department of labor: brown book

8/14/2019 Department of Labor: brown book

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B E S N o . 1-212O c t o b e r 1962

U n e m p lo y m e n t In s u ra n c el e g i s l a t i v e P o l i c y

R e c o m m e n d a t i o n s f o rS t a t e L e g i s l a t i o n1 9 6 2

U.S. DEPARTMENT OF LABORW. Willard Wirtz, Secretary

B U R E A U OF E M P L O Y M E N T S EC UR IT YRobert C. Goodwin, Administrator

Washington 95 , D.C.


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PREFACE

This statement of unemployment insura nce l e gi s la ti v e pol icy and recom-menda ti ons fo r S t a t e l eg i s l a t i on i s a r ev is io n of th e 1953 document,Unemployment Insurance Policy, Benefits - E l i g i b i l i t y . I t has been pre-pared t o meet the need f or an up-to-date summary of l eg is la t i ve pol icy.I t i s intended prim ari ly a s a gener al pol ic y guide and reference too lfo r the use of the s t a f f s of the St at e employment s ec ur i ty agencies andthe Bureau 's n at i ona l and reg ional of fi ce s who are concerned with theprepa rat ion or review of le gi s l at iv e amendments t o the ben ef i t ande l i g i b i l i t y provis ions of th e S ta te employment sec ur i t y laws . I t i shoped t ha t the d i scus s ion w i l l be use ful a ls o t o lab or and employer or-gan iza t ion s and t o other groups and in divi dua ls i nt er est ed in unemploy-ment: insura nce le g is la ti o n .A dis cu ssi on of d is qu al if yi ng income, which was included i n the 1953document, was not completed i n t ime f o r rele as e a s part of t h i s revise dstatement. I t w i l l be i s su e d a t a l a t e r d a te . Pol icy s tatements onot he r aspe ct s of th e employment sec ur it y program, such a s coverage,f inanc ing, appea ls , and adm inis t ra t ion , a ls o need to be updated. TheBureau plans t o prepare and is sue supplementary s tatements of p ol icy onthese subject s .Although the Manual of S ta te Employment Se cu rit y Leg isl ati on , revise dSeptember 1950, i s s t i l l the p rin cip al compendium of l eg is la t i vel an gu ag e, t h e i l l u s t r a t i v e bane f i t sch edu les i n th e commentary of th eManual are now out of da te and no Longer su it ab le f o r ref ere nce purposes.Accordingly, new be ne fi t schedules and ot he r tec hnic al di scu ssio ns andi l lu st r a t i on s have been included i n the Appendix of the revise d s tatement .Other le g i s l a t i v e ai ds which should be c onsult ed includ e UnemploymentInsurance Purposes and Pr in ci pl es , issu ed i n December 1950 as "a guidef o r eval ua tin g the main pr in ci pl es of unemployment insurance laws";Adequacy of Be ne fi ts Under Unemployment ~n s u r a n c e ,BES No. U-70 (R ) ,is su ed i n October 1958; and th e of S t a t e UnemploymentInsur ance Laws as of Janua ry 1, 1962. The f i r s t two documents inclu dec r i t e r i a f o r appra is ing employment sec ur i ty laws; the th ir d documentw i l l supply information on the provis ions of the S ta te laws. Copies ofth es e documents ar e a va il ab le from th e Bureau of Employment Se cu ri ty.

October 1962


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Page.I . Introduction ................................................. I1. Ease Period and Benefit Year .................................

Types of Periods ............................................. Individ-ual period s ......................................... Unifom periods .............................,.,............ Length of t h e Base Peri od and Be ne fi t Year ................... Lag Between Base Period and Benefit Year ..................... Lag with indiv idual per iods ................................

Lag with uniform periods ................................... Defin it ion of "Valid Claim" t o Begin an Indiv idual Benef i tYear ......................................................... Provisions f o r St ar t i ng a Second Benefit Year ................ Request Wage Reporting .......................................

111. Payments f o r Weeks of Total and Partial Unemployment ......... Definition of Week of Unemployment ........................... Weekly Ben efi t Amount f o r T o ta l Unemployment ................. What i s an adeqpate benefit ' ; ............................... Wage bas e and wage l o s s t o be compensated .................. Minimum weekly b e n e f i t ..................................... Maximum weekly b e n e f i t ..................................... Flex ib le maximum b e n e f i t ................................... Rounding of weekly benefit amounts ......................... Payments f o r Weeks of Les s tha n T o ta l Unemployment ........... Charac te r i s t i c s of ex i s t i ng fo rmulas ....................... A new type of p a r t i a l benef i t f o rmula...................... P ar t i a l ben ef i t s and dependents ' a l lo t rances ................


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Page.V . Eigh.Quarter.\, Jage Formula .................................... 17 Rela t ion of High-Quarter Provis ions t o Other Elements i n t h eBenefit Formula .............................................. 1 7 Co ns tru ctio n of High-Quarter Formulas ........................ 18 Sorae Recormiended Schedules................................... 19

V . Average- rJecld.y.Wa~e Formula .................................. 21 n el at io n of th e Average-1JeeXLy-Wage Pr ov isi on s t o Othe raem ent s i n t he Bene f i t Formula .............................. 21 Co ns tr uc tion of t'ne Average-Weekly-gage Formula .............. 2 1

Average weelrLy wage i n t h e bas e p er io d ..................... 2 1 Average weepry wage wit h t h e l a s t employer ................. 22 Average weekly trage i n weeks worked i n hig h qu ar te r ........ 23 Average ireekJy wage wit h each employer: "per-employer"de - t en~~ina t ion ............................................. 23

Proport ion of :/ages Compensated .............................. 24 Su gges ted Average- :.lee!-;Ly.lIage Formula ........................ 24 Problems i n th e Re lat io n of ;leekly Be ne fi ts t o !;eel-Jy Wages .. 26 Rel atio n of Ilnnual-Wage Prov ision s t o Other Jlements i n th eBenef i t Fomula .............................................. 27 Dur ation of B en ef it s under Annual-Wage Formulas .............. 27

V I I . Dependents' Allo.c~ances....................................... 29 Definition of Conlpensable Dependent .......................... 23 Form and Amount of Dependents1 ~ l o ~ m n c e s................... 23 A f l a t a uo tr an ce ....................................... 30 Amounts varying with t h e be ne fi t le v el ..................... 30 Allowances f o r claimants with maximum basic weekly benef i t . 31


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Page.elat ion of Dependents' Allo~?ances o Other Elenlents i n th eBenefit Formula .............................................. Dependentst allowances and duration of benefits ............ Dependents ' al lowances and p a r t i a l be ne fi ts ................ Ad min istr ativ e Aspects of Dependentst Allowances .............

V I I I . Naximum Po te n t i a l Benef i t s i n a Benef it Year ................. Uniform P ot en ti al Duration f o r A l l Elig ib le Cla i rmnts . , ......Period of uniform duration .................................

Qualifyiag employment or wages f o r uniform dur atio n ........ Variable Duration ............................................ Maximum dura t ion ........................................... Durat ion f rac t ion..........................................

Minimum duration ........................................... Maximum d ur at io n a t ta in a b le a t a l l be n ef i t l e v el s .......... The use of schedules i n connection with va ria ble duration ..Variable dura t ion wi th a weighted high-qu arter schedule....Variable dura t ion and dependents1 allowances ............... Rounding of duration ........................................ Addi t iona l l imi ta t ions on du ra t ion.........................

C( . Qua li fy in g Ehployment o r Wage Requirement .................... Form of t h e Q ua lif yi ng Requirement ...........................

1leeks of efiiplopent ........................................ IJIultiple o f hi@-s_ua rLe r wages o r of weekly be n e f i t amount.A f l a t qual i fy in g amount ................................... Amount of a p l o y m e n t o r :Jages Required ....................... b;odir"icatlon of Qua lify ing Requirements ...................... Step-down proxrisions ....................................... Additional qm li fy in g requirements ......................... Requalifying provisions for a second benefi t year .......... Alternative qualifying requirements ........................

X . El ig ib i l i t y fo r Benef i t s and Disqua l i f i ca t ion f rom Benef i t s ..Purpose of El ig ib i l i t y and Disqu al i f ica t ion Provis ions ....... Waiting Perio d ...............................................


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Ab ili ty t o Work and Avai lab ili ty fo r Work.................. Ava-Elable f o r su it ab le work.............................. A broad a va ila bi li t y provision........................... El ig ib il it y of approved traine es ......................... Special avai lab ili ty requirements fo r specid.groups ofworkers ................................................... Major Causes for Disqualification from Benefits ............ Voluntarily leaving suitable work....................... Discharge for misconduct .................................Refusal of suitable work................................. What i s su ita bl e work?....................................

Effect of Disqu alificat ion on Claiaants.................... Period of di squ alif icat ion............................... Variable vs. l a t per iods................................ Disqualification for the duration of the unemployment ....Disqualification for separation from other than mostrecent employment........................................ Provision for cancellation of benefit r ights............. Noncharging of Ben ef it s t o Employers' Accounts.............

Disqualification Because of a Labor Dispute................ Disqua lificati on for Fraudulent Misrepresentation..........


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A- 1

PageAppendix.. ..................................................... Problems Ar is ing from a 52-Week Bene fi t Year o r from OtherVariations from a full Year.................................. Table 1 - Lag between End o f ' Base Pe riod and Beginning of Bene fi tYear and,in S t a t e s with Uniform Periods, Date of New ClaimBased on Wages i n Such Base Period, October 1962............. Analysis of P artia l. Benefit Fo&as...........................

Pa rt ia l Earnings Limit: Less than Weekly Benefit Amount ....F l a t earnings allowance ..................................... Table 2 - Pa rt ia l Benefits and Total Income--Illustrations ofVarious Types of ,Sta te Formulas and De fi ni tion s of "Week ofE~lo~ent"......................... .........................

Earnings aJJ.owance s e t a t f r ac ti on of weekly be ne fi t amountSharp dec rease i n weekly be ne fi t papnent and to t a l income..Pa r t i d . bene f i t i n un i t s o f fill or half weekly benefitmnt...................................................

Partial Earnings Limit: Weekly Ben ef it Amount Plus theEarnings Allowance......................................... Construc tion of New Type of P a r t i a l Benef it Formula..........

