OPINION:
New
York
needs an update for
unemployment benefits
BY ANDREW STETTNER
9:43 PM EDT,
June 11, 2009
Andrew Stettner
is
deputy director of the National Employment Law
Project.
If you had asked the average person
something about unemployment benefits last year
you would have gotten a blank
stare. But nowadays, everyone seems to know
someone who is laid off, and New
Yorkers don't like what they are finding
out.
The maximum unemployment
benefit in New
York State is $405 a week
- while in
Pennsylvania it's $539, in
New
Jersey it's $584, and in
Connecticut, $576. In terms
of the share of lost wages that the state's
unemployment insurance fund provides
to the newly laid off, New
York ranks 49th. That's
a stunning failure for a state
reputed to be
worker-friendly.
Unemployment benefit
levels have been
frozen since 2000. And now, while New
York's jobless rolls
have more than doubled over the
past year, unemployed workers are forced to
rely on an insurance program that
has been broken for years.
Washington
has done its part to boost jobless
workers in the state. Federal aid now raises
unemployment benefits to a maximum
of $430 a week, but for most New Yorkers, this
$25 increase is one very short
trip to the grocery store. It's hardly going to
cover a medical emergency or
stave off a foreclosure.
Altogether,
Washington has
sent more than a billion dollars
to Albany for
benefit extensions and a $430 million grant to
improve the program. Now it's
Albany's turn
to
step up to the plate.
Before this week's
meltdown in the state capital,
some legislators were making progress toward
passing reforms to bring the
program into the 21st century. The goal is to
gradually raise benefits to cover
half of the average weekly wage. This modest
step would still leave New
York behind many
other states, but the proposals would end an
unfair loophole that keeps workers
laid off from schools and colleges from
receiving benefits - which leaves
cafeteria workers, groundskeepers and adjunct
faculty members with nothing to
live on between terms.
The proposals are
fiscally responsible. New
York's unemployment
insurance fund is now at such severely low
levels that the state has to borrow
from the federal government to pay benefits.
Absent action, employers and
New York
State
will face stiff
penalties and interest in the next few years.
But this proposal would generate
enough revenue to steer us clear of prolonged
debt to the federal government and
replenish the fund.
Under this proposal,
too, the increase in benefits
would start almost immediately, but allow
employers to phase in modest tax
increases - starting with $54 per employee per
year in 2010 - as the economy
improves.
A major cause of the current
shortfall is New York's
outdated
formula, which requires employers to pay the
fund only for an employee's first
$8,500 in yearly earnings. The national average
for this figure, known as the
taxable wage base, is $11,800 - and it's more
than $14,000 in Connecticut,
Massachusetts and New
Jersey. Raising this
base, which has not changed in a decade, even
as the average wage of workers and
the cost of living have risen, would go a long
way toward restitching New
York workers' safety
net.
The safety net, by the way, should
not be defined by the maximum
benefit, small as it is, but by the amounts
given to low-income and
middle-income workers. Consider a single mother
of two who loses her $8-an-hour
job. If she lives in New
Jersey, she would
receive $213 a week in unemployment
insurance benefits; if she's a New Yorker,
she'd collect $160 a
week.
Unemployment insurance is not
welfare. The benefits fund is
financed mostly by employers and, indirectly,
by workers who sacrifice in their
paychecks for their employers' expenditures.
Each dollar paid in unemployment
benefits generates $2.15 in economic activity,
most of it going to local grocers
and shops, mechanics and contractors,
restaurants and
hospitals.
New
York can't afford to
let the confusion about leadership
in the State Senate delay action to fix
unemployment benefits. Not only would
unemployment reform deliver badly needed relief
to the struggling economy and
its workers, but failing to act would allow the
unemployment fund to fall
further into the red.
