Biz, labor groups see need for unemployment benefits’ increase
by Becky Gillette
Published: February 12,2007
Business and labor groups are in agreement that the amount paid to workers for unemployment benefits needs to go up. But they are at odds about how much.
“The Advisory Council of the Mississippi Department of Employment Security (MDES), which is composed of labor, business and public representatives, met in December on this issue,” said Ron Aldridge, state director of the National Federation of Independent Businesses (NFIB). “Only one person vocally opposed a proposed $10 increase from $210 to $220 per week. That board member was the AFL-CIO representative. He requested at that meeting a $20 increase. Now they’re attempting to push a $40 increase through the Legislature with HB 296.”
NFIB and the Mississippi Manufacturers Association (MMA) have backed a compromise, with a $10 hike effective as soon as possible upon enactment and an additional $10 increase effective July 1, 2008.
The business groups are concerned about how depletion of the trust fund that pays for unemployment benefits would be impacted by higher increases.
“Many do not realize that the funds used for these worker benefits are paid for 100% by the employers of this state,” Aldridge said. “According to the MDES authorities, for every $5 increase, it equates now to about an $8-million drain on the Unemployment Insurance Trust Fund. Therefore, a $40 increase is an additional annual depletion on the fund of over $64 million. If the fund dips below $500 million, then the $20-plus-million coming now yearly from that fund for workforce training at our community colleges automatically ceases.”
He said that those are the very dollars used to equip workers throughout Mississippi with the needed skills to either acquire a new job or continue to elevate them up the economic ladder.
“Being a member of the State Workforce Investment Board, I know firsthand how these dollars are helping move Mississippi’s workforce forward,” Aldridge said. “As passed the House, HB 296 puts those funds in greater jeopardy, as well as increases the chances of an unemployment tax increase on employers in order to keep the fund sound. We stand ready to support our compromise position of a phased-in $20 increase through the legislative process.”
Robert Shaffer, president of the AFL-CIO in Mississippi, said currently Mississippi is last in the country in the amount of unemployment benefits. He said the labor union is supporting an increase in the maximum benefits from the current maximum of $210 to $230 for this year and another $20 increase next year.
“What you have to understand is that with a maximum of $210, someone making minimum wage would only draw about $100 per week,” Shaffer said. “We are asking to increase the maximum to $230, which across the board would increase the lower wage people somewhat.
“There is no way to live on it, and you don’t want to live on unemployment. No one wants to be unemployed. A couple of years ago we agreed to take $20 million out of the fund and divert it to workforce training. At that time they promised us to increase unemployment benefits, but that didn’t happen. What they offered us last year was a $5 increase. We wanted $20 per week last year. If you look at money in the trust fund, it has grown from last year $653 to $723 million this year. We feel there is room to help workers out more.”
The federal government requires that the trust fund not fall below $500 million. Hence, if too much is drawn down, money wouldn’t be available for workforce training.
Shaffer said if it was left up to the Mississippi Legislature, there wouldn’t be unemployment insurance.
“Everything we have for workers in this state is federally mandated,” Shaffer said.
The last time the unemployment benefit was increased was in 2002. Alice Perry, director of public information, MDES, said the agency is supporting the recommendation of the Advisory Council for an increase in maximum weekly benefits from $210 to $220.
“This would have the least impact on the Unemployment Insurance Trust Fund as compared to some of the other proposals,” Perry said. “The trust fund not only pays for benefits but provides training to the community college system. We want to increase the benefit without undue harm to the trust fund thus impacting training dollars. For every $5 increase, it impacts the trust fund $8 million.”
Jay Moon, president of the MMA, said that Rep. Harvey Moss, D-Corinth, when speaking to the House regarding his bill authorizing the increase, talked about the announcement by Alan White Co. that it was shutting down its Shannon plant and laying off 300 employees. Moon said that instead of asking why this company was leaving the state and what could be done to keep this and other companies from leaving, and thereby how to save jobs, Moss used the story as an example of why unemployment benefits should be increased.
“Rep. Moss missed the main point,” Moon said. “In a released statement, the company cited ‘chronic and overwhelming industry pressures,’ including price competition, as reasons for the plant closure. Mississippi’s important furniture industry is undergoing severe competition by countries like China. Rather than adding additional burdens to our state’s employers, we should be focused on helping our businesses compete in the global marketplace.”
Moon said they aren’t in opposition to increasing unemployment benefits, but feel the amount that passed the House is too large. He said since the Department of Labor has authorized taking money out of the unemployment trust fund to fund workforce training, it has become one of the major sources of workforce training for the state now.
“If we deplete the Unemployment Insurance Trust Fund, or get it down to the $500 million level, it stops the diversion of the workforce training dollars,” Moon said. “So the community colleges, which are the sources that utilize those resources on behalf of business and industry, would be left without workforce training dollars. We are still coming off the impact of large unemployment from Katrina that, if we had not gotten a significant injection of federal funds to support our Unemployment Trust Fund, we might have gotten there already.”
Moon said there was some confusion in the Legislature about who actually pays for unemployment insurance. This is a cost to business.
“When you raise the cost to business in this very volatile environment in a global marketplace, you obviously make it more difficult to be competitive,” Moon said.
“That is a concern we had. It is not that we are opposed to an increase, but not as much increase as the House projected.”
Pre-Katrina, because of the surplus, the amount businesses paid for unemployment insurance had decreased. Moon said that was a good thing because it helped to lower costs. But if there were a steady erosion of the trust fund, then decisions would have to be made to increase unemployment premiums in the future.
“Right now it would not have an immediate impact on the amount paid for unemployment insurance,” Moon said. “But we would have to look at what it would do to the trust fund.”
In addition to the Alan White layoffs, about 1,200 people have been laid off recently at a Sara Lee meat packaging facility in West Point. “That is 1,500 laid off in the space of a few weeks,” Moon said. “Those kinds of layoffs can have a direct impact on what we’re talking about. One of the reasons we originally came to the Legislature to get the diversion from the trust fund for workforce training is we believe the best thing we can do is train and educate the citizens of this state so they can get and keep jobs and can be better prepared for the jobs of the 21st Century.
“Placing additional cost pressure on our employers makes us less competitive and costs Mississippians more jobs. Ensuring training for our state’s workforce is the only way our state’s manufacturers are going to be able to compete globally and keep businesses-and jobs-in the state.”
At press time, the next step was for the bill to be considered by the Senate.
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.
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