Solving Unemployment by Abandoning the Unemployed

Representative Barbara R. Sears recently introduced House Bill 394 in a backward attempt to solve unemployment.

During the last recession, Ohio borrowed money to keep up with escalating unemployment rates.  It is reported that it borrowed $2 billion, with $774.8 million remaining due.  Seemingly inspired by the current debt, which is already projected to be paid off by the end of 2017, Barbara Spears has introduced a Bill to cut unemployment benefits in ways that seem not only dramatic, but also irrational. 

Although Ohio's current 5.43 million jobs is still down from the 5.6 million it had in 2000, its unemployment rate has been on the decline, recently dipping to 4.4% in October.  This is the lowest it has been since August 2001.  Ms. Spears' proposal seeks to cut benefits to those remaining people without meaningful adjustments to the Employer contribution rates.

Employers have paid unemployment taxes on the first $9,000 earned by employees since 1995.  If this had been adjusted for inflation, it would now be $14,052.  The national average is $13,407.  Rather than addressing any budget shortfalls by taking the obvious step of increasing the limit from the 1995 cap of $9,000 to at least the national average, Sears proposes to increase the cap to only $11,000 and only temporarily.  Her plan to "shore up" unemployment relies not on ensuring employer's pay their fair share, but on cutting benefits to those who have become unemployed through no fault of their own.

That is the current standard for unemployment - that the employee must be unemployed through no fault of their own to be eligible for benefits.  If an employer has just cause to terminate an employee, that employee will not qualify for benefits.  Likewise, if an employee lacks just cause to resign, they too will be ineligible.  Sears would modify these just cause standards, however.  Instead of looking at the particular circumstances for individual employees at their employers, she attempts to establish rules that apply across employers without evaluating whether there were good reasons for terminations. For example, an employee will not receive benefits if:

(I) The individual violated the terms of an employee handbook provided to the individual in connection with the individual's employment .

Although unemployment already looks at rule violations when an employee is terminated to determine whether there was just cause, Ms. Sears would disqualify an employee without regard to how the employer operates, how they train their employees, how they enforce their rules, or how minor the alleged violation.  Arguably, for example, if an employer hands an employee a handbook of several hundred pages with no training, the employee would be ineligible due to any violation of that handbook, regardless of how vaguely and broadly written, no matter how minor the violation, and without regard to whether the employer evenly applied the same expectations to all employees.  "Ohio would be the only state in the country with such a provision," explains Zach Schiller of Policy Matters Ohio.

Ohio Unemployment Rate.  Source:  Bureau of Labor Statistics, http://data.bls.gov/timeseries/LASST390000000000003?data_tool=XGtable

Sears also proposes to attack the length of benefits, despite the falling unemployment rates.  She must see the chart above from the Bureau of Labor Statistics, with our historic low unemployment rate, and feel compelled to get it to an absolute zero even if the only way to get there is to cut benefits to the remaining individuals searching for new work after becoming unemployed through no fault of their own.

Employees are currently eligible for a maximum of 26 weeks of unemployment, and Sears would cut that to less than half, leaving between 12 weeks and 20 weeks, depending on the jobless rate.  She would also depart from the current standard of requiring 20 weeks of average earnings of at least $237 during an employee's year long base period, to requiring earnings during at least three quarters of the year. Finally, Sears would reverse a practice abolished eight years ago, and start to deduct social security payments from unemployment compensation.

“Slashing worker benefits and lowering employer taxes is not a balanced solvency plan,” said Zach Schiller, Policy Matters Ohio research director. “This overhaul needs an overhaul if it is to meet the needs of the Ohio economy, as well as Ohio workers and employers.”

Abandoning people who are unemployed through no fault of their own is irresponsible and void of morality, especially in light of employers who have gone through the recession, and in fact the past 20 years, without seeing their caps increased.  The arguments for such irrational proposals are based on an assumption that there is no excuse for the unemployed to be unable to find work because Ohio is increasing jobs.  That increase in jobs, however, has already played itself out by reducing the unemployment rate from a high of 11% in January 2010 to the 14 year low of 4.4% it is at today. 

The unemployed worker still finds hurdles when searching for suitable employment where they live in the best of economies, let alone Ohio's economy.  Even with unemployment benefits, they might just barely avoid foreclosures, evictions, and repossessions.  The blunt truth is that many will face homelessness and hunger without the benefits.  Abandoning the unemployed, who are in that position as the result of layoffs, closures, and unjust terminations is, well, unjust.

If you have an opinion regarding House Bill 394, you can find your legislators' email and contact information here.  https://www.legislature.ohio.gov/legislators/find-my-legislators

If you do find yourself in need of applying for unemployment or appealing an unemployment determination, visit my web page for more information at http://SivinskiLegal.com