Table 2A - P a r t i a l Be ne fi ts and Total. Income, Computed underAlt ern ati ve Types of Fo rm la s Designed t o Provide Progres sivelyHigher Income................................................ Part I. PartiaL earnings l i m i t s e t a t a multi ple o; weeklybenefit amount and partial earnings allowance defined as afr ac t5on of earnings....................................... Part 11. Part ia l earnings l i m i t s e t a t a multiple of weeklybenefit amount plus a flat dollar amount and part ia l earningsallowance defined as a f l a t dol la r amount plus a fr act ion ofearn ing s i n excess of such f l a t d o l l a r amount..............

Table 3 - Formula A: Weekly benefit amount figured as 1/20 ofhigh-quarter wages and qualifying wages computed as 1 4 2 imeshigh-quart er wages........................................... Table 4 Form l a B: Weekly benefit amount figured fromweighted schedule of high-quar ter wages and qu al ifyi ng wagescomputed a s 1 4 2 imes high-quarter wages... ................


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A-18

PageTable 5 - Fomnda C : Weekly benefit amaunt figured from weightedschedule of average weekly wag;e.,............................ Table 6 - Mininnun and maximum weekly and annual benefits as per-

cent of minimum qualifying wages a t each level, 7 Stat es withannual-wage formulas, October 1962........................... Table 7 - Mininnun and m a w weekly benefit amount and minirmunweeks of work required a t specifi ed le ve ls t o q ualify f or aweekly be ne fi t equal t o 50 percent of average weekly wages i nbase period; 7 States with annual-wage formulas, October 1962.Table 8 - Formula D: Basic weekly benefit anmunt figured as1/25 of high-quarter wages, with augmented benefit s fo rclaimant with one, two, and th re e o r m r e dependents, andqualifying wages computed as b 1 / 2 times high-quarter wages..Table 9 - Analysis of hypothetical benefit schedule providing"variable" maximum benefit amounts for claimants with one,two, three,@ four o r m r e dependents...,................... Table 10 - Variable dura tion of benefits--number of weeks re-sulting from specified duration fractions and amaunts ofriod wages (expressed as mult iples of high-quarterunder five high-quarter fonrmlas...................... Table ll - Benefit Formula E: Weighted high-quarter schedulewith va ri ab le dura tion of benefi ts; qua lifying wages com-puted a s 1 4 2 imes high-quarter wages; -maxinaun potential

be nefi ts , computed as spec if ied percent of base-period wages,or (statutory maxlmum)tim&s the weekly benefit amount, which-ever i s the lesser........................................... Table 12 - Benefit Formula E: Abbreviated tabulation illus-tr at in g Wighted benefit and duration schedule for adminis-t ra t i ve use i n determining weekly benefit mount and m i m u mpotential benefits,..,....................................... Analysis of qual ifying wage requirements st at ed as a multipleof high-quarter wages or of the weekly benefit m t . . . . . . . . Analysis of provisions requi ring wages within the l a s t 2

calendar quar te rs of the base period.........................

- v i i i -


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I. INTRODUCTION

The most important as pe ct s of b enef it s t o a worker a re how much doeshe ge t, fo r how long, and what i s requi red o f him t o ge t them. TheState s have given diverse answers t o these questions, but a l l S tatel a w s vary the weekly ben efi ts with the claimants' pr io r wages. Thebenefi t fonrmlas used in the Sta tes d if fe r princi pally i n th e wagebase used t o determine th e weekly benefit-- high -qua rter wages, averageweekly wages, or annualwages. I n each type of formula th er e a rear i thmet ical di f ferences, i . e . , differ ence s i n the proportion of wagelo ss t o be compensated and i n t he minimum and maximum weekly benefitspayable. With each type of formula, po te nt ia l duration of be ne fit smay be u n if om f o r a l l eligible claimants or may vary with prioremployment or wages; here al so the re ar e arit hm etic al differe nces i nminimum and maximum weeks and amounts of po tent ia l benefit s and i nth e rel at io n of ben efi ts t o qualif'ying wages.!?he po li ci es discussed her e concern the base period and be ne fit yearwhich constitute the framework of the benefit formula, the formulasfo r determining weekly be ne fit s fo r t o t a l and p a rt i a l unemployment,dependents' allowances, duratio n of be ne fit s, and qualifying vages.While the various elements of the b en efit formula a re presented sepa-ra te ly , the in ter re la t ionship of a l l elements, esp ec ial ly of th eweekly be ne fi t amount, quali fyi ng wages,and dur ati on of bene fi ts ,must be kept in-mind.This discussio n of th e be ne fit formula i s followed by a discussion ofe l i g i b i l i t y f o r b e ne fi ts and disqual i f icat ion f ran benef i t s .


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11. BASE PERIOD AND BENEFIT YEAR

The base period and be ne fit year c on st it ut e th e framework of t he be ne fi tf o r m l a . Unemployment insurance can be thought of a s term insurance.Rights ar e e stablished during the base period by workers i n th e la borforce, t o be used i n the event of t h e i r unemployment during th e i r bene fityear . The base per iod i s th e period of th e clai man t's previous employ-ment experience i n insur ed work used as t he base f o r determining i f hei s "insured" under the program, h i s weekly be nef it, and maximum annualbenef i t s , I n a l l St at es except Wisconsin, th e base period i s r e la t e d t oa l a t e r pe riod , the ben efit year, i n which bene fit r i gh ts based on theclaimant's base-period employment may be used. A base period i s f ixedi n rel ati on t o th e beginning; of a ben efi t year; once establishe d, itremains unchanged f o r th e durat ion of t he be ne fi t year. Under most l a w s ,a determination of weekly benefit amunt and maximum annual benef i t s ,once made f o r an ind ivi dua l, remains unchanged throughout t h e be ne fi tyear*Types of PeriodsBoth the base period and th e be ne fi t y ear a re of two main types," individu al"and "uniform."Indi vidu al periods.--The indi vid ual be ne fi t year, i n most Sta tes , i s a1-year period beginning on the day with r e k e c t t o which an individualf i r s t f i l e s a new claim, providing he has s uf fi ci en t wages t o be insured.I n same Stat e$ however, th er e a re a dd iti on al requirements a claimant mustmeet (s ee page 5) .A va ria tio n which has been used i s an individ ual bene fit year beginningwith th e calendar q uarter i n which a va li d claim i s f i l ed . Such a pro-vi si on i s not recommended, sin ce it treats differently claimants whoseunemploynu3nt begins ea r ly and tho se whose unemployment begin s l a t e i n acalendar quarter. For example, a claimant f i l i n g i n th e l a s t week of aquarter would have an effective benefit year of 40, ra the r than 52, weeks.This m q j be an advantage o r a disadvantage t o a claimant depending onthe chance pattern of his unemployment and reemployment during the benefityear.Since the base period i s re la ted t o the benef i t year , an individual baseperiod i s ord ina ril y rel ate d t o the beginning of the claiman t's unemploy-ment. I t i s a char act eri st i c of the individual base period th at t heearnings used to compute benefit r ights are relatively recent. For th i sreason, th e Bureau recommends the ind ivi du al be ne fi t yea r. The discus-sion of l a g between base period and benefit year (page 4 ) ind ica tesvarious types of indiv idua l base periods .


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3

Uniform periods.--In a few St ate s, th e be ne fi t year begins f o r a ll e l i -gi bl e claiman ts on th e same day--i.e., th e f i r s t da;y o r th e f i r s t Sundayof a spe cifie d month--and continues u n t i l th e corresponding day i n thenext calendar year. A claimant who f i l e s a claim near th e ex pirat ion ofa uniform be ne fi t year does not have any oppor tunity t o draw a l l theweeks of be ne fi ts t o which he may be en t i t le d on the bas is of h i s base-pe riod employment and wages. However, such a claimant would ordinarilyhave benefit r ights i n the succeeding ben efi t year and could draw benefitsbased on a new determin ation of h i s ri gh ts .In the States which use a uniform base period, it i s defined as thecalendar year preceding the beginning of the uniformbenefit year.Length of the Base Period and Benefit YearThe base period of 1year (or 4 quarters or 52 weeks) used i n a l l Sta tel a w s a t present i s recommended. A 1-year base period usually reflectsan individual's recent year-round employment pattern. I-Iowever, undercertain circumstances, it m y not be representative of his normal attacn-ment t o the l abor force. For example, an indiv idu al with a long hi st or yof almost full-time employment mqy experience considerable unemploymenti n a 1-year period because of illness or recession and may not qualifyf or bene fit s de spi te hi s work histo ry and hi s current attachment. Withoutchanging the base period, it i s poss ib le t o admit such an indi dd ua l t oben efi ts under an alte rna tiv e qualifying requirement t ha t takes in toaccount h i s employment not only i n th e 1-year base period but al so overa longer period (see page 5 2 ) .Although a nuniber of S ta te laws provide f o r a 52-week in divi du al ben ef ityear, t h i s type of period should not be used with a f o m l a which pro-vides for a 4-quarter base period. Since th e $2-week pe rio d i s 1 o r 2days short of a f'ull year, it can result, when one benefit year immedi-ately follows another, i n the i nclu sion of th e same calendar qua rter ofwages in each of the two base periods for such benefit years. o or af'urther discussion, see page A-1 . )Since the end of a benefit year and the end of a benefit week do notneces sari ly coincide, provision should be made f o r the a llo cat ion ofs p l i t weeks t o a specific benefit year. This m a y be done by allocatingth e weeks t o a year by one of th e f o l l o d n g means: all weeks beainninqi n the benef i t year , o r a l l weeks ending in t he be nef it year, o r a l lweeks of which four or m r e days f a l l w i th in the yea r. Such allocation,which i s made necessary by the fa ct th at th e un it of paylllent i n the pro-gram i s a week, should not change th e ending or t he beginning d at es ofbenefit years as f ixed by statute. It i s p re fe rable to p rov ide s ta tu to ryauthority t o handle th i s by regulation because administrative f le xi bi l i tyi s desirable.


