Today’s grim job loss figures are a reminder that the U.S. safety net remains porous for many workers—a problem that could come back to haunt businesses.

There was good news earlier in the week on the unemployment insurance front, when President Bush signed into law a measure that extended jobless benefits. But evidence suggests many out-of-work Americans are not getting basic unemployment benefits in the first place. And it appears such out-of-luck workers are frequently among the most vulnerable in the economy—low wage earners, part-time workers and women.

A report from the U.S. General Accounting Office in 2000 found that the unemployment insurance system plays a “limited” role as a safety net for low-wage workers. The percentage of unemployed people applying for benefits declined from about 50 percent in the 1950s to about 33 percent in the 1990s. What’s more, the report shows, eligibility rules around previous earnings and part-time employment hurt low-wage and part-time workers. In 1995, only about 18 percent of unemployed low-wage workers were collecting unemployment insurance benefits, while about 40 percent of the higher-wage unemployed collected benefits.

Although the GAO report is nearly a decade old, problems it identified persist, according the National Employment Law Project advocacy group. Just 35 percent of the unemployed received jobless benefits in 2006, according to NELP.
 
NELP has backed legislation to “modernize” the unemployment insurance system, which dates to the 1930s.

A measure introduced in the U.S. Senate last year would encourage states to adopt reforms such as counting applicants’ most recent earnings (which would help low-wage earners qualify for benefits), extending unemployment benefits while workers are in training programs and allowing a worker to collect benefits if they left their job for a compelling family reason, such as domestic violence.

Getting behind such legislation may not, at first blush, seem to be a priority for corporate America. But closing gaps in the safety net along these lines would translate into a better trained workforce as well as stronger consumer confidence and spending. All important results for companies in the midst of a teetering economy. As it stands, with 62,000 additional payroll jobs erased in June, the confidence of Joe and Jane Paycheck is likely to keep dropping.