Unemployment Rate 2,033 1,183 1.72
 
Ohio 76,053 1,085 70.11
Michigan 56,101 2,072 27.07
 
Year and Quarter = 1999:1 -3,421 4,243 -0.81
Year and Quarter = 1999:2 -8,363 4,260 -1.96
Year and Quarter = 1999:3 -9,810 4,262 -2.30
Year and Quarter = 1999:4 -8,866 4,263 -2.08
Year and Quarter = 2000:1 -16,587 3,718 -4.46
Year and Quarter = 2000:2 -18,893 3,732 -5.06
Year and Quarter = 2000:3 -21,216 3,729 -5.69
Year and Quarter = 2000:4 -21,696 3,884 -5.59
Year and Quarter = 2001:1 -29,278 3,673 -7.97
Year and Quarter = 2001:2 -29,451 3,544 -8.31
Year and Quarter = 2001:3 -28,782 3,704 -7.77
Year and Quarter = 2001:4 -28,061 4,060 -6.91
Year and Quarter = 2002:1 -29,810 4,210 -7.08
Year and Quarter = 2002:2 -30,808 3,891 -7.92
Year and Quarter = 2002:3 -31,833 3,812 -8.35
Year and Quarter = 2002:4 -30,367 3,902 -7.78
Year and Quarter = 2003:1 -32,598 4,293 -7.59
Year and Quarter = 2003:2 -32,088 4,131 -7.77
Year and Quarter = 2003:3 -30,229 4,086 -7.40
Year and Quarter = 2003:4 -28,421 3,904 -7.28
Year and Quarter = 2004:1 -31,158 4,188 -7.44
Year and Quarter = 2004:2 -29,531 4,247 -6.95
Year and Quarter = 2004:3 -29,361 4,290 -6.84
Year and Quarter = 2004:4 -28,393 4,323 -6.57
Year and Quarter = 2005:1 -31,928 4,814 -6.63
Year and Quarter = 2005:2 -31,334 4,175 -7.50
Year and Quarter = 2005:3 -30,368 4,072 -7.46
Year and Quarter = 2005:4 -29,249 4,091 -7.15
Year and Quarter = 2006:1 -29,641 5,063 -5.85
Note:  Observations = 67; R-square = 0.9954; Adjusted R-square = 0.9909.

Only a small fraction of TANF leavers receive UI benefits. Among TANF leavers observed in this study, about 73 percent become unemployed within 3 years, 24 percent of these apply for UI benefits, with 55 percent of applicants becoming beneficiaries. This suggests that about 10 percent of TANF leavers receive UI benefits.

When asking if UI receipt helps to explain the downward trend in TANF caseloads, the implicit question is whether UI benefits act as a source of household income in place of TANF income support, thereby preventing return to TANF by newly unemployed TANF leavers. Three paths were examined after leaving TANF for work and then subsequently becoming unemployed: those who did not apply for UI return to TANF at a mean rate of 41.8 percent, UI applicants who do not receive UI benefits return to TANF at a mean rate of 52.6 percent, and UI beneficiaries return to TANF at a rate of 41.2 similar to the rate for non-UI applicants. Among TANF leaver UI applicants, those who received UI returned to TANF at significantly lower rates.

The person-level analysis identifies an important role for UI in supporting TANF leavers. But the significantly larger scale of the UI program makes it difficult to establish a clear statistical relationship between TANF caseload declines and numbers of UI beneficiaries at the aggregate level. A compositional analysis of UI claims showed that the numbers of recent TANF recipients among UI applicants were flat over the period of years examined (O’Leary 2007). Furthermore, the share of UI beneficiaries who lost high paying jobs increased at the same time, meaning TANF recipients actually declined as a share of all UI beneficiaries. In the years 1997 to 2003, the UI program operated to support self-sufficiency of TANF leavers, but the mass exodus from TANF did not overburden the federal-state UI system.

Endnotes

(1) Also called the UI benefit year begin date (BYB). See the glossary in Appendix B.

(2) The UI counts include all beneficiaries in the states and are not limited to TANF leavers.

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