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Lag between Base Period and Benefit YearSince unemployment insurance i s designed t o compensate wage lo ss , b en ef it sshould be based upon comparat ively re ce nt wages--i.e., th e l a g between t h ebase period and benefit year should be as shor t as possible. A s i l l u s -t ra ted in Table 1 (page A-2), the la g var ie s widely with the typ e ofpe ri od used and th e manner i n which wage information i s obtained. o ordis cus sio n of a system of wage repo rt in g t h a t w i l l permit reduction orelimination of the lag, see page 6 , )L a g with individual. periods.--Under th e mst common definition of anindividual base period ( f i r s t 4 of t h e l a s t 5 completed calendar quarters),t h e in te rv al between the end of th e base period and th e beginning of th ebenefit year ( 3 months t o 1day less than 6 months) i s intended to &Lowtime f o r the recording of all base-period wages p r io r t o the b e g i ~ i n g fa benefit year. Such a provision allows a minirmun l a g of 1 quarter be-tween th e base period and th e be ne fi t year. Since wage rep or ts ar eusually received 1month a f te r th e cl ose of a quarter, they mst beprocessed i n th e remaining 2 months t o be a vai lab le by th e beginning ofth e quarter i n which they mey be needed f o r th e computation of b en ef itr igh t s .A few States allow 1month more f o r wage proce ssing by def in in g th e baseperiod as the f i r s t 4 of the l a s t 5 completed calendar quarters precedinga ben ef it year which begins i n th e second or t h ir d month of any quarterand t he f i r s t 4 of the l a s t 6 calendar quarte rs preceding a ben efi t yea rwhich begins i n the f i r s t month of any quarter. Howwer, t h i s permitsa 1%period of 7 months during 4 months i n t he year, and a lag period i nexcess of Gmonths i s undesirable. For t h i s reason, th e Bureau recommendsagainst such a definit ion of the base period.L a g with uniform periods.--The uniform cal endar base ye ar and a benef i tyear beginning April 1 o r Ju ly 1 involve a lag of 3 o r 6 months betweenth e end of th e base period and the beginning of a benefit year. Thismeans a l a g of up t o 15 t o 18 months between the end of a base periodand th e beginning of same cl aima nt st unemployment. When uniform periodsa r e used, a claim ant's weekly be ne fi t xmy be based on wages earned aslong as 2 years ago and i s , therefore , un l ike ly t o be r ea l i s t i c i n te rmsof h i s more recen t wwes.I n sp it e of the s i q l i f i c a t i o n involved i n the use of the same year asthe base period for a l l cla imants who f i l e c la i m i n a correspondingben efi t year such a uniform period i s not recommended f o r th e follo wingreasons: ( ~ jages used i n th e computation of b enef i t s a re more remoteand, therefore, le s s indic ative of the claimants' degree of recentattachment t o the lab or force than when a more recent base period i sused; (2 ) Claimants ar e aff ec ted unevenly, depending upon when th e i remployment began i n r el at io n t o th e beginning of th e base p eriod andwhen t h e i r unemployment began i n r el at io n t o t he beginning of th e be ne fi tyear; (3 ) New ent ra nt s t o the l abo r fo rce must wait longer than whenindividual periods w e used before they are afforded the protection of


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the program; (4) I f new entrants earn less than the mininnun qualifyingamount i n th ei r f i r s t uniform base period, these wages are lost forbe ne fi t purposes. Under laws providing f o r ind ivid ual periods, the sewages can be used i n conibination with l a t e r earnings as a ba si s f o rbenef i ts.Administratively, a uniform base period and be ne fi t year bu il d up apeak load of claims a t the beginning of the ben efit year o r ju st beforei t . The new claims load goes up because, i n addition t o claims fromworkers j us t becoming unemployed, the agency ge ts new claims f r o m cla in-ants receiving be nef its a t th e end of t he o ld ben efit year, from thosewho exhausted th e ir benef it r ig hts i n the old benefit year and have re-mained unemployed, and fr om tho se who were unemployed but not ins uredi n the old benefit year and rnw be insured i n the new benefit year.De fin iti on of "Valid Claim" t o Beginan Individual Benefit YearA valid claim is a claim which est ab lis hes th e beginning of an individualbene fit year. In most Statesit i s merely a new claim fi l e d by a claimantwho meets t he employment and wage qu alif icati ons f or benefit s. The Bureaurecornends t h i s def in it io n of a val id claim under which a determinationof insured status i s made f o r any worker who f i l e s a new claim. Thisdetermination i s administratively time consuming and should be starteda t once i f it i s t o be av aila ble when needed fo r be ne fit paymnt. Pro-visi ons found i n s ow St ate laws which requir e th at the individual mustmeet oth er t e s t s i n addit ion t o th e monetary requirement befo re he canestablish a benefit year are administratively undesirable. For example,such a provision would be one requiring that the worker complete a weekof unemployment, t h a t he be a va ila bl e f o r work, or t h a t he be f r e e fromdisqualification. Under any of these provisions, th e agency mst deferac tio n on th e monetary determinati on un t i l t he p-nt i s nearly ordre ady due or it xnust make many conditional monetary determinationsth a t w i l l n w e r be used because, by the tim e claimants have met t hes evar ious requirements, t h e i r base perio ds have changed.Provisions for Starting a Second Benefit YearWith uniform periods, a po te nt ia l new be ne fi t year begins f o r a l lclaimants receiving bene fits a t the turn of the benefit year. Elig ibleclaimants can draw be ne fi ts i n the second ben efi t year without in te r-ruption unless a waiting week i s required (see page56). With individualperiods, a second bene fit y ear does not begin u n ti l a f t e r the end of theclaimant 's l a s t preceding benefit year--a year which ordinarily beganwith a pe rio d of unemployment. Claimants who exhaust t h e i r bene fi ts mustw a i t u n t i l th e end of the be ne fit y ear before they can begin a new be ne fi tyear and draw benefits based on a new base period.In St ates which cancel wage cr ed its i n cert ain di sq ua li ai ng si tu atio ns(se e page68), th er e may be in stances i n which a bene fit year Is estab-li sh ed i n which no ben efi ts are peyable because all wage c re d i t s have


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been ca nc el led. The Bureau recommends that in such instances thebenefit year and base period be cancelled also. Then a new benefityear can be sta rt ed as soon as the claimant.has sufficient qualifyingwages o r employment. Such a provision serves a usef'ul purpose i n t h atit helps t o mitigate t he extremely punitive ef fe ct of se tt in g up aperiod of 1year i n which a l l benef i ts are barred.Request Wage ReportingA smal1, but incr easi ng number of St at es have in st it u te d a system ofrequestin g wage repor ts f r m employers f or claimants only a f t e r theyf i l e a claim. This system i s termed "req ues t wage rep orti ng. " Thisadminis trative change, elimina ting the r ece ipt of q uar ter ly wage re -po rt s from employers, has had far-reach ing ef fe c ts on th e be ne fi tformula. It permits th e reduction or elimination of th e la g periodbetween th e base period and the ben ef it year, and elimin ates th enecessity of having a formula based on calendar q ua rte rs o r a ca len-dar year.The St at es having t h i s system of rep orti ng use a base period endingeither 5immediately before the b en ef it year, or within a short periodp r i or t o it. Sane States end the base period with the end of the las tcalendar quarter preceding the benefit year (see Table 1, page A-2).Any one of the se de fi ni ti on s of base period has th e advantage of usin gmore recent wage and employment data than would be available under asystem of q ua rt er ly wage re por ts.The impact of request wage reporting i s a ls o f e l t i n other aspects ofthe benefit provisions, that i s , the qualifying requirement and cm-putation of benefits . In sane benefit formulas these provisions arei n terms of th e cl aim an t's weeks of employment i n th e base period (s eepagekk). Benefit formulas req ui ring da ta on weeks of employment a r enot confined t o the State s th at use a request re porting system. How-ever, i t i s e as ie r t o ob ta in dat a on weeks of employment under such areporting system. A number of the "request reporting" States, but nota l l , have benefit formulas that use weeks-of-employment data.Certain concepts have been ccamnonly associated with request reportingsystems but a r e not inhe rent i n them. One of these i s the "per employerdetermination" system used in s everal of the St ates t ha t f i r s t adoptedrequest repo rtin g. Another i s the punitive character of the disquali-fication provisions that generally accampanied adoption of the system.S t i l l another is th e postponement of the s t a r t of t he bene fit yearu n t i l the c la imant i s fr ee of di sq ua li fi ca ti on . The Bureau conside rsth es e concepts unde sira ble and recommends t h a t the y be om itted.Although not inherent, the association of these concepts with requestreporting i s not merely coin cide ntal . Under t h i s system, it i s easyt o ob tai n and use se pa rat ion i nforma tion concerning employment th a t i sremote from the current unemployment and i t s preceding separation fromwork. The rec ei pt of a s epa rat e repo rt from each employer a t th e timethe claim i s filed, sharing both employment and separation information,


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tends t o promote the idea of r ela t in g the worker t o each of hi s pr io remployers i n t ur n as t o h i s work record and the reason for separation,rat he r than t o h is work record as a whole and t o the reason f o r hi scurrent unemployment.Experience with the system in se ve ral S ta te s has shown t h a t it i s f eas i -b le t o ob tain timely wage information under a request reporting systemfrom the employers th at are c orr ec tly l i s t e d by th e claimant. Examinationof employer records indicates t h at these re port s ar e usually correc t .While claimants can gen eral ly ide nt if y t h e i r base-period employers, it i smore di ff ic u lt fo r those who work fo r m y mployers i n the course of ayear--as, fo r instance, i n the building, *ades. In thes e instanc es,f a i l u r e t o i den t i fy all base-period employers may fre quen tly r e su l t i na lo s s of ben ef it s, which would not occur under a system of qu ar te rl y wagerep ortin g. With reques t reportin g, such lo ss es cannot be elimina teden tir el y, but th e nuniber m a y be reduced by competent claims interviewing.In order t o obtain accurate and t imely repo rts and t o reduce the delaysin b ene f i t s caused by l a t e reports, th e law should provide : (1) Thatemployers sh a l l fu rn is h each worker, upon sep ara tion , with a not iceshowing th e employer's name, account number, and the address where em-ployment and wage records are lnaintabed., and advising the worker thathe should keep such inform ation because it w i l l be needed when he f i l e sa claim f or ben ef i t s ; ( 2 ) That, i f the employer f a i l s t o f i l e t imelyreports, be ne fits sh al l be based upon the claima nt's statement, supportedby such information as may be reasonably required under the individualcircumstances of th e claimant, and th a t ben ef its paid on the bas is of suchstatements, i n th e absence of fraud, sh al l not be subjec t t o repayment onthe basis of any redetermination based on l a t e r information; and (3) Thatemployers who f a i l t o f i l e t imely re port s sh al l be subject t o a moneypenalty f or each report t ha t i s delinquent. In addition, th e time l i m i tfo r f i l in g r epor t s should be se t so tha t the re i s suf f i c i e n t t ime toreceive t he repo rt and make the determination before b en ef it s a re due.

