New York Partial Unemployment Insurance Reform Frequently Asked Questions
Make Work Pay NY: Partial Unemployment Insurance Reform (A.7278a/S.6572)
Q: When can New Yorkers receive partial unemployment insurance benefits?
A: New Yorkers don’t need to be totally unemployed to receive jobless benefits. Like every state, New York’s unemployment insurance (UI) program provides that otherwise eligible workers can receive reduced UI benefits to make ends meet during periods of partial unemployment. Partial unemployment occurs when employees have their hours reduced to part time because of employer cutbacks, or when current UI claimants who lost a full-time job pick up part-time work while they continue to look for a suitable full-time replacement.
Q: How do most states calculate partial unemployment insurance benefits?
A: States use different formulas to calculate partial unemployment benefits. As a starting point, most states will provide that partially unemployed workers can receive the difference between their part-time earnings and the value of their UI benefit were they not working at all.1 In addition, most states effectively ignore a portion of part-time earnings, meaning the state’s program does not deduct this amount from the full benefit. This is usually known as an earnings disregard. The purpose of a disregard is to hasten the claimant’s return to work.
In theory, a claimant is more likely to accept a part-time job if her UI benefit is not steeply offset by her earnings. (For individuals who are employed but enduring periods of reduced work, a disregard simply translates into a greater partial payment.)
Like the definition of partial unemployment, the amount of part-time earnings states disregard varies. Most states disregard a percentage of the regular weekly benefit, while others allow a fixed dollar amount. Several other states define it as a share of part-time wages. For example, Connecticut permits earnings of less than 1.5 times the weekly benefit and disregards one-third of those earnings. Another neighbor, Pennsylvania, permits part-time earnings of less than 1.4 times a claimant’s regular benefit and disregards wages worth 30 percent of the full benefit.
Using Pennsylvania as an example, a claimant normally eligible for a $400 benefit earning $300 for 20 hours of work meets the state’s definition of partial unemployment as any week of part-time work paying less than 1.4 times the weekly benefit (equal to $560). The state’s program disregards 30 percent of her full benefit in wages, or $120. The remaining wages ($180) are then deducted from the $400 benefit, leaving a partial benefit of $220. The claimant takes home $520 in total (the partial payment plus $300 in earnings.).
Q: What’s wrong with partial unemployment insurance benefits in New York?
A: Unlike nearly every other state, New York’s UI program bases the partial benefit amount on the number of days a claimant works instead of how much she earns that week. For every day in a week on which any work is performed, up to four days, a claimant’s weekly benefit drops by 25%, even if it’s for less than an hour. A worker receives no benefits if she works for any portion of four days or more. This is the case even if a claimant is not paid for this work. If she’s paid, she cannot earn more than New York’s current $405 maximum benefit.
Q: Which New Yorkers are most affected by the state UI program’s problematic partial UI policy?
1. Low-wage workers
A: By reducing jobless benefits in proportion to days worked rather than part-time earnings, New York’s UI program fails to protect workers enduring spells of underemployment. This may be especially true for workers in low-wage sectors, like retail and restaurants, who must more often contend with unstable schedules and work a greater number of hours and days to earn enough to meet basic expenses. Consider two claimants, one who receives a full benefit of $405 and the second receives $150. They both earn $160 for part‐time work. The high-earning claimant works on a single day; the low‐wage claimant works on four days, so she’s ineligible for jobless benefits.
This point is supported by the data, which shows that over the last few years, the industries with among the largest shares of New Yorkers employed part time involuntarily are also among the lowest paying, including accommodation (10.1%), food services and drinking places (9.1%), and retail trade (8.5%) (compared with 4.8% statewide).
2. Claimants who face a disincentive to return to part-time work
A: By imposing such a steep penalty for any work at all, New York’s UI program is in effect discouraging part-time reemployment, particularly among claimants with three or more days of part-time work. This may mean that the state’s program is supporting claimants for longer durations than it otherwise needs to, as research shows that the longer someone is unemployed, the less likely he or she is to find a new job (and in fact New York’s UI program has the 7th longest average duration of UI receipt in the country). This disincentive is likely placing further strain on the state’s long‐indebted UI trust fund.3
Table 1 demonstrates how much worse an average claimant who accepts part‐time work paying $200 fares in New York than in New Jersey, Connecticut, and Pennsylvania (shown in order of the value of the state’s maximum benefit). It shows that if the New York claimant were to take a job spanning three days, her total income would be $275 (her earnings plus a $75 benefit)—$25 less than the $300 benefit she would receive were she totally unemployed. This is in contrast to the situation for claimants in neighboring states, where a combination of part‐time earnings and reduced UI payments will always generate higher income than drawing full UI payments, as Table 1 shows.
Table 1: New York’s program lags behind neighbors in efforts to encourage part-time reemployment