Legislature should not punish workers because it’s hard to find a job in rural Kentucky

During the Feb. 21 House Committee on Small Business and Information Technology meeting, proponents of House Bill 317 cited two main reasons for their proposed punitive cuts to Kentucky’s unemployment insurance benefits: The duration which workers receive benefits and the impact the unemployment insurance system has on economic development.

When the UI system is viewed as a whole and its impact on economic development is considered, these arguments fail to justify the draconian benefit cuts. The bill would lower unemployment insurance benefits of workers terminated due to no fault of their own by as much as 40 percent,

The claim that our current UI system has a detrimental impact on economic development or business attraction is baseless, I searched the websites of both “Site Selection” and “Area Development” magazines, the most influential media outlets focused on economic development issues, for surveys about site selection factors and failed to see even a single reference to unemployment insurance as a reason for site selection decisions. Not one.

While there is a labor cost component in the survey — and UI is certainly a labor cost — it is an inconsequential factor in corporate site selection decisions with no specific focus on UI as an impediment to economic development.

And, according to the Kentucky Office of Unemployment Insurance the “2019 Contribution Rates are set based on Schedule A. This is the lowest rate schedule since 2003.” That’s right, Kentucky’s employer UI contribution rate is now the lowest in 16 years.

The federal government uses a number of measures to evaluate and rank state UI systems. For instance, Kentucky is ranked 23rd with an average weekly benefit of $339.75, and also is right in the middle of states at 25th for its exhaustion rate (the percent of people who exhaust their benefits before finding a job) of 33 percent. Kentucky is again ranked 25th on the average tax rate on total wages of 2.21 percent.

But there is one measure on which Kentucky ranks No. 1: Kentucky workers on average receive benefits for almost 19 weeks of the 26-week limit, the highest of any state.

The proponents of HB 317 view this longest duration as such an outlier and so offensive that it should justify cutting benefits to all workers who become unemployed through no fault of their own. They imply that workers are taking their sweet time finding work and trying to milk the system en masse.

This viewpoint fails to even acknowledge or consider several other outliers that have a direct and likely significant impact on why Kentucky has the highest average duration. Significant numbers of Kentucky’s rural counties have suffered and continue to experience the highest unemployment rates in the nation.

Other counties have some of the nation’s highest poverty rates with longstanding barriers to employment; our East and West Kentucky coalfield employment has been decimated with thousands of miners looking for work where there are historically few job opportunities, especially those that can feed a family. And the same is true for African-American workers who also face barriers to employment and lack of available employment needed to provide for their families.

Instead of cherry-picking a factor in a system with multiple factors and pointing to that as the rationale for implementing an experimental benefit tier-down system which decreases benefits by half for those receiving benefits for the average duration, the UI system must be evaluated as a whole. Done honestly, such an evaluation reveals a system that is functioning well and providing needed UI insurance benefits to workers who lost their jobs through no fault of their own.

An honest appraisal finds that not only are contribution rates the lowest in 16 years, but the UI Trust fund balance is at its highest level since the Great Recession at $580 million and steadily increasing.

This isn’t just about numbers or words on paper. It is about your neighbors, friends and constituents who through no fault of their own lose their jobs, after working sometimes for the same employer for decades. It about the 253 workers of the LEDVANCE plant in Versailles, and the 600 workers at the Trane Plant in Lexington and the workers at AK Steel in Ashland who will be losing their jobs like so many thousands have before due to plant closures and re-locations.

And for those working in the construction industry, where work is available on average about 10 months a year due to weather, availability of work and construction schedules, UI benefits are a critical bridge to their next construction project. Without adequate and reliable UI benefits for construction workers who often must wait out the weather for their next job the industry will lose more workers to other types of employment. That would hamper our ability to draw on a pool of skilled construction workers to build our schools, factories, highways and homes.

Please, call your legislators and urge them to oppose HB 317.

Bill Londrigan is president of the Kentucky State AFL-CIO.