From time t o time, changes ar e made i n St at e provisions fo r base periodand ben efi t year , fo r substantive o r fo r administrat ive reasons. I nmaking such changes, the Bureau recommends:1. That th e l a g between the base period and be ne fi t yea r be asshor t as possible, consistent with the benef i t fo rm la andwith administ rat ive feasibi l i ty .2. That the def ini t io n of a valid claim t o begin a benefi t yearnot include requirements of unemployment, a b i l i t y t o work,

availability for worksorfreedom &om disqualification.


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3. That an ind ivid ual, ra th er than a uniform, b ene fit year beused.4. That the be nef it year and base period be limited t o a year.5. That under a formula using qu art ers f o r the base period t h eben efi t year be a year period, rat he r than 52 weeks.6 . That, when a benefit year i s established i n which no benef itsare payable because a l l wage credits have been cancelled(se e page 68 ) , th e ben efi t year and base period be cancelledalso.7. That, i n Stat es using a system of request repo rting, the l a wprovide (a ) th at employers be required t o furnish separatedworkers with written notices which show the employer's firmname, r eg is tr at io n number, and reporting address; (b) th atthe t ime l i m i t fo r employer repo rts be s e t so as t o permittim ely ben efi t payments; (c ) t h a t the agency be authori zedt o campute and pay be ne fi ts on the bas is of information fir-

nished by the claimant i n cases where an employer's rep ort i sdelayed beyond a spec ified time and th at , i n the absence offraud, repayment of such be ne fi ts not be requ ired ; and (d )t h a t a money pena lt y be requi red of employers who do notfu rn is h wage and employment in form ation prmpt ly .


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1 . PAYMENTS FOR WEEKS OF TOTAL AND PARTIAL UNEMPLOYMENTThe unit of payment i s the benefit f o r a week of total. unemployment,However, since underemployment as well a s t o t a l unemployment ma y resul ti n serious wage los s, unenployment insurance laws should provide f o r pay-ment of benefits fo r p ar ti al as wel l as fo r t o t a l unenrployment.Definition of Week of UnemploymentThe week has been accepted as the period for measuring the existence ofunemployment and for paying benef it s fo r unemployment. Since the d is -ti nc ti on between t o t a l and p a r t i a l unemployment i s one of degree, onedefinition of a week of unemployment can serve all purposes with nosta tut ory dif fer en tia tio n between t o t a l and pa rt ia l unemployment. L/Under most of the current State laws, an ind ividual i s unerrrployed i n anyweek i f he meets c ertain t es ts : (1) i f he does not wark o r works less thanfu ll -t im e work fo r an employing un it ; and (2 ) i f my w e s t ha t a re pay-able to him a re l e s s than h is weekly benefit amount, o r le ss than hi sweekly benefit amount plus a specified dollar allowance. This defini-ti o n b e s not di sting uish between the individu al who i s t o ta ll y unem-ployed and without wages, t he one who has no regu la r job, but picks upsome work and earnings, and th e indiv idual who has not been separatedfrom h i s r eg ular employment but has had his hours cut and his wages sub-st an ti al ly reduced. If th e claimant's earnings i n a week of le s s thanflrll-time work are less than the earnings lim it specified in th e defi-nition of week of unemployment, he i s unemployed and, i f he i s otherwiseel igible, he w i l l receive a benefit. A s soon as his weekly earningse m r exceed th i s earnings l i m i t , he i s no longer considered unem-ployed and, accordingly, no longer en titl ed t o any part of his weeklybenefit.The earnings l i m i t should be s e t hi&= than th e weekly bene fi t amount.The shasp drop i n income tha t resul ts under the existing p a r t i d benefitformulas, when the earnings l i m i t i s set a t the claimant's weekly benefitamount, acts as a deterrent, rather than an incentive, t o seek any sub-s t a n t i a l amount of part-time work. (see page 12 and i l lus t ra t ions i nPast I, t able 2, pages A-4 and A-5.)In order to achieve the objectives of the partial benefit provisions,the earnings l i m i t in the definition of week of unemployment should1/ Different requirements as t o fi l i n g claims and registrati on f or workar e necessary i n cases of claimants par ti al ly unemployed, to ta ll y un-employed, o r to ta l ly unemployed except fo r odd jobs. 'Ilhese, howwer,ar e matters of sdmlnistra tive de ta il , i n which discr etion and flexi-bi l i ty are desi rable, and they can be handled more readily by regula-tion than by statute.


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(a) be se t hi& enough t o give th e claimant a r e a l incentive t o work asmuch as he can, but not so high th a t he will continue t o d r aw benefits,however small, when his t o t a l income ( e m i n g s plus th e pa rt ia l benefi t)approaches too closely his ftiU-time wages; and (b) be related to theearnings aUowance provided i n th e fonrmla fo r computing th e bene fit fo rpa r ti a l unemployment so th at , a t th e cutoff point, th e los s i n benef itpayment and to t a l income would be sma l l . (see pages 13 t o 15 and theal ternat ive formulas i l l ust ra ted i n tab le 2A, pages A-10 and A-11. Seeal so pages 15 and 32 f o r a discussion of dependents' allowances andpa st i al benefi ts. )Weekly Benefit Amount f o r Total UnemploymentThe weekly benefi t amount for t o t a l unemployment under all Sta te lawsvas ies with th e claimant's p ri o r wages. It i s generally accepted th atweekly benefits should be less than weekly wages--in fact les s than teke-home pay--to give claimants an incentiv e to r et ur n t o work. On the otherhand, b en ef it s should be adequate t o enable claimants t o maintain them-selves between jobs.What i s an adequate ben efi t?-- If th e program i s t o accomplish i t s purpose--to provide re a l secu rit y ag ainst th e hazard of unemployment--the weeklybenefit s should be s uff ici en t t o cover the basic neces sities of mostclaimants and their families without requiring them t o r eso r t t o r e l i e for t o reduce su bsta ntia lly the ir le ve l of liv ing while drawing benefits.Items which must be met, whether o r not a worker i s employed, a re foodand rent , heat and u t i l i t i e s , and medical care. Over sho rt periods, pur-chase of clo thing may be defer red , but claimants cannot be expected toreduce subs tan tia lly th e amount they spend fo r food, o r to move to l e sseqe nsiv e quarters, o r to neglect an i l ln es s o r injury requiring medlcalcare, while they ctre temporarily out of work. The proportion of wagesspent for these items i s , of course, higher f o r workers with low earningsand for workers w i t h dependents than f or high-paid workers and fo r workerswithout dependents. Some benefit formulas re fl ec t these fact s by givinglow-paid workers a higher proportion of their wages as weekly benefi tsand by giving claimants with dependents an allowance fo r th e dependentsi n addition t o the ba sic weekly benefit. (see pages 29-34 for a dis-cus sion of dependents ' allowances. )Wage base and wage lo ss t o be compensated.--In th e formulas cu rren tlyused, th e weekly bene fi t mount i s based on th e highes t quarte rly wagesi n th e base period, o r on average weekly wages, o r on t o t a l base-periodwages. !he systems are so diverse that they must be discussed separately(see pages 17-28). However, all fonm\las provide a minirmrm and maximumweekly be ne fi t fo r t o t a l unemployment. Between t h i s minimum and maximum,the formulas yield a sp ec if ied uniform proportion of wages, o r propor-tions varying w i t h wage levels. !bere i s genera l agreement th a t weeklybene fit s, exclusive of dependents' allowances, should rep lace at leas t50 percent of wages.


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- -Minimum weekly benefit.--In a l l systems, the minimum weekly benefit thatany cla imant may draw fo r a week of t o t a l unemployment i s specif ied inth e law. The minimum weelrly be ne f it or di n ar i ly rep re se nt s a la r ger pro-po rt io n of t h e minimum amount of wages re qui red th an do th e highe r amounts.The minimum pu ts a f lo o r on bene f i t s . It i s important t h a t t h i s f l o o rshould be high enough so th a t any worker who can qu al if y f o r be ne fi ts w i l lrece ive a bene f i t tha t w i l l be of some r e a l help, even though t h e ef fe c tof t h e minimum may be t o exclude from be ne f i t s some workers who have abona f id e attachment t o th e labor fo rce.The minimum amount should be r el at ed t o t he wage l ev el s i n th e S ta t e andt o t h e minimum qu al if yi ng wages. Because of t he wide var ia ti on i n wagel ev el s i n th e variou s sect ions of th e country, t he minimum weekly be ne fi tamount should vary among the States. A minimum ap pr op ri at e i n a high-wage S t at e would come to o c lo se t o fu ll -t im e weekly earnings of someb e n e f i c ia r i e s i n a low-wage St at e. Moreover, because of t h e re l at io n-sh ip of t h e minimum weekly ben ef i t amount and t h e qua lif yin g requirementi n a number of S t a t e laws, an unduly high minimum benefit amount mightr e s u l t i n a minimum qua li fyi ng requirement which el imi nate s from be ne fi tsa s ign i f i can t segment of low-wage workers. The minimum should be re l a t e dt o t h e weekly wages of th e lowest wage groups i n th e St at e f o r which t heunemployment insurance program i s considered appropriate . Even a t t h eminimum, t he re should be some r el at io ns hi p between th e be ne fi t amount andth e earnings of those c laimants en t i t l ed t o it.Maximum weekly bene fi t. -- The maximum weekly be ne f i t amount payable t o anyindiv idual puts a c e i l i n g on be ne f i t s . Where t h e maximum i s s e t i s i m -port ant because claimants with wages higher than those required f o r th emaximum weekly benefit receive a progressively smaller proportion oft h e i r wage loss . For example, if t h e maximum benef it i s $40 f or wagesof $80 o r more, t h e cla imant who ba re ly q ua l if ie s f o r th e maximum re -ce iv es 50 pe rc en t of h i s wages while one with weekly wages of $100 re -ceives only 40 percent.The maximum weelsly bene f i t shou ld be s e t a t a level which w i l l permitth e gr eat majority of workers t o receive a veekly benefit amount repre-sent ing th at percentage of t h e i r wage l os s 5rhich th e formula inten ds t ocoinpensate. If any worker e arni ng more t han t h e average wage i n coveredemployment i n t h e St at e i s t o be co..ipzr.sated f o r 50 per cen t of h i s wageloss , t h e maximum must be s e t a t a l e v e l higher tha n one-half of suchaverage wage. A benefit amount of 50 percent f or th e great majority ofcovered workers would be attained i f the maximum weekly benefit i s s e ta t an amount equa l t o two-t hir ds of t h e average weelrly wage i n employmentcovered by the State law. Such average weekly wage should be computed bydiv idi ng a l l wages p aid f o r such covered employment (inc ludi ng amounts n otsubject t o contribu tions under th e S tat e law) dwi ng the most recent 12-month period for vhich data a re ava i lab le by a f igure representing 52 timesthe average of monthly employment reported by employers for the same period.


