Victory on Unemployment Compensation
June 30, 2011
On June 17, Governor Tom Corbett signed into law important reforms that will begin to slow the growth of the state’s unemployment compensation system, which has a loan debt to the federal government approaching $4 billion.
Pennsylvania got into this dire situation as a result of benefit payments that, over the years, were liberalized well beyond the original intent of the UC system. The recession and resulting weak job market have made the problem worse.
As such, shoring up the UC safety net and restoring the Trust Fund to solvency has long been a top priority of Pennsylvania Chamber members. As a member of the state’s UC Advisory Bureau, the Pennsylvania Chamber has worked with all sides of the issue in the ongoing effort to find common ground on an effective solution.
The view of the Chamber and pro-reform lawmakers is that before we spent another $350 million of taxpayer money on a system that the U.S. Department of Labor says is victim of $377 million of fraud, waste and overpayment, we needed to make important reforms to that system.
While Act 6 doesn’t go as far as it could to restore the UC Trust Fund to solvency and reasonably tighten eligibility requirements, it is no doubt a good start and a legislative victory.
Nearly $133 million in annual savings will be realized in the following ways:
-
Freezing the maximum weekly benefit rate for one year, with incremental increases over the next five years
-
Requiring a “week of work for a week of benefits,” up to 26 weeks, and
-
Establishing a 40 percent severance offset to limit the collection of severance pay and UC benefits at the same time.
Recipients are also required to prove they are looking for work, which accelerates a return to the workforce. And employers and employees are able to negotiate work share programs with reduced hours in order to prevent layoffs during difficult economic times.
Pennsylvania Chamber members applaud these improvements, but recognize that more needs to be done. Lawmakers have pledged to address the solvency issue in the future.
And legislation will soon be introduced to clearly define willful misconduct and voluntary quits – two key reforms that get to the heart of the UC system’s purpose –providing assistance to people who are out of work through no fault of their own.
Thanks again for your continued support. And thanks for spending a minute of your time with the Pennsylvania Chamber – the Statewide Voice of Business.
