NELP commentary on Obama Administration UI proposals

Rick McHugh of the National Employment Law Project has two posts describing the Obama Administration’s unemployment proposals.

In the first post, he notes that the Administration wants to mandate a norm of 26 weeks of state UI benefits, which currently exists in Wisconsin after the waiting week, use of an alternative base period for determining eligibility for UI benefits (also currently available in Wisconsin), opening up UI eligibility to those looking for part-time work (currently NOT available in Wisconsin), and requiring states to allow workers to quit jobs for compelling family circumstances without losing unemployment benefits (currently available in Wisconsin but not well-enforced).

The Administration is also offering $5 billion in funds to states for modernization efforts and an option to create a volunteer work option — aka Georgia Works — for claimants.

In the second post, McHugh describes how the administration wants to: (a) institutionalize a four-tiered extended benefits program and the triggers for such benefits; (b) mandate minimum UI taxes, index the taxable wage base for unemployment taxes to inflation, impose a minimum state UI tax rate, and create new triggers for an increase in federal UI taxes when a state’s UI reserves fall below certain thresholds; and (c) make work-share options a permanent feature of the unemployment system.

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The declining market for unemployment benefits

Claire McKenna and Rick McHugh of NELP describe how unemployment benefits continue to be artificially low across the nation in 2015. Their key finding:

Using the latest data, we find that the recipiency rate in 2015 remained at a record low, with just over one in four jobless workers (27 percent) receiving UI benefits in 2015.

Their measure for a recipiency rate actually shows Wisconsin as above-average in the nation at 36%. As noted in their discussion of their methodology, there are several ways to measure recipiency rates. Their measure, for instance, does not account for penalty weeks (such as those where over-payments are being recovered because of concealment). Given the push for alleging concealment in Wisconsin, this 36% recipiency rate in Wisconsin is probably too generous.

Large state UI programs unprepared for next recession

Rick McHugh of NELP offers the following observations about unemployment legislation in other states:

Ben Casselman of the 538 blog has a new posting on the current state of UI programs. . The main focus of the blog is on the fact that several large states’ trust funds have not recovered from the Great Recession and they are unprepared for the next recession.

Rather than raising taxable wage bases and taking other responsible financing steps, the result of trust fund insolvency has been restrictive state legislation in some states mainly during the 2010-2013 time period. Eight states (AR,FL,GA,KS,MI,MO,NC,SC) have cut the maximum number of available weeks of UI to less than the traditional 26 weeks—and Ohio is considering joining this club. An Ohio bill cutting maximum durations to a sliding scale ranging from 12 to 20 weeks, depending upon the state’s unemployment rate, is advancing in the Ohio House of Representatives. The bill contains many other restrictive eligibility measures, and is modeled upon 2013 North Carolina legislation. It is estimated by the Ohio Legislative Service Commission to reduce benefits by $475 million a year.

One change from the North Carolina pattern is that Ohio employers would see UI payroll taxes fall under the Ohio bill, something that places the entire burden for improving Ohio’s trust fund on its jobless workers. Even North Carolina was not this one-sided in its approach to UI retrenchment. Policy Matters Ohio’s concerns about HB 394 are expressed in testimony by Zach Schiller and Hannah Halbert here and here. Many newspapers in Ohio have expressed concerns about the Ohio bill’s approach, and while momentum has slowed since the bill’s introduction in November 2015, the outcome remains uncertain.

States cutting the available weeks of benefits attempt to justify these changes by claiming that paying fewer weeks of benefit will induce a more rapid return to work by jobseekers. According to a recent Economic Policy Institute Snapshot by Will Kimball, three states cutting UI benefits the most (FL,GA,NC) by adopting a sliding scale approach similar to the Ohio proposal, have not seen their prime age (25 to 54 years of age) employment to population ratios increase. If the rationale for cutting weeks was true, jobless workers would return in greater numbers to employment. What appears to be happening to a more significant extent is that, without support from UI benefits, more jobless workers are dropping out of the labor force in those states.

These initial findings by EPI are consistent with many studies reviewed in NELP’s latest edition of our UI Toolkit. Specifically, one section of the toolkit presents recent studies that show that some economists’ preoccupation with disincentive effects of UI benefits has not been reflected in the behavior of jobless workers during the recession. In addition, the toolkit discusses other reports that show that UI claimants in fact do, in fact, look for work while on UI and that UI benefits keep individuals in the labor market and support better job matching. While sometimes facts don’t matter in contemporary policy debates, the tide of recent perspectives is now running against traditional economists’ strong moral hazard concerns about UI claimants.

