Proposed Cuts to Georgia Unemployment Insurance are Among Harshest in Nation
By Christine Owens for the National Employment Law Project (NELP):
GEORGIA –The Georgia Senate has approved a bill that would severely undermine support to laid-off workers as they search for new jobs, despite the state’s 9.1 percent unemployment rate, which is as high as 19 percent in some counties.
If enacted, HB 347, formerly SB 447, would reduce state unemployment insurance to a maximum of 20 weeks and as low as 12 weeks. It would make Georgia only the second state in the country to vary the maximum allowable number of weeks based upon the state’s unemployment rate, and HB 347 would also deny coverage to unemployed workers during their first week of unemployment.
Until recently, the national standard for over 40 years had been that states provide 26 weeks of unemployment insurance. A handful of states made reductions last year, including Florida, which enacted a variable benefit scheme that provides up to 23 weeks during periods of high unemployment. The Georgia proposal imposes even harsher reductions, at a time when no other state in the country is seriously considering such cuts in jobless assistance.
Furthermore, when states reduce their maximum unemployment insurance below 26 weeks, federal unemployment insurance available to jobless workers is reduced as well. Georgia workers should not be afforded less financial protection from the state-federal unemployment program than workers suffering job losses in other states, including those where unemployment is much lower than in Georgia.
This cut is particularly devastating to Georgia’s unemployed since Georgia already has the stingiest benefit formula in the country with regards to weeks of eligibility. The average jobless Georgia worker was able to collect only 13 weeks of insurance in 2011, the lowest average duration of all states. This is not because Georgia workers are finding work faster than in other states. In fact, more than 50 percent of all unemployed Georgians exhaust their state UI benefits without finding a job. Georgia’s low 13-week average duration is largely a consequence of an existing state law that restricts benefits to no more than one quarter of the wages the worker earned in the prior year. In every other state, benefits available to unemployed workers are a larger percent of their prior earnings. Already Georgia workers with low earnings prior to layoff are not receiving the current maximum 26 weeks of benefits; if HB 347 passes, neither will any other laid-off workers, no matter how high their prior earnings.
Fixing Georgia’s Unemployment Insurance Trust Fund
Much of the proposal to cut benefits is driven by the fact that Georgia’s unemployment trust fund is insolvent and is borrowing from the federal government. This situation is not unique to Georgia. More than 30 states have had to borrow in the aftermath of the great recession. However, the solution to this problem does not lie in eviscerating the system of benefits (a modest $269 per week on average) and undermining the program’s core purpose – to provide crucial income support to workers who lose employment through no fault of their own until they find a new job.
Instead, lawmakers should address the problem of the state’s trust fund solvency at its source. At the start of the last decade, Georgia businesses enjoyed a $1.3 billion tax cut courtesy of a four-year “tax holiday” – the largest unemployment tax cut in U.S. history. In addition, the state has suppressed an automatic surcharge on tax rates needed to replenish the low trust fund balance every year since 2003. Georgia’s state UI tax is already one of the nation’s lowest (contributions ranked 47th nationally in 2011) with four out of ten employers paying only the annual minimum of $3 per employee. It is these unusually low taxes – not the already low benefits for unemployed workers – that created the trust fund crisis, and the solution lies in addressing these rates.
We may be in the third year of a recovery, but there are still more than 435,000 unemployed Georgia workers looking for a job. For them, the recession persists, and the state should not turn its back on them. The Georgia legislature should reject HB347 and keep faith with workers who have already suffered so greatly from a recession they did not cause, and who should not be penalized anew by a cut in the benefits they need and have earned.
The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers.