How low-income women experience the unemployment insurance system

Unemployment insurance (UI) can be a lifeline for individuals and their families amid the uncertainty of job loss. Temporary payments, which are administered at the state level, help out-of-work Americans cover food, housing, child care, and other necessities while they find their footing in the labor force. Historically, UI has also maintained consumer spending in local markets during economic downturns. Yet only a fraction of unemployed Americans apply for UI when they’re out of work. And among those who apply, not all receive benefits. Across states, there is wide variation in UI recipiency. In 2023, rates ranged from 55 percent in Minnesota to as low as 10 to 12 percent in other states.

We know from previous research that certain groups are less likely to receive UI benefits than others. As part of the Federal Reserve System’s charge to help advance the economic well-being of low- and moderate-income communities, we sought to learn more about how members of one population in particular—low-income women—interact with the UI system. Our findings from a series of focus group discussions in Minnesota, which is part of the Ninth Federal Reserve District, suggest that uncertainty about UI, compounded by program variations and complexities, is central to their experiences.

Examining unemployment insurance

This article is the fourth 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, and subsequent articles explore the effects of state-level UI program variations and administrative burdens.

Learning from low-income women

As a group, women in the United States experience the labor market in ways shaped by wage inequities, diversion into certain industries, and family caregiving. Low-income women especially may experience these dynamics, alongside the documented additional challenges that under-resourced individuals face when navigating public programs. To learn more, we convened focus groups of low-income women in Minneapolis and St. Paul in the summer and fall of 2024.

To arrange these conversations, we worked with three community-based organizations that recruited a total of 20 working-age women who self-identified as low-income and had experienced unemployment within the previous five years of 2019 to 2024. This five-year period included the COVID-19 pandemic, which put significant stress on the UI system nationally, with millions of workers applying for benefits and states being tasked with instituting all-new UI benefits and programs.

In addition to their engagement in a focus group, 19 of the 20 participants completed an anonymous survey.¹ Of those surveyed, 17 provided information about their most recent experience with unemployment; among them, nine (53 percent) had applied for UI, some in Minnesota and some in other states, and five (29 percent) had received benefits.

Broadly, whether participants experienced job loss before or during the COVID-19 pandemic or more recently, the theme that consistently emerged about the UI program was uncertainty, which stemmed from several factors we expand on below:

• A lack of clarity about program eligibility,
• Complexities of meeting program requirements while not having child care or safe and stable housing in place,
• Inconsistencies in program information and service delivery, and
• Mismatches between eligibility requirements and work patterns.

Eligibility is unclear, locally and nationally

While the specifics differ by state, UI eligibility is generally based on three qualifications: first, the reason for the worker’s unemployment (which must typically be a layoff); second, the worker having sufficient earnings and weeks worked prior to losing their job; and third, the worker being able to work, available to work, and actively seeking work. However, eligibility determinations are made on a case-by-case basis. Unemployed workers interested in UI must apply to confirm their qualification—a process that differs from those of other public assistance programs, such as the Minnesota Family Investment Program, or MFIP (Minnesota’s version of the federal Temporary Assistance for Needy Families program), which typically specify straightforward, uniformly applied eligibility criteria based on household income and assets.

Nearly all the participants in our focus groups (including the five who had received UI) expressed confusion about eligibility criteria. Participants reported uncertainty around the case-by-case nature of eligibility and benefit determinations, including the impact of the circumstances of their job loss, such as being fired or quitting.

The majority of participants also expressed frustration at the complexity of written resources about UI. One woman who had read the program’s handbook had trouble deciphering its rules, sharing that she would benefit from clearer, plain-language materials. Others expressed confusion about how benefits were calculated, how much they would be able to receive, and whether it would be worth applying.

Notably, ineligibility—whether real or perceived—is the main factor in explaining lack of UI take-up. According to 2022 data from the U.S. Census Bureau, of the out-of-work women nationally who did not apply for UI benefits, 63 percent reported that their main reason for not applying was because they didn’t think they were eligible.² The reasons women considered themselves ineligible for UI varied: 41 percent believed they hadn’t earned or worked enough; 17 percent reported their reasoning as “Other”; and others thought they’d be ineligible because they had voluntarily left their job, were self-employed, or didn’t have a recent job. (See Figure 1.)

Child care needs and housing instability add complexities

Nineteen of the 20 focus group participants had minor children. As in many parts of the country, child care in the Twin Cities is costly and scarce,³ creating a tension with the Minnesota UI eligibility requirement to be “able and willing to begin suitable work without delay when offered.”

When asked about their experiences with navigating child care and the UI program’s requirement to seek employment, 14 of the 19 surveyed participants (74 percent) reported that their child care needs made seeking employment difficult. Many participants expressed their desire to be present for their children and to ensure they are in a safe environment. Several women mentioned wanting or needing a job that works around school schedules and described their difficulties in finding such a position. In participants’ experience, job requirements that are incompatible with family and school schedules, such as having to work evenings or weekends, made seeking employment as a parent difficult. The firsthand accounts of the parents in our focus groups add detail to recent research from the Federal Reserve Bank of Chicago examining how child care access can affect parents’ employment and the hours they can work.