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I n St at es with dependents' allowances, th e allowance should be i n addi-t i o n t o t he computed maximum weekly benef i t amount.Flexible maximum benefit .--During th e peri od th a t unemployment insuran celaws have been opera tin g, wages have inc re ased markedly and it has beennecessa ry t o in cre ase th e maximum weekly be ne fi t from time t o time merelyt o maintain th e re la ti on sh ip between t he maximum ben ef it and t h e wagele v e ls i n th e S ta te , a s measured by th e average weekly wages of coveredworkers. Because of t h i s , th e Bureau recommends t h a t th e S ta te law ex-pre ss t he maximum weekly be ne fi t, not a s a st at ed d ol la r amount, bu t a sa fr a ct io n of t h e S ta te average weekly wage i n cavered employment, t o berecomputed on a s pec ifi ed date a t le a s t once each yea r. Under t h i s typeof provision , th e maximum i s automatical ly adjust ed t o re fl e ct changesi n wage l ev el s and i s , therefore, always current without the necessityof repeatedly seeking remedial leg is la ti on .Rounding of weekly benef'it amounts.--Instead of paying b en ef it s i n t h eamounts ac tu a l ly computed, such a s $17.53 o r $25.42, most formulas roundfra cti ona l do ll ar amounts t o whole do lla r amounts, ei th er t o t he ,nexthigher or t o th e ne are st do ll ar . Such rounding reduces th e number ofdi ff er en t amounts fo r which checks must be writ ten , and si mp li fi es th emechanical process ing of be ne fi t checks and accounting co nt ro ls . Theamounts paid s t i l l represent an approximation of the percentage of wageloss compensated. A formula with rounded amounts can be expressed i nta bl e s of weekly b en ef it amounts by wage bra cket s, a s i s done i n th eben efit tab les i n the appendix. Such tab les simplify administrativedeterminations on claims and make it eas ier f o r claimants t o understandth ei r r ight s and t o check th ei r benef i t determinations .Veekly be ne fi t amoun-ts ar e ge nera lly rounded t o one-dollar in te rv al s.In te rv al s of l e s s than one dol la r do not permit t h e maximum adminis tra-t i v e advantages of rounding. In te rv al s of more than two do ll ar s a re notdesi rabl e since they accentuate wide di ffer ence s i n weekly be ne fi ts pay-able to workers with only sl ig ht differen ces i n th ei r earnings. Ordi-na ri ly , rounding th e computed weekly be ne fi t amount t o th e next hig he rdo lla r instead of th e next lower or the nea rest do ll ar i s desirable be-cause then no claimant has his computed benefit amount reduced by therounding.Pavnents f o r Weeks of Less than T otal UnemnlovmentThe pa rt ia l ben efi t provisions a re intended not only t o provide a measureof income maintenance f o r cla imants who a re employed a t l e s s t ha n f u l ltime through no fault of their own, but als o t o give them an incen tivet o take le ss than full- t ime work. The Bureau's previous recommendationsand the various S ta te p rovisions fo r pa r t i a l benef i t s f a i l t o p rovide anadequate incentive for seeking and retaining part-time work.


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Ch ara cte ris tic s of e xi st in g formulas.--The fa il ur e of th e exis tin g formulasi s due primarily t o the f ac t th at each do ll ar of earnings in excess ofthe partial earnings allowance (the amount of earnings disregarded incomputing the p ar t ia l be ne fi t) i s deducted from the claimant's weekly bene-f i t amount. This dollar-for-dollar reduction re su lt s i n two sit uat ion st h a t reduce the i ncent ive t o seek any su bs ta nt ia l amount of pa rt-time work.F i r s t , as soon a s the claimant ear ns the amount of th e earnings allowance,h is t o t a l income ( pa rt i al be ne fi t plus earnings i n part-time work) remainsunchanged, despi te add iti ona l part-time earnings, u n t i l he ceases t o beunemployed and i s no longer eligible for any benef i t . Second, when heceas es t o be unemployed because h i s par t-tim e earnings have reached h i sweekly be ne fi t amount, h i s to t a l income drops sharply.These two feature s of t he present par ti al benef it formulas are i l lu st ra -t ed i n the following examples (tak en from ta bl e 2, pages A-4 t o A-6) i nwhich the claimant's weekly benefit amount i s $40. I n i l l us tr a t io n ~ ( a ) ,th e claimant's t o t a l income increases with each doll ar of earnings u n t i lhe earns $10 (t he amount of t he e arnings allowance); th er ea ft er h i s incomeremains fixed a t $50, u n t i l he earns $40 i n part-time work, a t which pointhe cea ses t o be unemployed. A t th is poin t , an addi t ional dol lar of earn-ings resu l t s i n a l os s of $10 i n income.When the earnings allowance i s se t a t one-half of t he weekly ben efi tamount, a s i n i l l u s t r a t i o n ~ ( b ) , he c la imant' s to t a l income r is es t o$60 ($40 plus $20) and then remains fix ed a t $60 un t i l he ceases t o beunemployed because his earnings equal his weekly benefit amount. A t t h i spoint, one additi onal do ll ar of earnings r es u lt s i n th e lo ss of $20 inincome. Thus, under th i s type of formula, th e more li be r al th e earningsallowance, th e gr ea te r th e drop i n income when the claimant ceases t o bee l i g ib l e f o r a p a r t i a l b e ne f i t .A th i r d type of formula (shown i n i l lu s t r a t i on ~ ( c )n t a b l e 2, page A-5)provides be ne fi ts only i n amounts of one-half of th e weekly be ne fi t ( i fpart -tim e earnings exceed one-half weekly be ne fi t amount) or th e f u l lweekly be ne fi t ( i f part-time earnings ar e le s s than one-half weekly bene-f i t amount). This formula re su lts i n a sharp decline i n to t a l income a ttwo poi nts : when t h e part- time earnings reach one-half th e weekly bene-f i t amount and again when the y reach the full weekly be ne fi t amount, a twhich point the claimant i s no longer unemployed.The sharp d ec line i n income when th e claimant ceases t o be unemployeddoes not occur i n a l l of t he ex ist ing formulas. For example, i n il l us -tr at io ns 11(a) and 11(b), ta bl e 2 (page A-6), t he dec line i n income hasbeen e limi nated by providing, i n the de fi ni ti on of unemployment, t h a t anindividual i s unemployed as long a s hi s earnings i n part-time work areless than h i s weelrly be ne fi t amount plus th e amount of t he p a r t i a l earn-ings allowance. However, as i n most of t he othe r formulas, because eachadditional dollar of earnings i s deducted from the weekly benefit amount,h i s income remains unchanged from the time h i s e arn ing s equa l th e amountof h i s earnings allowance u n t i l he ceas es t o be unemployed.


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For a de tai led an aly sis of th e various types of formulas f or computingp a r ti a l bene fit s, see pages A-3 t o A-13.-A new type of pa r ti a l be ne fit formula.--A more ef fe ct iv e incentive f o rclaimants t o accept part-time work i s provided when the amount of earningst o be disregarded i n computing th e p ar t i a l be nef i t i s s t a t ed a s a f r ac t i onof earnings or, p referably, a fra ct io n of earnings i n excess of a smalli n i t i a l earnings allowance. For i ns tan ce , a s shown i n Example I , below,i f one-third of earnings i s disregarded, as the worker 's earnings ris e,the be nef i ts decrease gradually, u n ti l th e earnings ar e approximately1-1/2 times th e worker's weekly be ne fi t amount (or , assuming t h a t th eweekly benefit amount represents half of the claimant's normal weeklywages, thre e-q uar ter s of h i s weekly wages).

EXAMPLE IPart- time earnings 0 $9 $18 $27 $36 $45 $54 $60

Total income $40 $43 $46 $49 $52 $55 $58 $60A va ri at io n of th e foregoing formula conzbines th e advantages of th e f l a tearnings allowance with those of a fraction of earnings. For example,a s shown i n the fol lowing i l lu st ra t i on , i f t h e p a r t i a l b e n e f it i s com-puted by disregarding th e f i r s t $5 of p5r-t-time earnings plus one-fourthof earnings i n excess of $ 5 , t he partial benefi t decreases gradually ast o t a l income ris es , up t o the point a t which the claimant i s no longerunemployed--in t h i s ins tan ce, approximately 1-112 times h i s weekly be ne fi tamount.

