This article originally appeared in Governing on November 6, 2024.
Tim Walz’ Democratic vice presidential nomination has spotlighted his progressive reforms as governor, particularly Minnesota’s expanded child tax credit and universal school lunch program. While these achievements warrant the high-profile attention they have received, they risk eclipsing another seemingly less exciting but equally critical success: Minnesota’s ability to provide strong unemployment insurance protections for workers and their families.
Since 1935, the federal government has funded states to administer their UI programs. Because states have broad discretion in determining how to raise revenue, eligibility criteria and benefit levels, there is significant variability in system performance across them.
UI has recently dominated headlines due to widespread dysfunction during the pandemic, particularly in states like California and New York that have struggled with improper payments and escalating program debt. The situation has fueled a perception that these state programs are overly generous, contributing to fraud, fiscal insolvency and delayed job recovery. However, Minnesota, along with some of its Midwestern and Northwestern neighbors, has demonstrated that it is possible to offer generous support to unemployed workers while maintaining strong program integrity.
A healthy unemployment insurance system should cover roughly half of unemployed workers — those who are in eligible occupations and were involuntarily separated — with benefits replacing about 50 percent of their previous wages. Minnesota’s program meets these benchmarks more closely than California’s or New York’s, with 59 percent of unemployed workers temporarily receiving benefits that this year, on average, have replaced 44 percent of their former wages. Yet despite its relatively high level of support, Minnesota has managed to sidestep the fiscal and administrative pitfalls that have plagued too many other states. Between July 2020 and 2023, Minnesota maintained one of the nation’s lowest rates of improper payments and fraud.