By Kristine Goodwin and Zach Herman
The Bureau of Labor Statistics’ July 2 news release reported that 17.8 million Americans were unemployed as of June 2020—an increase of more than 7%, or 12 million people, since February.
For policymakers facing staggering job losses from the coronavirus (COVID-19) pandemic, one state’s successful re-employment strategy may offer a template for moving forward.
According to a March 2020 study, Nevada’s Reemployment and Eligibility Assessment (REA) Program has resulted in sizable and lasting earnings gains for individuals seeking unemployment insurance compensation.
Researchers concluded that “studies have established that Nevada REA is one of the most effective job-search assistance interventions ever implemented in the United States.”
The research also confirms what researchers learned about the program when they studied it in 2009-2011, in the aftermath of the Great Recession, offering what lead researcher Marios Michaelides told us were “strong clues that these types of interventions can be very effective in the context of a weak economy.”
A Closer Look at Nevada’s REA Program
Under Nevada’s mandatory program, new unemployment insurance (UI) claimants meet one-on-one with a trained worker at one of the state’s one-stop career centers. During this visit, the staffer reviews eligibility for services, provides labor market information, develops a reemployment plan, and other customized help, like resume assistance and referral to job training.
At a cost to the state of about $250 per participant, the program increased participants’ earnings by 15% ($8,460) over three years and resulted in net savings to the government. Researchers concluded that the program’s mandatory job counseling services were key to achieving better employment outcomes for job seekers in the program. While participants in other state programs may be informed about available job counseling services, Nevadans seeking UI are required to utilize them.
Researchers examining various states’ REA programs in 2009 also found other states’ programs had positive effects on employment, including quicker exit out of the unemployment system for participants—however, none were as pronounced as Nevada’s. “Nevada REA was also the only program that substantively improved participants’ employment outcomes,” boosting employment rates and earnings by up to 25% in the study’s six-quarter follow-up period, researchers found.
Moreover, it reduced the duration of unemployment insurance by about three weeks, resulting in average UI savings of $873 per participant, four times the savings of the other studied states.
How Nevada’s Program Compares to Other States’ Programs
The U.S. Department of Labor’s (DOL) Employment and Training Administration established the Reemployment and Eligibility Assessment (REA) initiative in 2005, and in 2015 replaced it with the Reemployment Services and Eligibility Assessment (RESEA) program to reduce UI duration and improve employment outcomes. According to the DOL, RESEA is based on Nevada’s successful approach “where eligibility assessments were delivered seamlessly with reemployment services.” While state participation is voluntary, 47 states, D.C., Puerto Rico and the Virgin Islands were operating a RESEA program in 2019, the department adds.
As of May 2020, seven states have either canceled or suspended their RESEA services due to COVID-19. However, 16 have moved their RESEA services to either virtual or via phone. During the peak of lockdowns across the country state unemployment offices waived work search requirements for either COIVD-19 related cases or all cases.
As states begin easing lockdown restrictions and the economy is beginning its slow recovery many states are starting to reinstate their work search requirements. A handful of states are also beginning to deny benefits to recipients who refuse to return to work if their job calls them back.
A working paper from the University of Chicago Becker Friedman Institute suggests it is likely that between 32% and 42% of current furloughs and temporary job losses will become permanent. This reallocation shock to the job market means that RESEA programs will be even more essential than ever, as unemployed people will have to navigate finding new work or learning new skill sets.
Translating Research to Today’s Environment
Policymakers can have confidence in the study’s results for several reasons, including their randomized control design—a research gold standard that demonstrates causality—and because the findings have been replicated in different economic circumstances, including after the Great Recession and later, under the tighter labor market of 2014-15.
Still, questions remain about how well re-employment strategies can work in today’s economic and labor environment in which businesses are still not fully operating and jobs are scarce in key sectors. Moreover, every state is different and there is not a one-size-fits-all solution to the unemployment problem states face. Policymakers can start to ask questions about the reemployment strategy in their own state and how it compares with—or differs from—the Nevada model.
Given states’ budget and labor market challenges, the stakes are high for state policymakers to get people back to work and not waste precious state dollars on programs that don’t work. Says Michaelides, “We have an opportunity to advance an approach that could help workers who have lost their jobs to improve their lives.”
Zach Herman is a policy associate in NCSL’s Employment, Labor and Retirement Program. Email Zach
Kristine Goodwin is a program director in NCSL’s Employment, Labor and Retirement Program. Email Kristine