States Urged to Help More Jobless Workers

**Limited coverage. Would not qualify for grants under proposed Unemployment Insurance Modernization Act.
Source: National Employment Law Project's "The Unemployment Insurance Modernization Act: Filling the Gaps in the Unemployment Safety Net While Stimulating the Economy," November 2008

For the millions of Americans losing their jobs in this recession, the likelihood of getting unemployment insurance benefits depends on where they live.

In 31 states, for example, a construction worker who was out of work most of the year, but landed a job only to lose it again in less than six months would be out of luck. The same goes for a recent college graduate laid off from a job he held for less than a half year. And in 30 states, unemployed women seeking part-time work so they can care for children or the elderly need not apply for benefits.

While many states have expanded their 74-year-old unemployment laws to cover more low-wage workers, more than half have not. As a result, only 37 percent of the more than 11 million jobless workers received benefits last year, according the U.S. Department of Labor.

That's why the Obama administration is backing a bill that would offer states $7 billion to temporarily pay for benefits for an estimated 500,000 mostly low-wage workers who are currently left out of the system. In addition to helping many of the nation's most vulnerable workers, supporters argue that every dollar spent on unemployment benefits generates $2.15 in economic growth.

Low-wage and part-time workers, who contribute to the unemployment insurance system, are a larger portion of the workforce than they used to be, yet they are half as likely to qualify for unemployment benefits as other workers," said U.S. Rep. Jim McDermott (D) of Washington, author of the bill. Adding to the problem, the U.S. Government Accountability Office says low-wage workers are more than twice as likely to get laid off.

Called the Unemployment Insurance Modernization Act , the proposal is part of the so-called economic stimulus package and would immediately provide $500 million to help states pay for more staff and better computer and phone systems to help manage spiraling demand for benefits .

But some experts say states that don't already offer benefits for low-wage workers are not likely to be persuaded by a temporary grant, particularly when they are overwhelmed by record-high numbers of applicants and shrinking state budgets.

Unemployment insurance is a federal-state program that temporarily provides laid-off workers with a portion of their paychecks. States administer the program, determining who is eligible, how much the benefits will be and the length of time benefits are available. The program is funded through federal and state employer payroll taxes, with states levying the biggest share.

At least 24 states will have to hike business taxes this year to replenish their dwindling unemployment trust funds, according to the National Association of State Workforce Agencies.

At issue are laws in some states that exclude recent earnings when determining eligibility for benefits. Other provisions exclude coverage of people seeking part-time work and those who leave jobs because of illness or to relocate with a spouse or escape domestic violence.

Women - who are more likely to work part-time and take temporary jobs so they can care for family members - are disproportionately affected by these laws, said Maurice Emsellem, policy director for the National Employment Law Project , which advocates for workers.

Since the early 1990s when a bi-partisan panel appointed by then-President Bill Clinton asked states to update their aging unemployment laws, 19 states began covering those with only recent work history and 20 began covering part-time workers. In addition, 29 states started offering benefits to those who leave jobs because of domestic violence, 15 began covering those who leave jobs because their spouses relocate and 16 states started providing benefits for workers who stop working because of illness or disability.

In states where these laws have not been adopted, many say the proposed federal incentives would not make a difference.

Aiming to replace about half of low-to-middle-income worker?s pay, states set benefit levels based on prior wages. The lowest minimum benefit is $5 in Hawaii and the highest minimum is $113 in Michigan. Maximum weekly benefits range from $210 in Mississippi to $900 in Massachusetts.

Texas, for example, would get $550 million in federal money under the program if it adopted new rules to include part-time laborers and those with a sporadic work history. But state unemployment director Larry Temple told, "The so-called quick money would run out real quick, and the only way to keep the program going would be to raise business taxes.

"We believe the best way to stimulate the economy and create jobs is not to raise taxes for businesses. Government doesn't create jobs - businesses create jobs," Temple said.

For different reasons, California - which would gain $844 million in federal money if it made the changes - also has failed to include recent work history in determining eligibility for temporary workers. According to Loree Levy, spokesperson for the California Employment Development Department , the change would require expensive retooling of the state's aging computer system, and would burden employers and state administrative staff. Covering more workers also would further stress the state's nearly depleted trust fund, she said.

Taking the opposite approach, North Carolina expanded unemployment insurance three years ago. It took five consecutive legislative sessions, but lawmakers voted to provide benefits to part-time workers and those with sporadic or only recent work history.

The result has been fewer repeated claims and no significant increase in total benefits, Employment Security Commission president Tom Whitaker told . "Instead, we've moved more people from the unemployment line to the re-employment line and decreased our workload."

Whitaker explained that unemployed workers who are denied benefits because their work history is too recent will continue to file claims every week until their work history falls into the right time period and they are finally approved. Similarly, those seeking part-time work will simply re-file claiming they are looking for full-time employment.

"Why make them go through all that? By giving people the benefits they have earned, the state has cut back on the number of applications and made it easier for everyone," he said.

Both California and Texas will consider proposals to extend unemployment insurance to part-time and temporary workers in this legislative session.

See Related Stories:

States swamped by spike in jobless rates (1/9/2009)

>Policy challenge - How to expand safety net (1/5/2009)

State jobless funds are running dry (10/7/2008)

States adopt bold anti-poverty measures (8/7/2008)

State jobless benefits reserves low (6/2/2008)


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