Factors Affecting Unemployment Insurance Trust Fund Solvency

Thank you, Chairman McDermott, Ranking Member Linder, and other members of the Subcommittee for the opportunity to appear before you this morning to discuss the solvency of the unemployment insurance (UI) system. My name is Alex Brill, and I am a research fellow at the American Enterprise Institute.

This is an important and timely hearing. As Department of Labor (DOL) Assistant Secretary for Employment and Training Jane Oates recently noted in testimony to the Senate Finance Committee, "It is clear that solvency of the UI system will be a concern over the next decade." I share the concern about the viability and health of many state UI trust funds and am concerned about labor markets in the United States generally over the near and medium term. My testimony today will focus on three topics:

  1. The deterioration in labor markets nationally and on a state-by-state basis.

  2. The current insolvency of many state trust funds and the appropriate way of measuring trust fund solvency.

  3. The impact of recent federal policies on labor markets and the impact of those policies on UI trust fund solvency.

I will begin with a brief overview of the current labor market. I will then discuss UI trust funds generally before focusing on the effectiveness of federal policies to promote job creation--the single most important determinant of trust fund solvency.

Click here to view the full testimony as an Adobe Acrobat PDF.

Alex Brill is a research fellow at AEI.

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