Bill would hurt the unemployed, economy but give businesses a break

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The unemployment insurance program is only for workers. To be eligible, you must earn benefits by working in the previous 15 months. Workers also must not have lost their job for cause; only layoffs, downsizings and unprovoked terminations are allowed.

Workers must actively look for a new job while they are unemployed, and they must report their job-search activities to the state. In return, they receive a small stipend while looking for new work, to help prevent the type of suffering seen in the 1930s. The amount workers receive is about 40 percent of their former income.

It’s still a tough blow with most Americans living paycheck-to-paycheck, but it’s enough to keep working families from suddenly finding themselves in a desperate situation following an unexpected job loss. Benefits last only up to 26 weeks.

Yet, House Bill 252 would decrease the number of weeks a laid-off worker could receive benefits down to just 14 weeks in certain conditions. Proponents of the bill point to the unemployment programs run by border states. However, only one of our seven border states — Missouri, at 20 weeks — provides less than Kentucky’s 26-week maximum. The other surrounding states all offer 26 weeks of unemployment benefits, as do almost all other states.

HB 252’s sponsors suggest that this change is needed because Kentucky offers too much in benefits, but it does not, on average, provide a disproportionate weekly benefit compared to our border states.

In 2016, the most recent year for which data are available, Kentucky paid an average weekly benefit of $320.53; Illinois: $362.44, Indiana: $273.92, Missouri: $253.45, Ohio: $354.32, Tennessee: $234.34, Virginia: $307.16 and West Virginia: $310.23.

The amount of Kentucky’s average weekly benefit is only 6 percent higher than the average for the eight-state region, and is still below the national average of $351.78.

Bill sponsors claim we need to “incentivize” people to get off unemployment quicker. I am willing to bet that none of this bill’s sponsors has ever been on unemployment or understands how difficult life is for people receiving it. I do.

I spent almost eight years with the unemployment insurance program in Frankfort, where I worked as an attorney, policy adviser and special assistant attorney general. I handled hundreds of cases, from the administrative level up through the Supreme Court of Kentucky. And, when administrations changed, I suddenly found myself out of a job, too. Things were incredibly tight, but unemployment benefits allowed my family to pay our bills while I looked for another job.

Despite what business owners in the legislature may think, receiving unemployment is not easy and it’s no gravy train. It’s hard to imagine anyone wanting to stay on unemployment any longer than necessary, but the bill’s sponsors assume the worst about the tens of thousands of Kentuckians who utilize the program every year.

Because Kentucky’s unemployed workers take an average of 3.5 weeks longer to find a new job than the national average, the bill’s sponsors propose to slash the maximum benefits to just 14 weeks — 12 weeks shorter than currently exists and a week and a half shorter than the national average. This will cause serious financial hardship to working Kentucky families.

As laid off Kentuckians lose this modest lifeline, it is to imagine what will follow: foreclosures, evictions, repossessions and collections actions. The effects will ripple throughout our economy. Each dollar of unemployment benefits generates $1.64 in economic activity. Losing 4.8 weeks of benefits for the average Kentucky benefit recipient would cause a loss of $2,523 to their local economy.

About 65,000 Kentuckians received unemployment in 2016. Decreasing benefits to 14 weeks would have resulted in a loss of about $163.4 million in economic activity that year.

What does the state get in return: Nothing. But Kentucky’s employers will be gifted another tax cut. Stimuli for business is usually seen when the economy is doing poorly, and companies need a shot in the arm. But the economy is doing well right now, and there is no indication that the business community needs another boost at the expense of its workers.

Businesses have already received numerous incentives from both the state and federal governments over the past two years, including generous tax cuts. Why would anyone now try to bludgeon unemployed workers to find work faster than they already do under the existing successful program?

Reach James Maxson, a Frankfort attorney, at james@maxsonfirm.com.