Looking at the unemployment rate alone—which sat at 3.5 percent in February 2020, had risen to 14.7 percent in April of that year, and had sunk all the way down to 2.4% as of September 2022—one might get the impression that labor markets had recovered surprisingly (or even shockingly) well after the turmoil of the COVID pandemic. So why is it that economic growth has been so slow, wages are actually falling when adjusted for inflation, and labor-force participation is depressed? There are no simple answers, but research implicates poor policy—in particular the unemployment insurance system—for disincentivizing work and slowing the pace of economic recovery. This paper offers background information on the rationale for unemployment insurance, describes its specific design elements in the United States generally and Missouri specifically, and discusses current research into the economic effects of unemployment insurance. In addition, it offers suggestions for modernizing unemployment insurance so that it functions more as it was originally intended to: as a pro-work support for working families rather than as an enabler of government dependency and economic stagnation.
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