Note that Wisconsin has through substantial fault and concealment, already seen a remarkable decline in its benefit levels.

In 2016, SNAP time limit should NOT be applied to UI claimants

Via NELP, Elizabeth Lower-Basch of CLASP indicates that a three-month limitation on SNAP (aka food stamp) benefits will reappear in 2016. This limitation, however, should not apply to UI claimants.

In 2016, unemployed workers without minor children in many states may be at risk of losing their Supplemental Nutrition Assistance Program (SNAP, also known as food stamps) benefits due to the return of the three month time limit for SNAP/food stamp benefits. Individuals receiving UI benefits — and many UI applicants — are supposed to be exempt from this time limit, but it is not clear that all SNAP agencies will correctly identify and exempt such individuals.Therefore, UI advocates may have an important role to play in both encouraging states to identify those who should be exempt and in assisting unemployed workers who are incorrectly denied SNAP benefits.

Since 1996, there has been a time limit on SNAP benefits of just three months during any 36-month period for working age adults without children unless they are working or participating in a qualifying work activity at least 20 hours a week.  The time limit applies to recipients who:

  • Are 18-49 years of old;
  • Are not determined to be medically certified as physically or mentally unfit for employment;
  • Are not pregnant;
  • Are not raising or residing in a household with minor children;
  • Are not otherwise exempt from SNAP work requirements; and
  • Are not working or participating in a qualifying activity for at least 20 hours per week.

Because of these rules, people subject to the time limit are sometimes referred to as “able-bodied adults without dependents” or “ABAWDs. Throughout the recent recession, many states qualified for statewide waivers of time limits due to high unemployment. But, in 2016 only a handful of states will still have statewide waivers (most states will qualify for waivers in some portions of the state, although not all states are taking the waivers for which they are eligible). The Center on Budget and Policy Priorities (CBPP) has estimated that nearly 1 million people will be cut off of SNAP in 2016 due to this time limit.

Individuals who are receiving unemployment compensation — and in many cases people who have applied for UI benefits — are exempt from SNAP work requirements, and therefore should not be subject to the SNAP time limits. The regulations include among the list of exemptions:

(v) A person receiving unemployment compensation. A person who has applied for, but is not yet receiving, unemployment compensation is also exempt if that person is complying with work requirements that are part of the Federal-State unemployment compensation application process. If the exemption claimed is questionable, the State agency is responsible for verifying the exemption with the appropriate office of the State employment services agency.

SNAP agencies should know whether recipients are getting UI benefits, as UI is countable income for SNAP, but we do not yet know whether all agencies have built this information into their processes for identifying recipients subject to the time limit. In most cases, SNAP agencies will not know that an individual has applied for UI benefits unless the caseworkers ask. For this purpose, registering for work as a condition of UI receipt is sufficient to count as “complying with work requirements.”

Questions to ask any state about this provision include:

  • Is the state requesting all of the time limit waivers for which it is eligible?
  • In the computer run to identify people subject to the time limit, are individuals reporting UI income automatically being excluded?
  • Can the SNAP agency automatically match data with the UI agency to identify individuals who have applied for UI benefits but not yet been approved?
  • In notices that are being sent to recipients regarding the time limits, are they informed that UI receipt and/or application is a basis for exemption, and asked to report if they qualify on this basis?

There are other bases for exemption from the time limit that may be of interest, including for students, those who are “physically or mentally unfit for employment” (which does not require the same level of disability as other programs), those in substance abuse treatment programs, those in workforce programs, and those working on a volunteer or in-kind basis. For more information about the SNAP time limits, see:

Medical marijuana UI decision in Michigan stands

The Michigan appellate court decision (previously noted here) holding that the use of medical marijuana does not qualify as misconduct in Michigan will not be reviewed by the Michigan Supreme Court. Rick McHugh of NELP has the details:

In October 2014, the Michigan Court of Appeals held that denying UI benefits to claimants who were registered medical marijuana users and who were fired when they tested positive for marijuana was a prohibited penalty under Michigan’s Medical Marijuana Act. Under the facts of this case, there was no allegation that any of the claimants were in possession of, intoxicated, or under the influence of marijuana while at work. All testified that they had used marijuana away from work pursuant to their medical marijuana cards. Despite this, the administrative appellate body, the Michigan Appellate Commission, had imposed misconduct disqualifications upon the claimants. Three separate trial courts then reversed and the cases were consolidated in the state court of appeals.