Part-time earnings 0 $9 $18 $27 $36 $45 $54 $60Weekly benefit payment $40 37 31 24 17 10 4 0Total income $ 4 0 $ 4 6 $49 $51 $53 $55 $58 $60This type of formula has an administrative advantage over the formulai n .Example I because it disregards negligible amomts of wages. By dis-? . '@gdhghe f i r s t few dollars of wages, i t als o provides a gr eater i ni -t i a l incent ive fo r the claimant t o s t a r t looking fo r part- time work. Forins tan ce, i n Example I , $6 of th e f i r s t $9 of earnings i s deducted fromthe weekly benef it amount, whereas i n Example I1 only $3 of the f i r s t $9


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i s deducted. Correspondingly, of th e f i r s t $18 earned i n part - t ime work,th e fom ula i n Example I would dedu ct $12, and, i n Example 11, only $9would be deducted. The de duc tion s i n Example I1 increase gradua l ly aspar t- t ime earnings increase , so th a t a t the higher amounts, th e pa r t i a lbenefit rrould be the same under both formulas. (See table 2A , P a r t s Iand 11, pages A-10 and A-11 . )To assure t h a t t o t a l income w i l l i nc rea se g radua l ly and t h a t a t no po in tw i l l addi t iona l earnings resul t i n a subs t an t i a l l os s i n income, t h eformula must r e l a t e the i n i t i a l ea rnings a llowance and the f ra c t io n ofearnings t o be di s regarded t o t he point a t which t he worker ceases t obe unemployed. A simple equat ion for achieving the necessary balancebetween these two factors i s described i n th e appendix (pages A-9 andA-12). B y means of th i s equat ion, St ate s considering t h i s new type ofp a r t i a l b e n ef i t f orniula can experiment with di ff er en t in i t i a l earningsallowances, di f fe r en t . f r ac t i ons of ea rn ings t o be disregarded over andabove the i n i t i a l earnings al lowance , and di f f e r en t l ev e l s of income a tvhich th e claimant would cease t o be con sidered unemployed--the so- cal led" p a r t i a l e ar n in g s l i m i t , 'The pa r t ia l ea rnings l i m i t i n th e de fi n it io n of week of unemploymentshould be es tabl i s hed a t sub s ta nt i a l ly more than th e c la imant ' s weeklyb e n ef i t amount b ut , a t t h e same tim e, ~ ~ f i c i e n t l yelow h i s usua l fu l l -t ime earnings tha t it w i l l provide an incen t ive t o seek ful l - t ime work.I n s e l e c ti n g t h e p a r t i a l e ar ni ng s l i m i t , pa r t i cu l a r a t t en t i on must begiven t o th e extent t o vhich th e weekJy ben ef i t amount f o r t o t a l unem-ployment rep res en ts more tha n one-half of th e claim ant 's f ul l- t im e weeklywages--either because of th e fr ac ti on of wages t h a t has been used i n com-put ing th e ben ef i t amount or because of t he a dd i t io n of dependents ' a l low-ance s ( se e discu ssi on below and on page 32) .In con s t ruc t ing a formula f or computing par t i a l be nef i t s , cons idera tionshould al so be given t o t h e wage and employment pat tern s i n th e i nd us tr iesand occupations i n which workers who a r e normally employed i n f ul l- ti mework may, hen unemployed, seek p ar t- ti n e employment, and t h e po ss ib leef fe ct of t h e formulas under considerat ion on th e inc ent iv e of such workerst o seek part - t ime work. The State w i l l wish a l so t o weigh th e adminis t ra -tive cons idera t ions of th e var ious a l t e r na t iv e formulas .P a r ti a l be ne fi ts and dependents' allowances.--; .&ether o r not dependents'a l lowances are included i n t h e bene f i t formula, a week of unemploymentshould be defined as a week i n which the c l a i &n t l s earnings aEe le s sthan a s ta te d mult iple of h i s bas ic weekly be ne fi t amount. (se e page 32.)Then a l l c la imants wi th th e same wage and employment h i s t o r y will havethe same par t ia l ea rnings l i m i t , rega rdles s of t he number of t h e i r de-pendents . However, t o th e extent t h a t the dependents' a l lowance re su l t sin a weelcly benefi t amount that approaches too closely the claimant 's full-time weekly pay, a prov isi on f o r depend ents' allowances may impede the


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adoption of an e f fe ct i ve formula f o r determining p a r t ia l ben ef i t s . Itmay be necessary i n t h i s s i t uat ion t o make a choice between (1)l i m i t i n gt h e amount of t h e dependents' allowance when th e part-time earn ings g ett o o c l os e t o t h e p a r t i a l e ar ni ng s l i m i t o r ( 2 ) s e t t i n g a lower par t i a learnings l i m i t fo r a l l claimants. ' From th e standpoint of e quity and anef fe ct iv e ben ef it formula, th e former choice trould seem more app rop ria te.

The Bureau recommends:That t h e minimum weelr3y ben ef it be re la te d t o th e weekly wagesof the lowes t wage group i n the S ta te fo r ~ M c hh e unemploymentinsurance program i s considered appropriate .That the maximum weekly be ne fi t be s e t a t a l e v e l a t ~ r hi c h h egr ea t ma jo ri ty of workers would be compensated fo r 50 percentof t h e i r wages; a maximum equal t o 2 / 3 of t h e average weelrlywage i n covered employment i n t he St at e would ach ieve t h i sobject ive .That t h e maximum weeYJy be n e f i t be def ine d by s t a t u t e as 213of t h e averag e weekly wage i n covered employment i n th e St at e,so t h a t it w i l l change auto mati cally with changes i n th e averageweekly wage increases, i .e ., a " f l ex i b le maximum. "That st at ut or y provision be made f o r rounding t o t he nexthigher do l l ar weekly ben ef i t s fo r to t a l and pa r t i a l unemploy-ment which a r e not whole d o l l a r amounts.That "week of unemployment" be def ine d i n terms of l e s s tha nfull- t ime work with earnings le s s than a s ta ted mul t ip le of th eclaimant's weekly benefit amount.That th e earnings a llowance i n the p ar t i a l b ene f i t formulaprovide an e f fe ct i ve incent ive t o work by al lowing t o t a l incomet o increase g radua l ly as t he c la imant ' s par t -t ime earn ings in -crease up t o and inc luding th e po in t a t which he ceases t o beunemployed.


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N . HIGH-QUARTER-WAGE FORMULA Ear ly unemployment insurance laws i n t h i s country based t he weeklybenefit amount on full-time weekly wages. Because of administrativecomplications i n obtaining and processing reports of wages and hoursweek by week, and of determining each cla iman t's fu ll -t im e wage, thehigh-quarter formula was developed on th e theory th a t a fra ct io n ofwages i n th e high qu art er approximates a fu ll -t im e weekly wage. Mostof t he Sta tes continue t o use the high-quarter be nefi t formulas. Manyfeatures of the se formulas have became " set" and i n dive rse p att ern s.In some States, th er e a re proposals for supplanting high-quarter formu-la s with others. However, many of t he cr i ti c is ms made of th e high-quarter formulas are not cr i t icism s of the formula i t s e lf ; they aremore concerned with such items as inadequate qualifying requirementsor long la g between base perio d and ben ef it ye ar, which can be changedwithout changing the type of fortnula.The calendar qu art er was se lec ted a s th e base fo r determining weeklybenefi ts large ly because it could tak e advantage of the qua rte rly pat-te rn of wage reporting previously estab lish ed fo r tax purposes f o r boththe unemployment insurance and the Federal old-age and survivors insur-ance programs. The unemployment be ne fi t i s based on th a t q ua rte r of t hebase period i n which wages were high est, which i s ge ne ral ly assumed t orepresent a quarter of f u l l or near ly f u l l employment f o r most insuredworkers.The calenda r qua rt er of highest ea rnin gs, however, does not alwaysreflect a worker's full-time weekly wage. Many workers experience sameunemployment i n th e quart er, e it h e r because of gene ral econamic conditiculor conditions in given industries and geographical areas; others losewages because of personal interruptions of work by i l l ne ss or familyre sp on si bi li tie s. This fa ct of unemployment within the high qua rtermust be given cons ideration i n determining what fra ct io n of hig h-quarterwages should constitute the benefit payment. The weekly benefit amountshould not be determined on the assumption that a l l claimants have hadf u l l employment during th e i r high qu arter ; i.e., th e average weekly wageshould not necessarily be assumed t o be 1/13 of high-quarter wages.I t should be c le ar th a t th e high-quarter formula does not attempt t obase benefits on the individual claimant's average weekly wage in weeksworked within the high quarter. It seeks t o approximate a b en ef it basedon ful l- tim e weekly wages by basing each cla ima nt' s bene fit s on th e be stquar ter 's experience i n hi s base period.Relation of High-Quarter Provision s t oOther Elements in the Benefit FormulaWith the high-quarter-wage be ne fit formula, e it h e r indi vidu al or uniformbase periods and be ne fit years (s ee page 2) can be used. Vir tua lly a l lhigh-qu arter St at es now use the ind ividu al base period and ben ef it year.


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Although the high-q uar ter formula %a3 or i g i na l ly dev ised t o u t i l i zequ art erl y wage reports, it can also be used with a system i n which wageinformation i s reque sted from employers only as needed f o r ben ef it de-terminations (se e page 6). A few hig h-q ua rte r S ta te s now obt ai n wagereports on a request basis t o reduce the lag between the base periodand benefit year.High-quarter formulas may use any type of qua lif yi ng wage requirement--a sp ec if ie d number of weeks of employment i n th e base period , a f l a tdollar amount, a multiple of the weekly ben efit, a multiple of high-qu art er wages, or a combination of the se requirements--as a pr er eq ui si tefo r ben efi ts (see page 44). The formulas t h a t requ ire wages i n morethan one calendar qu arte r ar e prefe rabl e t o f l a t amount qualifying wagerequirements.The duration of b en efi ts may be uniform f or a l l el ig ib le claimants ormaximum po te nt ia l ben ef its i n a be ne fit year may be li mite d t o a propor-t ion of the claimantts base -period wages ( see page 36).Construction of High-Quarter FormulasWeekly benefits under these formulas ordinarily are computed directlyfrom high -qu art er wages, without computing th e weekly wage i n th e highqua rter . The f i r s t high-q uarter formulas computed weekly be ne fi ts as1/26 of high-quarter wages on the assumption that the high-quarter wagesrepr es en t 13 weeks of employment and the weekly ben ef it amount should beha l f of weekly wages. Obviously many cla imants do no t have 13 weeks ofemployment in t h e i r high q uart er. Hence many S ta te s have used f ra ct io nsmore l i b e r a l than 1/26 o r have developed weighted schedules. A high-qua rter formula does not purport t o give a l l claimants the same propor-ti o n of t h e i r average weekly wage i n weeks worked. It can be devised t oprovide at le a s t a minimum percentage of weekly wages fo r a l l cla imantshaving a t l e a s t some sp ec if ic number of weeks of employment. A s showni n the following tab ulat ion , a 1/20 formula w i l l give 50 percent or moreof weekly wages t o a l l c laimants who had 10 or more weeks of employmentin th e i r h igh quar te r . A 1/26 fraction w i l l give 50 percent of weeklywages only t o cla imants who had fill 13 weeks of employment i n th e i r be stquar ter and only 38 per cen t of weekly wages t o a claimant who had only10 weeks of work.Claimant ' s weeks Weekly benefit amount expressed as a percentof employment in of c laiman t's weekly wage i n high qu art er, i nhigh quarter formula with high-quarter fraction of:1/m 1/23 1/24 1/26


