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Nevada’s Secret to a Better Unemployment System: Invest in Workers

Evidence shows Nevada’s reemployment program is helping thousands find jobs faster and saving the state money. So why isn’t every state following suit?

Steven Fritchel had been living the construction industry yo-yo for decades — work in the warm months, then layoffs in the winter. But when he filed for unemployment benefits in January 2019, things were different. He was called into a Nevada state employment services office, for what he thought would be a standard, albeit nerve-racking eligibility review.

Instead, that visit changed his life.

After a few moments of discussion about Fritchel’s job hunt, staff there patiently helped Fritchel re-write his resume, search through computerized listings, and consider a career shift that would let him work inside for the winter. Soon, for the first time in years, he had a year-round, steady job. Eighteen months later, armed with a much-improved resume and sense of confidence from role-playing interviews, the 61-year-old landed an even better full-time position at Waste Management.

“Without them, I would have been lost,” Fritchel said. “When you are at my age, you have a hard time finding a job. And the older you get, the harder it is… They helped me a lot.”

That help was a big surprise. When he was first summoned to the unemployment office, Fritchel was worried they’d give him a hard time during his benefits validation.

“When I got the letter, I wondered, ‘What's going on?’ You always get worried when you get a letter in the mail like that,” said Fritchel, who lives in Fernley, Nev., just outside Reno. As he sat in the waiting room, he watched staff working hard to assist “customers” in any way they could. “You feel relieved. Really, everybody in there was helpful.”

Fritchel’s success story has been repeated in Nevada for years, due to this unique feature of the state’s unemployment program: Applicants who are selected to complete their eligibility screening process in person simultaneously receive job hunting services like resume help and skills assessments. In most states, review and assistance functions have been separated. Traditionally, that made sense: Eligibility reviews can feel acrimonious, while job service assistance is more like life coaching. But studies have shown the simple act of providing these two features at the same time is remarkably successful.

During pre-pandemic times, somewhere between 10 and 20 percent of unemployment recipients were randomly selected to participate in the program, says current director Lynda Parven, Deputy Administrator of Nevada’s Employment Security Division.

“The people doing this job are reemployment specialists, not eligibility workers. The key focus is on getting people back to work, not in taking away their benefits,” Parven said. According to her, they really do refer to unemployment claimants as “customers.”

The labor-intensive program takes longer and it does cost more money — roughly $250 extra per applicant. But over the past decade, in two different randomized controlled trials, researchers have found the program saves taxpayers much more. That’s because the sooner workers get off unemployment, the less they drain the state’s unemployment trust fund, and the more they contribute in income tax.

The evidence is dramatic and long-lasting: Combining services helps people find jobs faster and saves the state money, relieving stress on the unemployment fund. And most important to social scientists, the evidence is both robust and repeatable.

The program’s random selection of program participants makes it ready-made for evaluation by randomized controlled trials, the most rigorous evaluation method for measuring a program’s impact. In a study of claims from 2009-2011, claimants in the program produced a $2,988 (18 percent) increase in wage earnings per claimant during the first 18 months. A more recent study examining claims from 2014-2018 found an $8,460 (15 percent) increase in wage earnings per claimant over the 36 months after random assignment. The two studies show the program works both in the aftermath of a recession and during times of economic expansion.

18%
Increase in wage earnings per claimant during the first 18 months. Source
15%
Increase in wage earnings per claimant over the 36 months after random assignment. Source

“Things that have eye-popping effects like this are rare ...but when you can find exceptional programs you should pay attention and try to scale them up,” said David Anderson, Director of Evidence-Based Policy at Arnold Ventures, which funded the more recent study. “From our perspective, the big takeaway is that people who go through the program earn substantially more money and the state saves money.”

The program is on pause right now as Nevada, like all states, contends with an unprecedented flood of new unemployment applications and limits in-person meetings. But now is the time states should be weighing better unemployment programs to help with the acute job losses people in every state are facing.

