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The first section of the paper reviews changes in the labor market since UI was created. Although most workers still have traditional full-time jobs, the prevalence of non-traditional work has increased. Non-traditional work includes self-employed, independent contractors and freelancers who operate outside formal employer-employee relationships. Other types of non-traditional arrangements include temp-agency workers, on-call workers, contract company workers, multiple jobholders, and part-time workers. These arrangements can be structured as W-2 employment, yet do not provide traditional, stable full-time work. While non-traditional work can provide increased flexibility, it can also heighten job and financial insecurity, and can leave workers without access to critical employment-based benefits and protections. The second section of the paper explains why workers in non-traditional jobs often lack UI coverage. Independent contractors and freelancers are excluded from UI because they do not work for a traditional employer that would make contributions on their behalf. Other non-traditional workers, such as part-time workers, can qualify for UI as a benefit of W-2 employment, but are disadvantaged relative to traditional workers in how the program is structured. The third section of the paper discusses the opportunity to use non-traditional work to help unemployed Americans return to the labor market. Most states generally require UI recipients to seek traditional full-time work in order to continue receiving benefits, even if their original jobs were part-time. Very few states offer Self-Employment Assistance (SEA) to help UI recipients become entrepreneurs. Further, there are structural incentives that discourage regional workforce offices from helping workers find and prepare for non-traditional work. The final section of the paper reviews proposals to modernize the UI program to account for the growth in non-traditional work. The proposals are grouped according to three goals: first, protecting independent contractors — who currently lack UI coverage — from job and income loss; second, providing better coverage to non-traditional workers in W-2 arrangements; and third, supporting entrepreneurship and voluntary transitions from unemployment into non-traditional work. The paper does not include proposals for improving the solvency of state UI trust funds, as it focuses on reforms to broaden eligibility for workers in non-traditional work arrangements. However, the authors strongly support improving solvency as an important goal of any UI reform effort
