Jobs the Ultimate Goal of Unemployment Reforms

02.26.2015
Issues & Policies

“We don’t want to be on unemployment, we just want to work.”

That’s what a trade union representative told the Labor Committee this week, whose members learned about a major barrier to jobs in Connecticut and what they can do to eliminate it.

The committee’s hearing in Middletown focused mainly on municipal prevailing wage issues, but the committee also took up several reforms of the state’s unemployment compensation system that can help reduce costs—and help put people more back to work.

Employers in the state continue to face higher and higher costs to pay back the nearly billion-dollar federal loan the state needed to keep the unemployment system afloat. 

And those rising costs are stifling economic activity and job creation.

Connecticut’s job creators alone are responsible for paying back the federal loan, and they’ve been facing annual tax increases and special assessments in order to speed up the repayment. 

Just as an employee can become unemployed through no fault of his or her own, employers–including those that never had to lay off an employee during the recession–have had to pay higher federal unemployment taxes each year since the recession through no fault of their own. 

And just as the union representative wants to work, employers want to create so much economic activity that every construction employee, union and nonunion, has a job and contractors have their hands full with projects. 

“Job creators can’t create opportunities for Connecticut citizens when they are paying almost four times the federal unemployment taxes that are paid as a similar business would pay in Massachusetts,” says CBIA’s Eric Gjede. 

Why are Connecticut employers paying so much more? Mainly because Connecticut, unlike many other states, has put off reforming unemployment benefits—and that’s led to more going out of the system than coming in. 

HB 5851, however, would use some of the best ideas of other states to reform our unemployment compensation system, such as:   

  • Requiring claimants to wait a week before receiving benefits (like they do in 41 other states)
  • Raising the earnings needed by a claimant to qualify for unemployment benefits to $2,000 (CT has been at $600 since 1982)
  • Basing benefits off an employee’s annual salary rather than two highest quarters to stop unfairly rewarding seasonal workers (just like they do in 16 states)
  • Freezing automatic increases to unemployment benefits for three years
  • Requiring claimants to post their resume online after their sixth consecutive week of unemployment benefits to encourage their effort to return to work. 

Our state’s failure to make these reforms for so many years has helped to push Connecticut’s unemployment trust fund to a point of perpetual insolvency. 

Meanwhile, our neighboring states, all of whom have made some or all of the reforms found in HB 5851 are enjoying solvent unemployment trust fund safety nets without threatening their business communities with yet another tax increase. 

For the benefit of preserving this important safety net, it’s time for the legislature to adopt the reforms found in HB 5851.

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede

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CBIA IS FIGHTING TO MAKE CONNECTICUT A TOP STATE FOR BUSINESS, JOBS, AND ECONOMIC GROWTH. A BETTER BUSINESS CLIMATE MEANS A BRIGHTER FUTURE FOR EVERYONE.