Fix That Leaky (Unemployment System) Bucket!

Issues & Policies

If you’re trying to fill an old bucket with water, shouldn’t you plug the holes first?
One of Connecticut’s leakiest buckets is the state’s Unemployment Compensation Trust Fund.
Connecticut has historically refused to follow other states’ leads in patching up the holes and making the kind of benefit reforms that can make the system more solvent.
In fact, Connecticut is one of the few states that have just continued to try and fix the problem by advocating solutions that only focus on pouring in more funds.
That’s why a bill backed by a large coalition of business associations that would make reforms to the unemployment benefits paid out by the state is gaining traction among lawmakers and picking up co-sponsors.
Employers are only suggesting reforms that neighboring states made years ago that helped spring them back from the debts caused by the recession far more quickly than Connecticut.
HB 5367 would make the following reforms:

  • Raising the minimum earnings to qualify for unemployment benefits to $2,000. Claimants in Connecticut need only earn $600 in a year to qualify for benefits—the third-lowest earnings requirement in the U.S. For perspective, 32 states/territories require between $2,000 and $5,000 in earnings. The earnings requirement in Connecticut has not been raised since the statute went into effect in 1967.
  • Requiring claimants to post their resumes online to receive benefits after six consecutive weeks of unemployment. Rhode Island recently instituted this reform, which studies show gets the unemployed back to work faster. Connecticut’s labor department already has an online resume listing portal in operation that can be used for this purpose.
  • Basing benefits on an employee’s annual salary rather than two highest quarters, to avoid inequitably rewarding seasonal workers. Sixteen states base employees’ benefits on a full year’s salary. Under current law, a seasonal worker in Connecticut earning $30,000 over the course of two calendar quarters would get the same unemployment benefits as a full-time worker earning $60,000 over four quarters. This reform will provide relief to businesses, especially farms, that hire a lot of seasonal workers.
  • Freezing the maximum weekly benefit rate for three years. The maximum benefit rate is allowed to increase by $18 every year. Freezing this for three years could save as much as $10 million per year.

It’s time for state lawmakers to make the changes needed to fill the bucket so we can put this fire out for good.

In testimony earlier this session, the few that opposed the measure said they preferred a more “comprehensive” approach to solving the unemployment trust fund’s solvency issues.
But that approach translates to mean “including more tax increases.” That is, dumping more water into a broken bucket.
There may come a time when it is necessary to increase the state taxes businesses pay into the unemployment trust fund.
Unfortunately, our neighboring states seem to be running their unemployment trust funds very well while taking in a similar amount of unemployment taxes as Connecticut.
Connecticut employers value the unemployment system because they realize it’s an important safety net--but we also know a bad investment when we see one. Businesses avoid throwing more good money after bad.
So while some will always stand against even the most minor of reforms, the fund continues to fall vastly short of solvency.
It’s time for Connecticut state lawmakers to make the changes needed to fill the bucket so we can put this fire out for good.

For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede


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