Unemployment Reforms Clear First Hurdle
A bill that will have a positive impact on the state’s business climate and jobs was unanimously approved by the Connecticut legislature’s Labor Committee.
HB 5367 could bring long-term savings for employers by improving Connecticut’s unemployment compensation system with reforms that neighboring states have successfully made.
And this positive proposal would have no impact on the state budget.
Connecticut’s unemployment trust fund did not fare well during the recession—the state had to borrow nearly $1 billion in federal funds to keep the system above water.
It’s a billion-dollar debt, plus yearly interest rate hikes and special assessments that Connecticut businesses have been paying back for the last five years.
Much of that borrowing could have been avoided, however, if Connecticut had made the same state benefit reforms our neighboring states had made.
But businesses in the state are now saddled with the highest federal unemployment tax rate in the country.
Employers here are paying more than four times the rate that businesses in neighboring states are paying: $189 federal tax per employee in Connecticut instead of $42 per employee elsewhere.
HB 5367 introduces the reforms that have been ignored for so long:
- 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 utilized 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 $30,00 over the course of two calendar quarters would get the same amount of unemployment benefits as a full time worker that earns $60,000 over four quarters.
- 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.
The business community applauds the Labor Committee for moving forward on this important bill. While Connecticut businesses had to pay a heavy price for lawmakers’ failure to enact solvency promoting reforms in the past, the mistake doesn’t have to happen again.
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