Access to safe and stable housing was another issue that frequently arose for participants. Several expressed difficulties receiving notices about their UI application when they did not have access to permanent housing. In addition, participants reported a sense that attempting to access a program with uncertain eligibility and benefits could put other benefits they receive at risk—echoing existing research on the challenges posed by benefits cliffs. A staff member at one of the organizations we partnered with further described this issue: “Many individuals worry that applying to UI might not be worth their time or effort if it could lead to a reduction in their MFIP benefits. Regardless of whether this concern is justified, it remains a significant issue.”

Program information and service delivery prompt dissatisfaction

Amid uncertainty and a patchwork of information sources, participants reported seeking guidance and resources from friends, family, and community networks to help navigate job loss and the UI system. Several women shared that friends, family members, or others discouraged them from applying regardless of their eligibility by telling them that the money provided is minimal or the application process is too difficult. One participant reported that her family advised her against applying by warning that she could have to pay back the government for incorrectly calculated benefits.

Administrative burdens—the frictions individuals experience when they seek to interact with public programs and services—introduce documented challenges to the take-up of public benefits programs and may contribute to the uncertainty the women in our focus groups expressed. An issue that participants frequently mentioned was that Minnesota does not provide in-person assistance for UI. Rather, the state directs prospective applicants to its website or general phone help line. Several participants reported negative UI phone line experiences, including hold times that were long and program information that was inconsistent or remained unclear after speaking to multiple staff members. Of the nine participants who characterized their UI application experience in the survey, only two reported being even somewhat satisfied. (See Figure 2.) These service-delivery experiences are not unique to the women in our focus groups. The surge in claims and resulting processing delays at the beginning of the COVID-19 pandemic exacerbated existing customer service challenges, prompting the U.S. Government Accountability Office (GAO) to issue formal recommendations to the U.S. Department of Labor in 2022.

Some participants navigating public assistance programs in addition to UI described receiving repeated requests for the same personal and financial information from unconnected administrative systems, characterizing the experience as “stressful.” These participants expressed the sense that each additional interaction with a public assistance program (beyond what would be needed if information were fully shared across systems) introduced new scrutiny and critiques of their circumstances. In Minnesota, the MNbenefits Combined Application Form allows people to apply and submit documents for several assistance programs at one time, reducing the administrative burdens applicants may experience when navigating multiple programs. However, the state UI program does not participate in the combined application form.

One focus group participant reported that she was a victim of UI fraud during the pandemic, prior to moving to Minnesota. In the state where she lived at the time, someone had applied for and received UI benefits in her name, and she was later informed by that state’s UI office that she owed a large sum of money—a deeply stressful experience she felt under-resourced to remedy. She emphasized the need for greater fraud protection with the UI program, a sentiment echoed by other focus group participants.⁴

Fraud was a significant issue across all states during the pandemic. In a 2023 report, the GAO estimated that improper benefit payments—including from fraud—rose significantly during the COVID-19 pandemic, from $8 billion in fiscal year 2020 to $78 billion for fiscal year 2021. To provide redress to victims of identity fraud, state and federal agencies may require victims to file police reports, produce credit reports, and provide identity documents. Low-income victims may experience hurdles in meeting these requirements—for example, due to encountering barriers in recovering documents needed for identity verification, being less likely than other workers to have a credit history, or dealing with the emotional toll of navigating an investigation with limited resources.⁵

To avoid potential confusion and hassles with UI, some participants expressed that they would rather simply borrow money from family or friends, with whom they might better know what to expect.

Work patterns are a mismatch

Focus group participants described their training and experiences in a wide array of jobs, ranging from nursing to commercial truck driving. Many were credentialed, with 13 of 19 surveyed focus group participants (68 percent) holding professional certificates and five of 19 (26 percent) having earned an associate degree or more. At the time of their most recent job loss, eight of 19 (42 percent) had been engaged in additional work along with their main job.

But balancing multiple jobs or working at jobs with irregular hours may create challenges when applying for UI, as traditional eligibility requirements don’t always account for these work patterns. However, during the COVID-19 pandemic, temporary policy changes created a window of expanded access. The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 opened UI up to workers who were typically ineligible for benefits, including some women in our focus groups. Nationally, workers who benefited from the CARES Act changes included those who are self-employed; do gig work, such as driving for a rideshare service; or have limited work histories. The expansion expired in 2021, reverting the UI system to its traditional structure.

Deepening the discussion on UI access

By providing a direct window into how low-income women interact with the UI system, the insights from our focus groups complement existing research based on large national surveys. Focus group participants told us about the impacts of uncertainty regarding aspects of UI, from eligibility requirements to the program’s capacity to accept nontraditional work patterns.

It’s worthwhile to evaluate how workers perceive and access programs like UI, as its design makes it well-positioned to respond to future economic events: it can scale up quickly to cover eligible individuals, as we saw during the COVID-19 pandemic. Workers across the nation—including low-income women—have the firsthand experiences with UI that can help inform the policy discussion.

Endnotes

1 At the conclusion of the focus groups, the participants and community-based organizations were compensated for their time.

2 Authors’ calculations based on data from the Current Population Survey (CPS) Unemployment Compensation Supplement 2022, accessed via IPUMS-CPS.

3 The availability of affordable child care is especially limited for low-income parents; as of August 2024, the waiting list for the state’s income-based child care assistance program in Hennepin County—where Minneapolis is located—had 1,899 children on it.

4 State-federal efforts to address improper and fraudulent benefit payments have expanded since the COVID-19 pandemic, including the development of the Integrity Data Hub.

5 Federal efforts to strengthen identity-verification processes and victim redress may increase access to justice for those impacted.