Pamplin Media Group – The Wyden plan revamps the US aging unemployment benefit system



The acting director of state likes economic triggers, but says other changes to the safety net need to be discussed.

Oregon Department of Employment Acting Director says there are things to like, and much to consider, in sweeping proposal by Oregon Senator Ron Wyden to overhaul the national benefit system of unemployment from the era of depression.

Wyden, who heads the Senate Finance Committee, and Colorado Senator Michael Bennet outlined their framework for a revised system in a document they released on Wednesday, April 14.

Wyden has been talking about system changes for almost a year, since the coronavirus pandemic triggered the most abrupt economic downturn in a month and a record number of jobless claims in recent history. In Oregon, the unemployment rate rose from a record high of 3.5% in March 2020 to a record high of 13.2% (adjusted) the following month and claims exceeded 500,000. March 2021 was 6%.

Wyden gained political clout in January when Democrats won a narrow majority in the Senate – Vice President Kamala Harris holds the tiebreaker in a 50-50 chamber – and he became chairman of the tax drafting committee.

Now that Congress has extended the short-term benefits until Labor Day as part of President Joe Biden’s pandemic stimulus package, Wyden said it was time for his colleagues to consider the next ones. steps to change a system that dates back to 1935.

“As we saw last year, it is much more difficult for the unemployment system to function in times of crisis when it has been neglected and sabotaged. Years,” Wyden said in a statement.

“A 21st century economy demands a 21st century safety net that supports workers who lose their jobs through no fault of their own. Our proposal would help ensure that benefits cover the essentials, minimize the glaring disparities between state programs and create a permanent advantage for the self-importantly, it would also prevent another race to the bottom where state after state reduces his program to the bone.

“If we don’t fix UI now, the system will be even more broken when the next inevitable recession hits.”

Economic triggers

Gerstenfeld was director of the Unemployment Insurance division from 2011 until he took another position with the state agency in 2019. Governor Kate Brown appointed him interim director when ‘she fired Kay Erickson on May 31 of last year.

Gerstenfeld said he supported changes that would trigger additional benefits based on economic indicators, for example when three-month unemployment averages reach specified levels.

During the Great Recession ten years ago, Congress finally extended federal unemployment benefits to 99 weeks, which ended in 2013. During the most recent downturn since March 2020, Congress adopted three sets of allocations under various programs, including first payments. self-employed and gig workers, who were never covered before – and then-President Donald Trump ordered the Federal Emergency Management Agency to transfer relief money in the event of a disaster to the payment of benefits.

“During most recessions, we ended up with new ad hoc benefit programs or extensions that caused some of the challenges we’ve seen during this pandemic,” Gerstenfeld told reporters on a weekly conference call.

“All states need to build the new program or extension after it is passed by Congress, rather than having something already designed and ready to be rolled out once conditions require additional benefits. We believe that (the Wyden’s proposal) is a good long-term fix. ”

Over the past year, he said, Oregon has paid out $ 738 million in federal benefits to the self-employed and workers in concert under the program known as Unemployment Assistance in Case pandemic.

Wyden offers a permanent benefit of $ 250 per week for “job seekers”, covering workers outside the traditional system and new entrants to the labor market.

Gerstenfeld said Oregon used its state unemployment trust fund to cover some gig workers who were entitled to benefits. Last year, the original CARES Act required states to screen these workers before qualifying them for federal benefits under pandemic unemployment assistance.

Yet, said Gerstenfeld, these federal benefits made a big difference for workers who had never been covered before.

“There is always the possibility that a lot of people will have no support during a huge economic recession,” he said. “So I think having a permanent program like this in place would make the safety net much stronger.”

Other changes

Other features of Wyden’s proposal include:

• A standard 26-week period for state regular benefits – Oregon already does, but seven states have shorter periods – and at levels equivalent to 75% of workers’ wages. Maximum weekly state benefits now range from a low of $ 235 in Mississippi to $ 823 in Massachusetts; The Oregon is towards the high end at $ 648. In an economic emergency such as the recent pandemic-induced downturn, the replacement level would reach 100%.

Gerstenfeld said such a system would be more complex to run. But the Oregon Department of Employment is about to embark on a modernization of its computer system, which dates from 1993 and is based on a computer language dating back to 1959. The state received 89.3 million dollars in federal funds in 2009. Governor Brown’s budget proposes to start the project in the next two-year cycle beginning July 1.

“Some of these provisions would require extensive work with our technological systems,” he said. “But some of them might work in time so that we can integrate them into the modernized system that we are building.”

• Benefit coverage would extend to part-time workers and workers who leave their jobs for “just cause”, such as domestic violence, sexual harassment or caring for a sick or disabled family member.

• Workers would be paid for their “waiting week,” the first for which they file unemployment claims. Oregon finally paid workers last year after Governor Brown ordered an end to non-payments for the “waiting week.”

• An allowance of $ 25 per week would be paid to dependents of the unemployed.

How is it paid

To fund an expanded system, Wyden proposed reducing the overall federal payroll tax rate, but raising the taxable payroll base above the current $ 7,000, a figure dating back to 1983.

He did not propose to extend payroll taxes, which are now paid by employers, to the self-employed or odd jobs.

States would get more federal money to administer unemployment programs. Gerstenfeld said Oregon is reimbursed, but not at full cost, by the US Department of Labor.

But states should also take steps to ensure they wouldn’t have to borrow from the federal government to maintain their unemployment trust funds for regular benefits. Oregon did not borrow during the Great Recession, and Gerstenfeld said he did not anticipate the state would have to do so this time around.

Oregon started the pandemic a year ago with about $ 5 billion in the state’s trust fund; it fell to $ 3.7 billion.

Oregon lawmakers are considering a bill to defer and reduce some state payroll taxes, which will replenish the state’s trust fund but at a lower level. Gerstenfeld said Bill 3389, which awaits a House-wide vote, would save employers about $ 2.4 billion over a decade.

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Learn more

To see a discussion project by the Senses. Ron Wyden and Michael Bennet of the changes they are considering in the country’s unemployment benefit system, click here.

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