Almost two-thirds of the country's unemployed receive no unemployment compensation benefits, largely because they have exhausted their 26-week allotment or because of cutbacks by the Reagan administration and the states.
The shrinking proportion of benefit recipients, a dramatic change over the last decade, indicates that despite a shrinking unemployment rate -- 7 percent in August -- the number of hard-core long-term unemployed remains high.
According to federal statistics and unemployment specialists, the gaps in the unemployment compensation system have grown significantly since the 1975-76 recession, when more than 65 percent of the jobless received benefits for up to 65 weeks.
A fairly steady decline in unemployment insurance coverage -- and the virtual dismantling of extended benefit programs -- have left only 34 percent of the unemployed collecting benefits.
Of the 8.1 million unemployed in August, 2.4 million were collecting benefits averaging $120.60 per week from the state unemployment systems, according to the Labor Department. More than 2.5 million jobless have exhausted benefits in the past year, according to the department, while the remainder include new entrants and re-entrants to the work force who are ineligible and others disqualified by the stricter eligibility requirements imposed by more than 40 states since 1980.
"There has been quite a huge drop" in the percentage of jobless receiving benefits, said Gary Burtless, a senior fellow at the Brookings Institution who studied the issue for the Labor Department. "The question is: why?"
He said studies point to a combination of federal cuts, state cuts aimed at salvaging debt-ridden insurance systems, and the decline of basic manufacturing industries, whose plant closings and layoffs have resulted in a new, longer-term form of joblessness.
Critics contend that the insurance cutbacks have forced increasing numbers of workers into poverty, welfare and homelessness. But others assert that the 50-year-old system had grown too costly and generous, that most jobless persons have family members working, and that tighter eligibility has weeded out those who were abusing the program and not aggressively seeking work.
The deep recessions of the late 1970s and early '80s forced 33 states to borrow more than $17 billion from the Treasury to pay claims to up to 11 million jobless persons a year. Basic unemployment benefits of up to 26 weeks are paid by states from employer taxes that average 1.3 percent of total payroll.
During those recessions, high-unemployment states were also eligible for up to 39 extra weeks of federal-state "extended" and supplemental benefits. But amid the budget cuts of 1981, the Reagan administration pushed through Congress changes which made it substantially harder for states to qualify for extended benefits. Because of those changes and the improved economy, only Alaska and Puerto Rico currently qualify for extended benefits, covering only 14,000 workers.
The 1981 changes contributed to a major spending cut, Burtless said. Measured in 1982 dollars, the government spent $31 billion in 1976 to assist 7.6 million unemployed; in the 1982 recession, although unemployment rose to 10 million, spending fell to $24 billion.
An additional cut was enacted last April when Congress, at the urging of the administration, ended federal supplemental benefits that had provided up to 14 weeks' extra benefits to an estimated 325,000 jobless.
But many of the significant changes took place on the local level, where "the states have really tightened up," said James van Erden, chief actuary of the federal unemployment insurance service. Most states now require claimants to have worked at least 20 weeks of the previous year to collect unemployment insurance, he said, whereas many previously required only 10 to 15 weeks.
Workers who voluntarily quit or are fired for cause now find it almost impossible to collect, after previously being able to qualify in many states. Employers, whose state tax rate rises with the level of unemployment insurance claims, have also become more assertive in contesting employes' claims for benefits, according to state officials.
"The bottom line is that a minority of the people who need benefits are receiving it, and we think that is bad," said AFL-CIO unemployment specialist James Ellenberger. "The system has become much more restrictive."
"Our people are losing their homes, their cars . . . and once they use up their resources, going onto welfare," said Linda Watkins, president of the Cleveland Council of Unemployed Workers.
"A lot of people have drifted off into the underground economy," said Robert Anderson, a former steelworker who exhausted his benefits and now runs a soup kitchen for Pittsburgh-area jobless. "They do odd jobs. They haul stuff. They set up little businesses that usually go bankrupt . . . . Or they move away. Their phones were cut off and we don't know what happened to a lot of people."
"I think there is a positive side to this cutting back," said Marvin Kosters, a former Nixon administration labor economist now at the American Enterprise Institute, who said he believes that reduced-term benefits and stricter rules provide a strong incentive for the unemployed to seek jobs.
"Job-creation," Kosters said, "has two sides -- a person willing to hire, and a person willing to take jobs. In terms of willingness to take jobs, it is an incentive" when benefits are curtailed.