Paul E. Miller: Protect jobless trust fund
During August legislative interims, Workforce West Virginia projected that the Unemployment Insurance (UI) Trust Fund would go broke in February and would remain insolvent until the state receives additional employer contributions around May.
CHARLESTON, W.Va. -- During August legislative interims, Workforce West Virginia projected that the Unemployment Insurance (UI) Trust Fund would go broke in February and would remain insolvent until the state receives additional employer contributions around May.
Delegate Craig Blair (R-Berkeley) blamed the pending insolvency of the UI Trust Fund on the state's long-term unemployed, suggesting that the 99 weeks of unemployment benefits creates a disincentive for these individuals to find work. This argument fails to grasp how the state's UI Trust Fund operates.
Only the first 26 weeks of jobless benefits are paid out of the state's UI Trust Fund. The federal government picks up the tab for the remaining 73 weeks for qualifying individuals. As such, the long-term unemployed -- those who've been unable to find a job for 27 weeks or more -- cannot be held responsible for the financial decay of the state's UI Trust Fund.
Currently, there are five jobless workers for each available job in the United States, up from 1.5 workers for every job in 2008. The number of unemployed West Virginians has more than doubled since the recession started. Most strikingly, an estimated 45 percent of jobless workers have been unemployed for more than six months. Since employer contributions help to fund the UI Trust Fund, the increased joblessness in West Virginia has led to a decrease in contributions into the fund.
Furthermore, employer contributions have not been adjusted annually for wage inflation since 1982, although UI benefits have. Consequently, more money goes out of the UI Trust Fund in benefits than comes in through employer contributions, creating an underlying structural revenue problem. The state could take steps to enact eligibility and financing reforms that would help prevent the insolvency of its UI Trust Fund.
Another solution to avoid the pending insolvency of the UI Trust Fund is for the state to complete the UI Modernization reforms that were included in the ARRA stimulus package. This could include providing coverage for workers who leave work due to domestic violence and other compelling family reasons and part-time workers. This policy change would benefit approximately 2,400 West Virginia workers.
Adoption of these reforms would immediately inject $22 million dollars into the fund. Thus far, 32 states have modernized their UI Trust Funds. Republican legislatures in South Carolina, Nebraska and South Dakota have modernized their UI system taking full advantage of the available stimulus funds.
While there may be little West Virginia can do immediately about the lack of jobs and the increased demand for unemployment benefits, the adoption of these policies would help the state prevent insolvency in the short run and put the UI Trust Fund on a path toward long-term stability.
Miller is a policy analyst for the West Virginia Center on Budget & Policy.
CHARLESTON, W.Va. -- During August legislative interims, Workforce West Virginia projected that the Unemployment Insurance (UI) Trust Fund would go broke in February and would remain insolvent until the state receives additional employer contributions around May.
Delegate Craig Blair (R-Berkeley) blamed the pending insolvency of the UI Trust Fund on the state's long-term unemployed, suggesting that the 99 weeks of unemployment benefits creates a disincentive for these individuals to find work. This argument fails to grasp how the state's UI Trust Fund operates.
Only the first 26 weeks of jobless benefits are paid out of the state's UI Trust Fund. The federal government picks up the tab for the remaining 73 weeks for qualifying individuals. As such, the long-term unemployed -- those who've been unable to find a job for 27 weeks or more -- cannot be held responsible for the financial decay of the state's UI Trust Fund.
Currently, there are five jobless workers for each available job in the United States, up from 1.5 workers for every job in 2008. The number of unemployed West Virginians has more than doubled since the recession started. Most strikingly, an estimated 45 percent of jobless workers have been unemployed for more than six months. Since employer contributions help to fund the UI Trust Fund, the increased joblessness in West Virginia has led to a decrease in contributions into the fund.
Furthermore, employer contributions have not been adjusted annually for wage inflation since 1982, although UI benefits have. Consequently, more money goes out of the UI Trust Fund in benefits than comes in through employer contributions, creating an underlying structural revenue problem. The state could take steps to enact eligibility and financing reforms that would help prevent the insolvency of its UI Trust Fund.
Another solution to avoid the pending insolvency of the UI Trust Fund is for the state to complete the UI Modernization reforms that were included in the ARRA stimulus package. This could include providing coverage for workers who leave work due to domestic violence and other compelling family reasons and part-time workers. This policy change would benefit approximately 2,400 West Virginia workers.
Adoption of these reforms would immediately inject $22 million dollars into the fund. Thus far, 32 states have modernized their UI Trust Funds. Republican legislatures in South Carolina, Nebraska and South Dakota have modernized their UI system taking full advantage of the available stimulus funds.
While there may be little West Virginia can do immediately about the lack of jobs and the increased demand for unemployment benefits, the adoption of these policies would help the state prevent insolvency in the short run and put the UI Trust Fund on a path toward long-term stability.
Miller is a policy analyst for the West Virginia Center on Budget & Policy.