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The weighted high-quarter formula, which i s used by a number of States,i s based on the rationale that claimants with low earnings i n t h ei rhigh quarter need a more generous ben efi t i n rel at io n t o th ei r earnings.The larger fraction for low income workers recognizes that a l a rgerproportion of earnings i s needed a t these lev els , whether th e low l eve lwas due t o underemployment o r t o low wage ra te s . When th e low ea rn ingsare due to l ow wage rat es , a la rg er proportion i s needed for nondefer-rable expenses. When th e low earnings a re due t o underemployment, ahigher fr act ion of th e high-quarter earnings i s needed t o ar r ive a t thedesired fraction of weekly wages.The weighted schedules a re so designed th a t the high- quarter fr ac ti ondecreases gradually as th e qua rte rly wages increa se from a li b e r a lfr ac tio n, us ual ly 1/20 o r more a t th e lowest wage bracket, dropped t o1/24 o r 1/26 a t t he hig hest wage bracket.In proposals extending a weighted ben ef it schedule t o provide a highermaximum weekly benefit amount, there sometimes i s a tendency towardprogres sively smaller fra cti ons i n th e high wage brackets. The high-quarter f ra ct io n should be maintained a t not l es s than 1/26 a t a l lwage brackets. A smaller fra ctio n, such as 1/28, i s undesirable be-cause i t can yie ld a weekly be nef it equal t o 50 percent of normalweekly wages only for those few workers whose reported high-quarterwages include pay checks f o r 14 weeks of work or unusua lly high earn-ings because of sub st an ti al amounts of overtime pay. It cannot beassumed th a t t he high-q uarter earnings of. claimants a t th e higher bene-fit l eve l s a re in f l a t ed . Reducing the high-quarter fraction for a l lworkers i n the higher wage brac kets i s not just i f ied by the fa ct tha tworkers i n some in du st ri es o r occupations rece ive e xt ra pay from timet o time.Some Recommended SchedulesHigh-quarter formulas ill u st r at in g the princ iples accepted by theBureau a re shown i n Tables 3 and 4 of the Appendix.Formula A gives all claimants with weekly benefit amounts between theminimum and maximum the same proportion of t h e i r high-quarter wages(1/20). Formula B i l lu s tr a te s the weighted schedule, with t he weeklybenefit varying from approximately 1/18 of high-quarter wwes f o r thelower be ne fi t amounts t o 1/24 f o r the maximum benefi t .For purposes of i ll u st r at io n , th e maximum be ne fi t i n thes e scheduleshas been se t a t two-thirds of the U. S. average weekly wage i n coveredemployment during 1961 ($95.53). The same relationship should be main-tained i n adjust ing the maximum be ne fi t t o the average weekly wage ofthe St at e f o r which the formula i s being adapted, The minimum benef i tof $10, which has been used i n each of the schedules, i s %he minimumamount c ur re nt ly provided i n most of the States . I t , too, should beadju sted upward o r downward i n r e la ti o n t o t he weekly earn ings andemployment patterns of tk lowest wage earners the program intends toprotect .

I


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The Bureau recommends, as a guide i n considering le gi sl at iv e proposalson the high-quarter-wage formula:That evaluation of State experience under the formula be basedon a study of the enti re bene fit formula, i .e. , the inte rre la-tio nsh ip between the f ra ct io n of high-quarter wages used i ncomputing th e weekly be ne fi t, qualif'ying requirements a t allleve ls, duratio n of ben efits , length of th e lag between th ebase period and be nef it year, and th e effective ness of th evarious elements i n meeting th e ob jectives of th e St ateprogram.

2. That, instead of su bst itu tin g another type of be nef it formulabecause of th e in eff ect ive ness of one or more of i t s elements,t he necessa ry changes be made i n such elements.3. That, i n recommending amendments, a t ten t ion be given t o assu rethat the changes w i l l re su lt i n a fornaiLa th at i s in te rna l ly

consistent.4. That, i n extending weighted formulas t o provide higher maximumweekly benefit amounts, th e fr ac ti on used i n computing th e bene-f i t amounts be maintained a t not l e s s than 1/26.5 . That changes i n the ben efi t f o r m l a be governed by t h e i r effec-tiv en ess i n advancing th e obj ecti ves of t h e program.


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V. AVERAGE-WEEKLY-WAGE FORMULA An average-weekly-wage formula, which i s i n use i n a small but increas-ing number of States, bases weekly benefits on actual average weeklywages i n th e weeks worked during t h e base period or some pa rt of i t .This formula does not attempt t o base be ne fi ts on fu ll- tim e weekly wages.I t does, as a general rule , eli mi na te weeks of inco nseque ntia l work andearnings so that the average weekly wage may more nearly approach theclaimant's normal weekly wage. Whether these formulas yield an adequateben efi t in r el at io n t o the regular weekly earnings of a l l groups ofclaimants depends on th e basi c elements of t h e formula--the de fi ni tio nof week of employment, the method of computing average weekly wage, andth e pe rcenta ge of th e average weekly wage used t o compute th e weeklybenefi t . The var iou s ways i n which St a te s usin g th e average-weekly-wageformula have defined thes e elements and the ef fe ct of the se defin itio nson the weekly be ne fit a r e discusse6 n th e following sec tion s,Relation of the Average-Weekly-Wage Provisionst o Other Elements i n th e B enefit FormulaThe average-weekly-wage formula uses an individual base period and bene-fit year (s ee page 2). The base period i s gen era lly th e 52-week periodending not more than a week o r two pr io r t o th e beginning of t he b en ef ityear. However, a 4-qua rte r base per iod can be used,and i n t h i s ins tan cea full year, r ath er than 52 weeks, should be used a benefi t year(for a dis cus sion of th e ef fe c t of a 52-week ben ef it yea r, see page 3).The duratio n of be ne fit s may be uniform fo r a l l el ig ib le claimants o rmay va ry i n pro porti on t o th e number of weeks of employment in the baseperiod (s ee pages 36 and 37 ). In St at es using the "per-employer" systemof benefit determination, the duration of benefits varies with the numberof weeks of employment with-ach employer (s ee page23).A l l th es e formulas t ake i n t o account employment and wages with a l l base-period employers i n determining whether claim ants meet the qua lif yin grequirement. This requirement i s us ua lly expressed in terms of weeks ofemployment excluding th ose weeks i n which wages f a l l below a sp ec if iedlevel (see page 45).Constru ction of the Average-Weekly-Wage FormulaThe method of d er iv ing t he average weekly wage va ri es . A s i l l u s t r a t edi n t he foliating discus sion of t he s eve ral patte rn s f o r computing theaverage weekly wage which have been used by the States, the extent towhich weeks of l o w earnings ar e included i n the computation i s animportant factor.Average weekly wage i n th e base period .--T his method of camputationproduces an average weekly wage t h a t i s representat ive of the individ-u a l ' s earnings hi st or y over the e n ti re 52-week base period, excluding


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weeks i n which he earned l e s s than th e sp ec if ie d minimum amount. Inperiods of dec lining business a c ti vi ty , averaging wages over th e mostrecent 1-year period can lead t o depressed ben efi t amounts, re fl ec t i ngconsiderable underemployment. I f the claimant had many weeks of lowearnings, h is average would be considerably le s s than h i s normal weeklywage. For example, a cla imant who had 20 weeks of work a t a fu ll- tim eweekly wage of $80, plus only 2 more weeks of work, bu t a t half -t im epay, would have an average weekly wage of $76.36; but an ind ividu al withth e same number of weeks a t th e same fu ll -t im e wages, who was kept on a thalf pay during the remainder of his 52-week base period, would have anaverage weekly wage of only $55.38.One de fi ni ti on of average weekly wage e lim ina tes a s "c re di t weeks,"th at i s , weeks t o be used i n the computation, tho se weeks i n whichearnings a r e below the sp ec if ie d minimum amount, but inc lud es t h e dol -la r amount of earnings i n such weeks i n th e computation. The averageweekly wage i s obtained by div idin g t o t a l base-period wages by th e num-ber of c re d it weeks. This de fi ni ti on o f average weekly wage can givea r e su l t t ha t i s unrea l i s t i c and it i s not recommended. The wages i nthose weeks of l ow earnings that are excluded from the count of weeksshould al so be excluded from th e do ll ar t o t a l of earnings. The follaw-ing example i l lu s tr a te s the undesirable re s ul t th at could come fromt h i s def in it io n: Where "c re di t week" i s defined a s a week of employmentwi th earnings of a t le as t $20, an individual qualifying on the basis of20 c re d it weeks and earnings of $50 a week may a l s o have 32 weeks of $15a week; h i s average weekly wage would be computed by div id in g h i s t o t a lannual earnings ($1,480) by hi s cr ed it weeks (20) and would have an aver-age weekly wage of $74 altho ugh he never earned more than $50 i n any weekof employment.Average weekly wage wi th the l a s t employer.--Another method computes th eclaimant's average weekly wage with the l a s t employer who employed himfo r a t l e a s t the-number bf weeks required t o for benef i t s. Int h i s type of formula, a claimant who has l e s s than the sp ec if ied amountof employment wit h h i s most r ec en t employer has h i s weekly ben e fi tdetermined on th e ba si s of a l l h i s bas e-period employment and wages.Computing the average weePly wage with the last employer i s advantageoust o t he claimant during periods of r is in g wages and l o w unemployment.However, it tend s t o be d isadvantageous when unemployment i s high i n thel a t t e r pa rt of th e base period and workers ar e forced t o accept work a tlower weekly wages. Another disadvan tage i s th a t a claimant who workedconcurrently fo r two employers during hi s base period f or a t le as t th esp ec if ie d number of weeks and i s then laid off by both employers i sallowed a benefit based only on the wages with the employer who laidhim off l a s t . The ben efi t in such cases does not re fl ec t his normalweekly earn ings . This de fe ct makes th i s method of computing th e averagewage di s t i n c t l y disadvantageous during a period when many workers workconcurrently for two or more employers.


