Wednesday, May 29, 2013

Senate Republicans Call for Unemployment Insurance Reforms; Propose Changes to Ensure System's Long-Term Sustainability

The Senate Republican Caucus today renewed its call for reforming the state’s unemployment insurance system, one day after the co-chairmen of the Legislature’s Joint Committee on Labor and Workforce Development expressed a willingness to address the issue this session.

“I’m glad to hear the chairmen are interested in making changes to the current system, which continues to impose an undue financial burden on the state’s employers and to hamper business expansion and job growth,” said Senate Minority Leader Bruce Tarr (R-Gloucester).  “If the committee is serious about tackling this issue, we already have comprehensive reform legislation on the table to revise the existing rate structure, crack down on abuse and ensure the system’s long-term viability.”

In January, Senator Tarr filed Senate Bill 895, An Act Improving Unemployment Insurance, which was the subject of a public hearing yesterday before the committee.  The bill has bi-partisan support and co-sponsors from both the House and Senate.

Senator Tarr noted that Massachusetts currently provides the most generous unemployment insurance benefits in the nation.  Recipients are not only eligible for the highest weekly payment of any state ($625 in 2012), but they also can receive benefits for up to 30 weeks, compared to 26 weeks in all other states except Montana.  Individuals in Massachusetts also become eligible to collect unemployment after just 15 weeks of employment, compared to the 20-week standard used in most states.

The unemployment system is also vulnerable to abuse.  A 2004 analysis by Commonwealth Magazine showed that 700 people had collected unemployment benefits in each of the 20 previous years.  Commonwealth Magazine noted that many seasonal employers game the system by continuously laying off and rehiring their workers, in some cases several times a year, resulting in instances where the benefits paid to these “laid-off” workers far exceed the money paid into the system by the employer.

According to Senator Tarr, Senate Bill 895 will bring Massachusetts’ unemployment insurance benefits in line with most other states, while making sensible reforms to the rate structures for the businesses that fund the program.  Specifically, the bill would:

· increase the amount of time someone must work before becoming eligible to collect unemployment from 15 to 20 weeks;

· reduce the amount of time a beneficiary can receive payment to 26 weeks, with the caveat that if they participate in a job training or internship program, they can continue to collect for the full 30 weeks;

· require employers that use the unemployment system more frequently to pay more money into it; and

· require the Division of Unemployment Assistance to give extra scrutiny to those who show a clear pattern of filing benefit claims without any challenge from their employer.

In additional to these reforms, Senate Bill 895 would:

· require the Division of Unemployment Assistance to hold at least one public hearing attended by the employers who finance the system;

· create a study to examine current inefficiencies in the unemployment insurance hearing process; and

· form a commission to scrutinize the weekly benefit payment structure utilized by the Division of Unemployment Assistance, and examine whether a change in the payment structure could increase the incentive to rejoin the workforce and lower the cost to operate the system.

“Reforming the unemployment insurance system is essential to ensuring its long-term sustainability,” said Senator Tarr.  “Senate Bill 895 offers substantive changes that will help to make the state more competitive while also promoting job growth.”