Unemployment Reform Focus of Senate Hearing

The more than 100,000 jobs lost in Connecticut since the recession began have put a huge strain on the state’s unemployment compensation system. In fact, Connecticut is among more than 40 states whose unemployment trust funds have run out of money and have had to borrow from the federal government to pay benefits.

What many policymakers may not understand, however, is how the recession will affect states’ ability to meet their unemployment benefit obligations into the future. On Wednesday, April 14, the U.S. Senate Committee on Finance held a hearing to address the challenge.

Experts from across the nation came to the hearing to discuss such issues as trust fund solvency, the impact of repeated unemployment insurance benefit extensions, experiences with work-sharing programs, the expanded eligibility measures contained in federal stimulus legislation and improvements in states’ unemployment administration.

During the hearing, business leaders made several recommendations, including that the federal government:

• Provide short-term relief from federal unemployment tax penalties by extending the interest-free waiver period on federal loans to states for unemployment compensation and the Federal Unemployment Tax Act (FUTA) offset credit penalty for two years
• Encourage personal responsibility on the part of unemployed workers and step up efforts to help unemployed workers search for work and get training
• Improve efforts to identify and collect overpayments and prosecute fraud
• Correct the unemployment insurance program by reducing benefit payouts; minimizing tax burdens on businesses, and bolstering the original purpose of the UI program—to provide only temporary wage replacement benefits for workers who become unemployed through no fault of their own and who are available for and actively seeking work.

CBIA supports these recommendations, and believes that solving the unemployment fund challenges has to start by making sure the system is used as intended—that eligibility requirements are adhered to; that people out of work are given incentives to find suitable employment quickly; and that individuals who collect benefits fraudulently must repay the funds as quickly as possible.

For more information, contact CBIA’s Kia Murrell at 860.244.1931 or kia.murrell@cbia.com..