The favorable reported ruling is found in Braska v. Challenge Manufacturing, 861 N.W.2d 289 (2014). While the agency’s petition for appeal was pending, Mr. Braska passed away, so the Supreme Court order denying review last week was issued under the caption Janine Kemp v. Hayes Green Beach Memorial Hospital, one of the two remaining cases.

Here is a news article that gives further background about the case.

NELP had filed an amicus brief with the Michigan ACLU and Michigan UI Program in the Court of Appeals. The favorable holding is based upon explicit language contained in the Michigan Medical Marijuana Act — which was passed as a result of a voter referendum. And the act was very skillfully drafted.

NELP releases scathing report on Florida unemployment

On September 22nd, the National Employment Law Project released a report about a rapid decline in unemployment claims in Florida. In 2011, Florida enacted a series of restrictions on claim filing and in 2013 launched a new claims-filing system called CONNECT. The result: in 2014, just 12% of jobless Floridians received unemployment benefits, the lowest rate of recipiency in the nation (tied with South Carolina). For instance, a chart in this report shows a sudden and significant drop starting around the middle of 2011, when new claim-filing protocols went into effect, and then accelerating the decline in first payments relative to the national average.

FL first claims filing chart

“Ain’t No Sunshine: Fewer than One in Eight Unemployed Workers in Florida Is Receiving Unemployment Insurance” at 6. Some of the new filing requirements Florida instituted and eerily similar to what Wisconsin is doing. Florida’s claim-filing requirements, for instance, include:

  • An initial skills assessment consisting of a 45-question test to be completed online as part of the initial claim process; (Note: In 2014, the Florida Legislature acted to make the skills assessment voluntary and removed participation in the assessment process as a condition of benefit eligibility.)
  • A requirement that UI claimants register for work electronically on the “Employ Florida Marketplace” as a condition of benefit eligibility, including completion of a “background wizard” (another detailed online application in order to qualify for a first benefit payment) and an online resume; and
  • Detailed documentation of five employer contacts per week on weekly claim certifications filed electronically as a condition of weekly eligibility.

Id. at 3. These requirements, among others, led the US Department of Labor in 2013 to issue a lengthy and detailed probable cause finding that Florida was discriminating against claimants because of their national origin and their lack of proficiency with English. Unfortunately, Florida rejected these findings and, as evidence from this report, seems to have doubled down on putting up obstacles to making a successful unemployment claim. As the report concludes:

Florida has imposed a series of burdensome process requirements and technological obstacles so severe that unemployment insurance is virtually inaccessible for the average jobless Floridian seeking benefits earned through their work histories. Instead of remedying this problem, the implementation of the CONNECT system appears to have made the situation worse. And for the small share of jobless workers who do receive benefits, the limited weeks available have proven to be inadequate time for most to secure suitable new employment.

A program in which the number of disqualifications for reasons relating to availability, work search, and procedural reporting requirements exceeds the number of first payments is not unemployment insurance; it is an obstacle course. And the steep decline in Florida initial claims over the past four years (by 44 percent compared to 32 percent nationally) strongly suggests that these obstacles are discouraging unemployed workers from filing for unemployment insurance.

The federal government funds administration of the unemployment insurance program, and federal law establishes standards with which states must comply to ensure qualified unemployed workers can access benefits and are not unfairly denied. The State of Florida is thwarting the fundamental rights of unemployed workers to apply and qualify for unemployment insurance. An insurance program that pays benefits to fewer than 4 in 10 unemployed workers who apply and fewer than one in eight jobless workers in the state can hardly be called insurance. Unemployed Floridians struggling to make ends meet until they get that next job deserve a UI system that is fair and accessible. The Social Security Act was intended to hold state unemployment insurance programs to standards of fairness and accessibility. There should be no exception for Florida.

“Ain’t No Sunshine: Fewer than One in Eight Unemployed Workers in Florida Is Receiving Unemployment Insurance” at 8.