Congress has been trying for decades to encourage states — which administer unemployment programs — to require active job hunting as part of the process, with decidedly mixed results. In 2005, a new strategy was hatched that was a bit of a carrot-and-stick model: the Reemployment and Eligibility Assessment (REA) program.

The federal government said it would pay for states to conduct in-person eligibility reviews in an effort to cut down on fraud, and also pay for employment services to help laid-off workers find new jobs. Nevada chose a novel approach: require applicants to undergo both eligibility review and job search services simultaneously. A subset of all applicants was to meet with program staff in the first few weeks of their unemployment to undergo an eligibility review and mandatory job-counseling.

Kim Morigeau, an Employment Security Division Specialist at the Nevada Department of Employment Training and Rehabilitation, was there at the beginning. It wasn't easy. Staffers trained to find fraud now had to learn how to help customers find hope.

"I spent many years almost feeling like I was going to pull my hair out,” Morigeau said. There is a ‘them vs. us’ culture you come across.” Because eligibility screening and job training can seem like polar opposite skills, a lot of training was required.

“The that's-not-my-job mentality. If you’ve been working on eligibility for 15 years and seen people who were cheating the system, that probably gives you a certain view of people.”

The big takeaway is that people who go through the program earn substantially more money and the state saves money.
David Anderson Director of Evidence-Based Policy, Arnold Ventures

The challenge worked in both directions. Applicants can view counselors as the enemy, a barrier to be overcome in order to receive unemployment checks at a time when the money is really needed.

“We tried really hard to make it a pleasant experience,” Morigeau said. “We taught (counselors) how to interview in a positive manner…we really emphasized that these are people who lost their job through no fault of their own.” Case workers were assigned to follow individuals through the system — the same worker has helped get Fritchel three different positions in the past two years.

“Many of these people don’t need that much help, but for some of these people, we really can change their career trajectory,” Parven said. In some cases, "customers" return later to brag about job offer letters or other big career moves. When that happens, workers ring a bell to celebrate.

The Nevada program works well because of the subtle, mechanical shift in the delivery of services. Human nature being what it is, many claimants who make it through the eligibility interviews wouldn’t bother to show up for a second session, at a different place, to gain job search skills. Switching to a one-stop-shop approach made the difference.

“In the transfer from compliance to service, you see people falling through cracks,” Morigeau said. “With this program, you're not sending people in different directions… that's the critical piece right there.”

Meanwhile, when the success stories started to pile up, staff and state officials began to understand the value of the program.

"There's a lot more buy-in,” Morigeau said. “Especially since they see we are getting people off unemployment faster, once you start showing some results that are positive.” Her faith in the program led her to encourage independent studies and randomized controlled trials to prove the program was working.

Marios Michaelides, an economist and Senior Research Associate at Impaq International, ran both randomized controlled trials, and he gushes about the program.

"One of the things that strikes me as a researcher… you see all the results you get from different types of programs, and it's stunning how effective this program is,” he said. “They are doing something great here.”

There are efforts to encourage similar experiments in other states when the pandemic subsides enough to allow them. Arnold Ventures is actively encouraging this work.

“The federal and state governments have missed key opportunities to replicate and expand the Nevada REA program, so as to potentially improve the lives of millions of American workers,” writes StraightTalkonEvidence.org, an Arnold Ventures-affiliated publication. “Our nation faces massive unemployment in the wake of the COVID-19 pandemic. Nevada REA would be an ideal strategy for policy officials to implement and rigorously test on a large scale once our nation is able to turn attention to reemploying the millions of dislocated workers.

"We have a rare opportunity to stop guessing at how to help workers who have lost their jobs, and to advance an approach that could truly improve their lives."

The key barrier in other states, Anderson said, are silos within state offices that could make combining state employment services a challenge.

“Nevertheless, this is a pretty clear case of a relatively simple intervention working in a big way. Nevada has demonstrated for other states that it can be done.”

It’s an approach that should provide near-immediate relief for cash-strapped states. For every dollar spent on the program, Nevada saves about $4, Parven says. “For me, I'm fiscally conservative. And if a return on investment is proven, for every $1 we spend we get $4, I spend that money every day.”