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Legislature faces big decision on state unemployment program

3/7/2024

Hoppy's Commentary – Here is a question West Virginia legislators always need to ask themselves, especially in the closing days of a session: Is it better to something or do nothing?

That applies to the current debate under the Capitol dome over SB 841 which makes significant changes in the benefits paid to laid off workers and the payments by employers into the trust fund.

Currently, laid off workers qualify for up to 26 weeks of unemployment at a rate of 55 percent of their average weekly wage and a maximum benefit of about $17,000. The bill that has passed the Senate and is under consideration in the House changes that to 24 weeks.

Under the bill, benefits would be scaled from a high of 70 percent of the average weekly wage in the first four weeks and then declining by 5 percentage points every four weeks down to a low of 45 percent in the final weeks, with a maximum benefit of about $14,000.

Currently, employers are taxed on the first $9,500 in employee wages. The bill would cap the taxable amount at $10,000.

Here is an important point: Right now, the taxable amount and the size of the benefits are based on a formula linked to wages. As wages rise, so do the unemployment taxes and laid off employee benefits. The proposed bill would set the rates in statute.

Employers like that because it would give them cost certainty in the future. Brian Dayton, vice president of policy and advocacy of the West Virginia Chamber of Commerce said the bill “would provide stability to the unemployment fund and prevent a series of cascading tax increases on businesses.”

Bill supporters also argue that front loading the benefits would encourage laid off workers to get back to work sooner rather than wait until their payments decline.

As you might expect, labor leaders have a different view. They believe the caps would not keep up with the cost of living. They say contract construction workers would be hit hard since they are typically seasonal employees who are frequently laid off. They would see their benefits at the lowest at the end of their eligibility, just when they need it the most.

Meanwhile, the condition of the state’s unemployment trust fund is at the heart of the debate. It has a balance of $390 million. Supporters of the bill argue that the fund is paying out more than it is taking in and could be exhausted if the state falls into a long recession and unemployment rises above ten percent. It is currently at 4.3 percent.

However, labor leaders, including Justin Williams of the Affiliated Construction Trades Foundation, contend the fund is flush, and he calls the concern “manufactured outrage.”

Williams also argues there is confusion among lawmakers over the potential impact of such a dramatic change. He points out that the bill passed the Senate on the same day it was introduced with little discussion.

This is a big deal.

There are 110,000 small businesses in the state and they make up 98 percent of all businesses here. They all have to pay the unemployment tax as a cost of doing business.

And there are at least 560,000 individuals who work in the private sector in the state and each one of them faces the possibility of being out of work one day.

I am not offering an opinion on whether this a good bill or a bad bill. I really don’t know, and frankly, I don’t think many lawmakers do either. There seem to be many unknowables, at least at this point, about the impacts and possible unintended consequences.

The House will likely vote on the bill Friday, and delegates have to decide—knowing what they know, and more importantly what they don’t know—whether it’s better to do something, or do nothing.

 

Story by Hoppy Kercheval, MetroNews

 

 

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