Lessons learned from the Pandemic Unemployment Assistance Program during COVID-19

In response to the COVID-19 pandemic, the U.S. government implemented the largest expansion in eligibility to federal Unemployment Insurance (UI) benefits in history through the creation of the Pandemic Unemployment Assistance (PUA) program. This program expanded eligibility to self-employed workers, gig workers, independent workers and others not previously eligible for UI or who were unable to work for a variety of COVID related reasons.¹ Once implemented, the PUA program accounted for roughly 40 percent of total claims through expiration (Figure 1) and $80 Billion (20%) of the $400 Billion spent on UI expansions in 2020 (DOL IG, 2021).

The PUA program officially ended on September 6, 2021, and 21 states opted to terminate the program in June or July of 2021.  When the Omicron surge hit the U.S. in December 2021, it resulted in disruptions in dependent care, widespread quarantines, and a return of virtual school or school cancellations for many children. According to the U.S. Census Household Pulse Survey, the number of individuals who reported not working due to having or caring for someone with COVID-19 increased from 3 million in the first half of December 2021 to almost 9 million between December 29 2021 and January 10 2022, the highest level ever recorded by the survey. With PUA no longer in place in 2022, workers had fewer means of receiving income supports if they lost earnings as a result of these circumstances.

What policy lessons can be learned from the “PUA experiment” for policymaking going forward?   Specifically, the PUA program marked an important departure in the UI eligibility framework. States would normally rely on employers to verify whether a worker is ineligible for UI if they were fired for cause, did not respond to a recall, or started working in a new job. The PUA program enabled self-employed and other workers to become eligible for UI for many reasons beyond involuntary job loss. The central question when evaluating the PUA program – what was the tradeoff between expanding benefit eligibility versus work disincentive effects or overpayments, as compared to traditional UI recipients?

Figure 1: Continuing unemployment insurance claims in all programs, 2020-2021

In this brief we highlight two findings. First, the PUA program was successful in increasing access to benefits and insuring against income losses for workers on the margins of the labor market. Second, we do not see clear evidence that PUA recipients exhibited greater work disincentives than did traditional UI recipients.

We conclude reforming UI to more permanently broaden eligibility warrants consideration. A key challenge states faced during the rollout of these income supports is that they were establishing an entirely new program amidst peak claims volume. Thus, keeping a version of PUA permanent has the important benefit of allowing states time to establish protocols and enhance systems to accommodate populations of uncovered workers in non-peak times.