Pay Benefits during Retraining under Unemployment Insurance?

Abstract

President Nixon's recommendations on unemployment insurance legislation in 1969 will undoubtedly hit some snags as they pertain to the payment of benefits to claimants who are being retrained. nature of the interests of parties involved are reasonably clear. Unclear, however, is the nature of the evidence on which the recommendation was made. California's experience may be interpreted as discouraging when one examines the employment patterns of retrained workers. It should at least raise some questions about the viability of unemployment insurance systems for manpower developnment. On July 8, 1969, President Nixon recommended Federal and State legislative action to strengthen the unemployment insurance system. Six recommendations were made, one of which advocated ending the restrictions imposed by half the states on payments to unemployed workers undergoing retraining.' President's recommendations (on the same day, Secretary of Labor Shultz sent Robert C. Goshay is Associate Professor in the School of Business Administration, University of California, Berkeley. This paper wNas presented at the A.R.I.A. 1969 Annual Meeting. 'The others were: We should act together to extend unemployment protection to more employees, including manv highly vulnerable to layoffs who are not now covered. The States should make certain that workers throughouit the United States receive enough money for a long enough period of time to sustain themiwxhile they seek new jobs. We shotuld better protect the investment made on behalf of the insured by seeing to it that the funds are paid only to those who should receive them. XVe should increase the responsiveness of the system to major changes in national economic conditions, We should strengthen the financing of the system which presently discriminates against the low-waage worker and the steady employer. proposed legislation to the Congress) will undoubtedly be opposed by some, and if enacted into law, will pose some knotty administrative problems for states not restricting benefits as well as those who fonnerly restricted. Further, the President's recommendation obviously is an attempt to encourage retraining efforts by the states. This encouragement is an explicit goal in his message to the Congress. goal, of course, presumes a high value can be attached to retraining on several grounds, such as lowering the overall unemployment rate, achieving a more equitable distribution of job opportunities, and on humanitarian grounds. It is the purpose of this paper to explore the nature of some of the potential opposition to this legislation, outline some of the administrative problems attendant to its passage and, finally, describe certain data on the employment experience of a group of retrained workers in California. These data raise questions, at least, concerning the value of the retraining provisions in state unemployment insurance