Don't Let the Douglas Administration Dump on Unemployed Vermonters

The number of Vermonters forced into unemployment by the global economic crisis has put a strain on the State's unemployment insurance fund. To address this problem, the Douglas administration has proposed cutting the amount of money that unemployed Vermonters will receive while they are out of work. The governor calls this a "balanced" approach to dealing with the problem. We call it heartless and inhumane.

The legislature's Unemployment Insurance Trust Fund Reform Study Committee will be meeting Wednesday, November 4 from 1:00 PM to 6:00 PM. The last two hours of the committee meeting (4 PM - 6 PM) will consist of a public hearing. We urge Vermonters to go to the State House and tell the committee not to balance the unemployment insurance funding imbalance on the backs of the Vermonters who need it most.

• To register for a chance to speak, call (802) 828-2253 or email .
• If you cannot make it to the State House wednesday afternoon but wish to share your thoughts with the legislature, email your thoughts to , and we will share them with the committee.
• If you are not comfortable speaking, just come and show your support for the members of our community who, through no fault of their own, have been put out of work.

Read a good op-ed from Rep. Warren Kitzmiller "Let Them Eat Cake"

Unemployment Insurance in Vermont

Working Vermont Briefing Paper

June 2, 2009

General issues

* The Douglas Administration’s proposal for altering the Unemployment Insurance system will undermine one of the most important programs for Vermonters who are out of work.
* In the depths of this economic downturn, one of the worst things we can do is cause further harm to individuals who have lost their jobs through no fault of their own. Vermont’s working families cannot absorb this hit.
* Vermont’s UI total benefit levels are right at the national norms and below the regional norms.
* Vermont is not alone in its UI Fund solvency problem. At least 35 other states are in equal or worse shape than Vermont.
* Only one other state – Indiana – is considering cutting benefits or limiting eligibility to this essential safety net.
* Virtually every other state is using the mechanisms in law that allow them to use federal funds to bridge the gap while the economy recovers and the UI Fund returns to solvency.
* These proposals also run in exactly the opposite direction as the Obama Administration’s stimulus package which seeks to modernize unemployment insurance programs and expand assistance to those who have lost their jobs during this epic recession.
* We cannot balance the solvency of the trust fund on the backs of the very people who need our help right now. We must not cut the safety net for Vermonters who lost their jobs through no fault of their own.

Regarding the Administration’s “balanced approach”

o When a “balanced approach” is argued, it is essential to keep in mind the history of how we got here.
o Over the past 25 years, Vermont’s employers have seen their UI taxes go down 58% as a percentage of their payroll – a direct result of only the first $8000 of wages being taxed since 1983, with no increase in over 25 years.
+ In 1983, the Average Annual wage was $14,469. In 2007 it was $36,323. Yet employers are still only paying on the first $8000.

What the Governor’s proposed cuts would mean to working Vermonters:

à Freeze the maximum weekly wage cap at $425 and prevent the maximum weekly wage cap from rising to $438.

o Vermont’s unemployed workers stand to lose millions of dollars if the maximum benefit is frozen.
o Next year alone, Vermonters who have lost their jobs will have at least $5,000,000 of wage replacement taken right out of their pockets. An unemployed worker on extended benefits could lose $676 next year.
o That amount will likely rise to $10,000,000 or more for the following year, and so on, as the maximum continues to lose pace with the cost of living.
o This will reduce benefits by approximately $10 million per year and is targeted at the 22% of workers who already bump up against the current artificial cap.
o It would represent a cut of about 7% in workers’ benefits from what they otherwise would be receiving next year.
o In any given week about 5000 households with a laid off worker would be impacted.
o Moreover, Vermont’s maximum benefits are low for New England and are about average for the rest of the country. Same is true for our overall total benefits per recipient. It is pure spin to say we have generous benefits.
o This totally goes against the whole purpose of the Obama stimulus package- which was to prime the economy and to give those out of work a helping hand.

à Disqualify workers from UI for any misconduct

o The proposal would allow employers and the department of labor to totally deny unemployment benefits for even minor transgressions.
o This is akin to taking away a school principal’s ability to suspend a student and forcing them to expel in all circumstances.
o Certainly there are times when “expulsion” is warranted, and current law allows for that. However making expulsion the only option is punitive at best.
o Many claimants alleged by the employer to have engaged in “misconduct” may not have actually done so. Some employers fail to follow proper disciplinary rules and fire employees for “misconduct” without giving a warning or suggesting corrective action before terminating the employment.
o Most claimants do not receive legal assistance. There are many instances where unrepresented claimants either do not, or cannot, effectively represent themselves where they may well have defenses to allegations of misconduct.
o The employer is not prejudiced by leaving the rules as they are because an employee fired for misconduct does not affect the employer’s experience rating.
o The only result of this change will be to unjustly deny qualified beneficiaries the opportunity to receive a benefit after the 9 week waiting period expires, and to make it harder for other unemployed workers to get back into the workforce.

à Reduce the weekly benefit amount from 57% to 50% of the average wage replacement.

o This would represent many millions of dollars more in benefit cuts and would reduce the average benefit by 12%!

àLimit total annual benefits to 1/3 wages or 26 weeks, whichever is shorter:

o This would be a limitation on the number of weeks an otherwise eligible claimant could draw (which is normally 26 weeks).
o The proposal purports to go after only those with limited attachment to the workforce, but in reality could impact those who have worked for close to a year before being laid off. It is estimated to cut benefits by $5.9 million and would impact fully 35% of all workers. It would hit seasonal workers and the building and construction trades particularly hard.

What Vermont could be doing

o Surprisingly not among the Governor’s ideas is the recovery of the millions of dollars in unpaid or underpaid taxes resulting from employers wrongly misclassifying their workers as independent contractors. Indeed, DOL’s own reports show misclassification found in 10 -14% of routine audits and in 40% of non routine audits.
o Analyze areas of the UI program where Vermont is out-of-step, particularly the case of “negative-balance” employers.
o Like the 35 other states facing solvency issues, Vermont should be carefully considering the appropriateness of borrowing from the federal trust fund designed precisely for these situations. Other states have considered bonding and special limited surcharges to address the federal interest costs.