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Average weekly wage i n weeks worked i n high quar te r. --Th is method ofcomputing the average weekly wage use s only th e weeks worked i n t h a tqua rter of th e base period i n which th e claimant received th e mostwages. Since high-quarter earnings gener ally represent the in div idu al' shighest weekly earn ing s and f u l l e s t employment, a weekly ben efi t computedas one-half o r more of such an average weekly wage w i l l usual ly yield amore l ib er al ben efi t than t ha t provided i n most of th e other formulas.By using th e q uart er of hig hest earnings, th e method eliminates t he needt o exclude weeks of inco nsequentia l earnings because the number of suchweeks i n an individual 's quarter of highest earnings i s l i k e l y t o besmall. However, f o r purposes of the quali fyi ng requirement--as we ll a sfor duration of benefits unless uniform duration i s provided--some typeof earnings li mi ta ti on should be included i n th e def in it io n of "week ofemployment."Average weekly wage with each employer: "per-employer determination."--Under a system of per-employer de te rminat ions ,an average weekly wage i scomputed f o r each base-period employer, and both a be nefi t amount and aduration are computed on the ba si s of earning s and weeks of employmentwith each employer. These determinations a r e made successively, begin-ning with the l a s t employer. The claimant f i r s t draws a l l the benefit st o which he i s entit led on the basis of his record with the last base-period employer. For subsequent weeks of unemployment, the weekly bene-f i t amount and t he du rat ion of payments a t t h a t amount a r e computed onthe basis of his earnings and weeks of employment with the next precedingemployer. Weekly ben efi ts f o r some claiman ts w i l l vary several timeswithin a s in gl e s p e l l of unemployment. The benefit formula and the exper-ience-rating formula ar e inte rre lat ed so th at t he l im it of what may becharged t o an employer's experience-rating account a ls o se ts the l i m i t ofwhat may be paid t o t he worker. Thus, the b ene fit formula as well a s thee l ig ib i l i t y and d isqua l i f ica t io n provisions i s made dependent on theexperience-rating formula. ( or discussion of the relat ionship t o theel ig ib il i t y and disq uali fica tion provisions, see page 67.)The system of per-employer determination of weekly benefits and of dura-tion of benefits does not seem appropriate i n a pooled-fund system ofunemployment insu rance i n which a l l money i n t he unemployment Fund i s"commingled and undivided" and be ne fi ts a r e paid t o any e l i g ib l e claimantas long as there i s money in th e St at e fund, regardle ss of t he balance i nthe ex peri ence -rat ing account of th e employer t o be charged.Obviously a system of per-employer d eterminations ra i se s no sp eci a l prob-lems f o r th e c l a h a n t s who had only one employer and does not di f f e r , f o rthese claimants, from other average-weekly-wage formulas. However, manyclaimants have two or more employers and, fo r thes e, th e following disad -vantages are cited:

Benefit rights f o r each claimant who had employment wi th more thanone base-period employer must be separately computed for each base-period employer u n t i l the claimant has drawn the maximum poten t ia lbe ne fi ts . Some claimants w i l l have two or more different weeklybe ne fi t amounts during a s in gl e s p e l l of unemployment,


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The weekly benefit i s not based on the concept of canpensating theclaimant f o r a portion of cu rrent wage lo ss sinc e the bene fit canvary even within a single spell of unemployment for causes unrelatedt o wage los s. That a clai mm t should rece ive $30 f o r one week ofunemployment and $40 f o r th e immediately follow ing week makes c l e a rth e f a c t th at the concept underlying th e formula i s governed byconside rations ot her than be ne fit payment. The be ne fi t formuladoes, however, f i t th e experie nce-ratin g formula prec isel y. Sincethe fundamental purpose of the program i s payment of benefits, thebenefit formula should be based on benefit considerations and noton convenience fo r experience rat in g.The close relationships maintained between a claimant and severaldif fer ent employers has le d t o the d enia l of ben efits fo r causesun re lat ed t o th e cu rre nt unemployment. For each employer i n th ebase period the claimant i s t r e a t e d a s i f his current unemploymentwere att ri bu ta bl e t o tha t employer. This ignores th e princ iplethat unemployment due t o la ck of work i s t o be compensated andlooks t o other concepts, such as the ju sti ce or in ju st ic e of charg-ing a pa rt ic ul ar employer, as the bas is for allowing or denyingbenef i ts .

Proportion of Wages CompensatedGen eral ly the average-weekly-wage S ta t es use weighted schedules whichprovide benef its ranging f r m approximately two-thirds of t he averageweekly wage a t the minimum be ne fi t amount t o approx imately one-half a tthe maximum amount. Where th e weekly benef i t i s one-half of th e averagewage a t a l l ben efit leve ls, other fact ors i n the formula have tended t oinc rea se th e weekly payments--by provid ing an allowance for dependentsor by computing the average weekly wage on earnings i n weeks worked i nthe high quarter.A weighted schedule, allowing a ben efi t equal t o two-thirds of the aver-age wage a t t h e lowest b rack et and decreas ing gra du all y t o somewhat morethan one-half a t the maximum amount, appears, i n general, t o be the mostappropr iate fo r the average-weekly-wage f o m l a . It recognizes that,even though some weeks of i nconseq uent ial earnings a r e excluded, averageweekly wages may r e f l e c t underemployment and t he formula should compen-s a t e f o r t h i s f a c t.Suggested Average-Weekly-Wage FormulaFormula C, which provides a weighted schedule of be ne fi ts based on th ecl aim an t's average weekly wage i n th e base period ('Table 5, page A-17)i l l u s t r a t e s the pr in ci pl es accepted by the Bureau. The average weeklywage i s computed by di vi di ng t he number of weeks i n which th e claimantearned a t l e a s t $15 ( th e amount req uired f o r th e minimug weekly be ne fi t)i n t o th e t o t a l amount earned in such weeks. The weekly ben efi t v ar ie s


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from approximately two-thirds of the average weekly wages required for the luwest weekly benefit amounts to somewhat more than one-half at the upper end of the schedule.

The Bureau recommends as a guide in considering legislation for an average-weekly-wage formula:

That, as a basis for computing the average weekly wage, a claimant's experience over an entire year be used, either by using the entire year's employment experience or by selecting fram the year the quarter in which wages were highest. That the formula compensate claimants in an amount equal to two-thirds of the average weekly wage at the lowest wage bracket, decreasing gradually to somewhat more than one-half at the ms~rimumweekly benefit amount, That one determination be made for each claimant based on his relevant experience with wages or weeks of employment with &employers rather than separate determinations based on his experience with each employer. That the benefit formula be designed for benefit payment purposes rather than be made dependent on the experience-rating fomuh.


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VI. ANNUAL-WAGE FORMULA

An annual-wage formula which bases weekly benefits on aggregate annualearn ings i s used i n a f ew Sta te s . A system which determines weekly bene-f i t s so le ly from annual wages without information on t h e number of weeksworked i n th e year yie lds ben efi ts which bear only a chance re la t ion toa c tu a l wages i n weeks worked.Since an annual-wage formula i s not recommended, t h e di sc us sion he re i si n terms of t h e few e xi st in g annual-wage laws.Problems i n th e Rel ation of WeeklyBe ne fi ts t o Weeklv WagesThe f i r s t annual-wage formula which was proposed allowed 1percent ofannual earnings as t h e weekly be ne fi t amount. Such a formula wouldyi el d benefi ts equal t o 50 percent of ful l- t ime wages only for workerswho had 50 weeks of fu ll -t im e work' i n t h e yeas. Obviously, many workers,es pe ci al ly th os e wit h low annua l earni ngs , do not have 50 weeks of worki n a yeax.The pr es en t annual-wage formulas a r e based on t h e assumption t ha t , i ngeneral, workers with low annual earnings have fewer weeks of work thantho se with higher annual wages; they, the ref ore , allow a more l ibera lpercentage i n computing bene fi ts a t th e lo,wer wage brackets. On t h eaverage, cla im ant s who ba re ly qu al if i f o r t h e minimum weekly amount re -ce ive a weekly benef i t equal t o a l i t t l e more than 2 percen t o f the i rannual wages, as compared with s l i g h t l y more th an 1percent fo r thosewho have ju st enough wages t o q ua li fy f o r t he maximum weekly benefit.(see Table 6, page A-19.)No amount of annua l wages, however, can re pr es en t even approximately t h esame number of weeks of work f o r a11 workers. For example, a worker whoearned $500 -in h i s base pe rio d q ua li fi es f o r a $10 weekly be ne fi t a t 2per ce nt of ann ual wages. He would b e compensated a t 50 percent of hisweekly wages on ly i f t h e $500 rep re se nt ed 25 weeks of work. If he hadworked more than 25 weeks t o earn the $500, h i s benefit would be morethan hal f of h i s weekly wages, while i f he had earned t h e money i nfewer weeks, h i s be ne fi t would be a smaller percent of his weekly wages.Similarly, a $30 weakly be ne fi t, computed as 1per cen t of $3,000, i s50 pe rc en t o f normal weekly ear nin gs only f o r t h e worker who e arnedsuch wages i n 50 weeks. or i l lu s t ra t i on of t h e number of weeks ofwork requ ired t o rec eiv e a weekly benefit equal t o 50 per cen t of weeklywages, se e t a b l e 7, page A-19. )It i s poss ib le t o make an annual-wage formula more or less generous, asi s i l l u s t ra ted by the pe rcen tages i n Tab le 6 (page A- 19) but it i s im -poss ib le t o devise one tha t w i l l provide a reasonable r el at io n betweenweekly benefits and normal weekly wages. If t h e formula i s g

department of labor: brown book

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