Since when did some members of Pennsylvania's General Assembly become so shortsighted that they think it's good to pass legislation that harms the most vulnerable people? But, this would be the consequences of proposals to restore the solvency of our state's Unemployment Compensation (UC) Fund on the backs of unemployed persons. These are the persons who have most suffered from the recent recession and for whom this Unemployment Insurance (UI) was established.
Our national history reflects a legacy of helping those who need help, instead of saying, "sorry for your luck," or "gee, too bad, if only you worked a few more weeks." We must get back to the ideal that helping those who need help is the right thing.
The Governor has already signed into law a bill which cut UI eligibility and reduced UI benefits for thousands of unemployed Pennsylvanians. Yet, less than a year later the administration urges more cuts which likely would deprive an additional 50,000 individuals of the unemployment insurance lifeline. When did we get so selfish and shortsighted?
Let's remember that employees and employers mutually fund Pennsylvania's Unemployment Insurance program that benefits all of Pennsylvania.
UI helps workers by providing to them essential minimal financial assistance until they can find other employment. The average weekly UI allowance is less than $335 a week, or approximately 50 percent of the worker's previously earned weekly wage. The unemployed are not getting rich, nor are they receiving so much money that they can afford to postpone finding a new job. UI recipients use these allowances to pay for their and their families' bare essentials of life: housing, food, clothing, childcare and transportation to help workers find new jobs. As a result, all of Pennsylvania, including employers, benefit because every UI dollar goes back into local economies and Pennsylvania's economy. In a way unemployed persons are a kind of pass-through of UI to local economies throughout Pennsylvania.
Since this is a system primarily funded by employers, the Commonwealth has borrowed $3 billion from the federal government on their behalf, to keep money flowing into the economy. This money most likely saved many businesses from bankruptcy, saving many more workers from being unemployed and needing UI. Now, businesses are being asked to repay that loan. But yet in this crazy political atmosphere that we live in, there are elected state officeholders who want to bail out business and make unemployed workers pay back the loan.
Pennsylvania's UI program originally was intended to be an employer-driven system because employers benefit when unemployed workers have money to spend. Yet, the bill for UI increasingly falls on employees. Pennsylvania is one of only three states which requires workers to make UI contributions based on 100 percent of their total wages. On the other hand, employers contribute to UI only on the first $8,000 of wages paid to employees. They also receive a federal tax credit to offset their contributions. This wage base was implemented in 1984, when the average salary in Pennsylvania was $17,726 (representing approximately 45% of the average yearly wage). Since then, wage levels have increased three fold. In 2012, $8,000 is about 18% of the average yearly wage. Had employers supported a reasonable increase in the taxable wage base when it was proposed three years ago we would not be in this position.
And yet the administration wants to further burden 50,000 additional persons who are unemployed due to no fault of their own. This is the wrong solution for Pennsylvania.
It's time to act for the benefit of all. To fairly restore the solvency of the Fund, the taxable wage base must be updated to reflect today's wage scales. This alone will go a long way toward restoring solvency to Pennsylvania's UC Fund. In fact, if the taxable wage base had been properly adjusted since 1984, Pennsylvania's UC Fund would be solvent today.
Rick Bloomingdale is President of the Pennsylvania AFL-CIO.