Thursday, June 16, 2011

Pennsylvania Unemployment Deal Struck - Why It's a Bad Deal

On June 16, HuffPost published an Article indicating that Pennsylvania legislators struck a deal that would prevent 45,000 unemployed Pennsylvanians from losing unemployment benefits next week.  Actually, the bill was passed by the House (by vote of 194-0), and was approved by the Senate on Friday, June 17. It is expected that Governor Corbett will sign it into law shortly.

But it cost some real serious pork.

A few things about this deal that are really problematic: 1) it creates an agreed upon freeze of the maximum benefits amount (presently $573);  2) it apparently would amend existing law, which allows those receiving severance to also receive unemployment, so as to eliminate or minimize benefits for such persons; 3) it requires lower wage earners to be employed longer and earn more in order to qualify for benefits; and, 4) it "tightens up" job search requirements for those collecting unemployment.

Pa's legislators are touting this amendment as a "Reform Bill," i.e. a bill that corrects and eliminates certain provisions seen as less than ideal.  An examination of the "Reform Bill" demonstrates that almost all of the "take backs" are detrimental to future unemployment claimants, and not to Pennsylvania' employers.

One report indicates that "[t]he bill includes reform measures that require claimants to actively seek work, and increase the level of a credit week wage from $50 to $116. A new severance pay offset allows a person to receive severance pay of up to $17,853 before their unemployment benefits are affected."   The source of this information was a Press Release from  State Rep. Turzai (R), who lauds the Bill's reformative measures.

The Turzai Press Release says "[t]he average annual savings to the UC Trust Fund from 2012-2018 will be $133 million with the bulk of the savings in the last 4 years. The cumulative savings for 2011-2018 will be nearly $1 billion."  And exactly where is that $1 Billion going to come from?  Not from employers; the Bill does not create any new obligations on corporations that I can see.  Rather, all of the "savings" will result from the deprivation of benefits to claimants.
NOTE:  We have since this Post was published surmised that the nearly $1 Billion in projected savings will in large part come about via the disqualification of claimants who do not follow the new job search requirements.  Click Here to read more on that issue.

I believe this is a real bad deal for Pennsylvanians.  Robbing Peter to pay Paul, it seems to me.  One can see that, in the long run, the Government will come out ahead and the Pennsylvania workforce behind.  After all, while it is wonderful to help those 45,000 in need, there are far more future claimants who will be hurt by this bill.  And, I don't personally expect to see any sort of reduction in my company's future unemployment tax, or in my personal unemployment tax contribution.  The bill doesn't provide for that.

Pennsylvania's Unemployment Compensation Act was last amended in 1988.  Since that time, and particularly since the recent economic crisis, there have been calls to "reform" the Act - and that is exactly what has happened here.  As the aforementioned HuffPost article noted:

"When the U.S. Congress reauthorized federal extended benefits in December, federal lawmakers told states they'd need to tweak their laws to remain eligible for the final regimen of aid. Twenty-six states have taken Congress up on the offer, most of them doing so without any controversy. But Pennsylvania is one of a handful of states where keeping the federal dollars became leverage for proposals to curtail state spending on the jobless."

In my view, it would have been far better to pass this Bill, and thereby help the 45,000 people in need, without dinging future claimants.  Instead, Pennsylvania's legislators used the current financial crisis as an excuse to "reform" Pennsylvania's unemployment law to the great detriment of many unsuspecting future claimants.  Yet, there are no reformative measures where corporations are concerned, despite the fact that it is well known that many employers refuse to even consider applications from people who are currently unemployed.  So, Pennsylvania Legislators, why not take the next step by passing a bill that would require corporations to do something - like employ unemployed workers who are being shunned like lepers?

Why not pass a bill that, rather than make future unemployed workers pay for it, require Pennsylvania businesses to do something to help the currently unemployed, such as an Affirmative Action Plan, which would eliminate obviously prevalent discrimination against the unemployed?  Why should future unemployed have to pay for this, when businesses across America are intentionally refusing to hire unemployed workers, thus deepening our economic crisis, and causing personal tragedies across America.

What, you say?  Campaign contributions?  Oh, got it. The sad truth is that most of our elected officials are frequently most concerned with their most important constituents - the corporations that fund their election campaigns (and particularly their reelection campaigns!).  Recession or not, there really is nothing new under the sun.  Skeptical of my acerbic conclusion?

Consider the "Tort Reform" campaign that swept across America a few years ago....Or the fact, as noted in the wonderful Oscar-Award winning documentary "Inside Job," that our government stood by and did absolutely nothing even though it knew that Wall Street executives were intentionally misleading the public to line their own pockets with gold - creating a debt we still have not paid (although not a single perpetrator of the frauds has been arrested or asked to pay a dime of restitution).

John A. Gallagher, Esquire

1 comment:

Dennis Deitsch said...

My wife has worked for over 32 years and has never once claimed any unemployment benefits. She was just laid off and because of the freeze we will be bankrupt. We are in the middle of a chapter 13 bankruptcy due to my business closing and now we may have restructure it into a complete bankruptcy because the freeze makes her income less than 25% of what it had been. She paid into the fund and now would like her share back. Dennis Deitsch