Chairmen See Path For Jobless Benefit System Changes
After years of votes to freeze unemployment insurance rates on businesses and talk from lawmakers about the need for substantial reform, two key House and Senate lawmakers on Tuesday voiced a growing desire to tackle unemployment insurance reform this session.
The Committee on Labor and Workforce Development, co-chaired by Sen. Daniel Wolf and Rep. Thomas Conroy, took testimony on UI system reform proposals, including calls by business groups to increase the threshold for benefit eligibility and reduce the amount of time unemployed workers are eligible to collect benefits.
Wolf and Conroy said the system is clearly in need of reform in light of the Legislature’s votes year after year to freeze rates on businesses, blocking scheduled increases with no detrimental effect on the solvency of the fund. But Wolf said he is leery of proposals to further penalize employers that frequently use the unemployment insurance system, and is reticent to decrease the maximum number of weeks a recipient can collect benefits from 30 weeks.
Wolf also said he will use the focus on UI reform this session to promote tapping the insurance fund to train unemployed workers for jobs in the private sector that are going unfilled, hitting on a topic that is likely to intersect with the welfare reform bill Senate President Therese Murray intends to roll out in the coming weeks.
“I would really like to use this to build into the rates a commitment to workforce training to address the gap between skilled workers and the needs of employers,” Wolf said. Conroy agreed with the need for more workforce training, and supported the idea of using the UI fund to lower unemployment rates by linking workers with jobs.
Murray has suggested UI reform will be a priority of hers this session, and Conroy said there is an “open mind” in the House to tackle some of the issues that have been a constant source of frustration for business owners. Both chairmen said their committee will explore the possibility of drafting a comprehensive bill taking pieces out of the proposals already filed.
Concerned that Bay State business owners pay the highest unemployment insurance rates in the country, John Regan, executive vice president of government affairs at Associated Industries of Massachusetts, said the committee had enough “raw material” to work with in the form of multiple bills to draft a “pretty substantive UI reform package.”
Regan called for the rate tables to be redesigned to tax those employers who frequently use the unemployment insurance system at a higher rate than those with stable workforces, and called for the income threshold for benefit eligibility to be increased to 40 times the weekly benefit, or on average 20 weeks of employment, from 15 weeks.
“If this feels like déjà vu for you, try it from my side,” Regan said, telling the committee he has testified more than a dozen times at similar hearings over is 15 years with A.I.M.
Regan also suggested that the committee consider reducing the from 30 weeks the maximum length of benefits to be more in line with those offered by 49 other states. “I think it’s not inappropriate to look for the standard benefit duration to make Massachusetts competitive,” Regan said.
Wolf, however, called it “counterintuitive” that the UI system should penalize employers who lay off larger numbers of employees, suggesting cyclical economic downturns can often hit specific industries harder than others and taxing them more would add to the burden.
Jon Hurst, president of the Retailers Association of Massachusetts, testified in favor of a bill filed by House Minority Leader Brad Jones (H 1734) that he called a “middle of the road approach” that would prevent abrupt increases in rates by smoothing the increases over three years.
“Growing jobs means big spikes in unemployment insurance and a change from one to five people can have a big impact on payroll and their taxes,” Hurst said.
The Jones bill would require workers to have earnings in at least two quarters before they become eligible for benefits, and would smooth the hit to growing businesses by basing UI taxes on an average of three years of payroll as opposed to the previous 12 months.
“Nobody’s going to stop Massachusetts from being a generous state, but it has to be a state where the unemployment insurance rates aren’t an outlier either. They’re just too expensive,” said Bill Vernon, state director for the National Federation of Independent Business.
Vernon said the current system is “out of step” with neighboring and competitive states, and creates a disincentive to hiring. “Our current laws stop us from creating the number of jobs we should be creating,” Vernon said.
Tim Sullivan, legislative director for the Massachusetts AFL-CIO, said the state’s largest union supports reforming the UI system, but opposes both of the bills filed by Jones and endorsed by the business groups.
“We should be able to do more UI policy than an annual rate freeze,” Sullivan said. “If we could hang a banner in this room for every time we have frozen UI rates, it would be like the glory days of the Boston Celtics.”
Sullivan, however, said increasing the amount of time an employee would have to work, on average, before they can collect benefits would hurt working families and take money out of the pockets of consumers relied upon to support the economy and small businesses.
Margaret Monsell, an employment law attorney at the Massachusetts Law Reform Institute, said raising the income test for eligibility would make it more difficult for workers, particularly those new to the workforce, to qualify for benefits. “It’s important to remember the vital role that our state’s UI program played in moderating the harm of the Great Recession here in Massachusetts,” Monsell said.
The AFL-CIO supports a bill filed by Rep. Martin Walsh (H 1772) that would raise the taxable wage base for unemployment insurance from $14,000 per employee to $20,000, a shift that would ease the burden on smaller businesses with lower wage earners, but raise the responsibility of larger, higher-wage employers.
Vernon said businesses oppose this idea as a “permanent tax increase.”
In April, Senate President Murray spoke about the need to reform the unemployment insurance system in a speech to the Greater Boston Chamber of Commerce, calling the current system “too narrow and not sensitive enough” to employers with either very good or very poor employment records.
"We need to look at ways to ease the burden of our unemployment insurance system on smaller and new businesses," Murray said, suggesting tourism-based businesses that hire many seasonal employees are not properly accounted for either.
Wolf said he does not necessarily support the idea of giving seasonal businesses a break on their UI rates, calling it a cheaper alternative to having year-round employees and a necessary expense to ensure that there is a labor pool for seasonal work.
The committee also heard from a number of lawmakers and advocates representing temporary staffing agencies about a bill (H 1756) filed by Rep. Denise Provost (D-Somerville) that would eliminate a requirement that temporary workers contact the temp agency about other employment opportunities before filing for unemployment benefits when their temporary job ends.
Provost said staffing agencies can’t be trusted to be honest about whether a worker sought other employment before filing for benefits, and said workers don’t often realize that their employer is the staffing agency and not the company they had been working for.
Staffing agents told the committee the change in the law was unnecessary, but lawmakers on the Labor Committee said they were struggling with how to balance the need for worker protections against untrustworthy staffing agencies with their desire to not penalize staffing firms that follow the law.
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