NCPA - National Center for Policy Analysis

Using Unemployment Insurance To Pay Family Leave

February 2, 2000

The Department of Labor has proposed to allow states to pay unemployment insurance (UI) benefits to parents who take time off for the birth or adoption of a child.

The UI law now says that persons drawing UI "must be able and available for work and must not refuse suitable work." By contrast, persons on family leave are not available for work, and they are unemployed by choice. However, through tortuous reasoning, the Labor Department says it has the authority to interpret family leave as falling within the "able and available" requirement.

A 1996 report by the Commission on Family and Medical Leave said lost pay was the most significant barrier to parents taking leave after the birth or adoption of a child. However, it indicated that only a few parents faced this barrier:

  • 3.4 percent of the nation's total work force -- about 4.5 million -- said they needed leave but were unable to take it.
  • But of this group, only 8.4 percent -- about 375,000 -- needed leave for birth or adoption, with the remainder needing leave for family illness and other reasons.
  • Of the 375,000, 63.9 percent -- about 240,000 -- cited financial need as the reason for not taking leave.
  • Yet more than five million people each year -- 24 times as many as said they needed UI benefits -- would be able to draw them.

The Labor Department estimates that allowing people on family leave to draw UI benefits would cost no more than $68 million a year, but the Employment Policy Foundation says it would cost a minimum of $14.4 billion annually.

The 1996 report said 52 percent of those taking leave received full pay and another 22 percent received partial pay from their employers. Employers are likely to cut back on their own pay and substitute public UI funds for the payments they have been making.

Source: William B. Conerly, "Bad Idea: Paying for Family Leave," Brief Analysis No. 312, January 31, 2000, National Center for Policy Analysis.


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