Unemployment Benefits - A Business Perspective

Just a quick update on the Pennsylvania unemployment compensation benefit issue: I got an email from Gene Barr, who represents Pennsylvania Chamber of Business and Industry, one of a group of labor and business leaders that are trying to figure out how to deal with massive structural problems in the unemployment trust fund. The fund has been borrowing money to pay benefits, but beyond the immediate problem, there is a difficulty in the mechanisms for how revenue is brought into the trust fund. Also, the chamber and business interests complain that Pennsylvania's benefits are overly generous. That's probably NOT the point of view of anyone collecting the benefit, which maximizes at a little more than $2,000 a month.

I am going to give you a link to my story on the subject, which ran about a week ago, and I'm going to copy an email from Gene, who is the Chamber's vice president of government affairs. He gave me permission to do so:

Keep in mind that this is just one side of the story. Everyone agrees that there is a problem, but there are different ideas about how to fix it.  Please also scroll down a few posts to see some earlier blog items on the same issue. Now here's Gene's email: 


I read last week's UC article and wanted to offer a few comments.  I am concerned that the message a reader is likely to take from the story is that the financial instability of the unemployment compensation trust fund is due solely to a lack of proper funding from employers since the story only mentions the wage base.  In fact, the wage base is not the only calculation to determine employer contributions and the chart we provided shows PA is tenth highest in the US for UC costs per employee.  

Also, I think it is important to note that during the 12 month period ending 1-31-09, PA gave out more money in UC benefits than any state besides California, even though we are not the second most populous state nor did we have an extremely high rate of unemployment.  I believe this demonstrates that much of PA's insolvency issues are due to a fairly liberal benefits policy that provides unemployment compensation payments even when a person is receiving a substantial severance package, allows a person to receive both UC and Social Security payments, and fails to compel unemployed individuals to look for work.



P.S. The following came in a second email -- Gene wanted me to add this comment.

We are not asking for any across the board reductions in UC benefits and, in fact, are trying to forestall reductions that are scheduled to occur next year as a result of the fund's insolvency.  We believe we need to continue to make sure those truly in need of UC benefits continue to receive them while they are unable to find work.  That is why the employer community has offered between $300 million and $400 million in additional taxes to address this serious issue.  


We need a comprehensive solution to the insolvency problem that includes additional revenue but also significant structural changes that are fair to employers, workers, and organized labor. 
Thanks for reading.
Gene Barr