Jobless Workers Can’t Feed Their Families While States Sit on $3 Billion in UI Funds

by James Parks, Aug 31, 2009

With unemployment at its highest levels in decades, it’s unbelievable that some $3.1 billion in unemployment insurance (UI) benefits included in the federal economic recovery package is not being spent because 23 states have not yet revised state rules covering jobless benefits.

Today’s USA TODAY reports that nearly 350,000 out-of-work Americans could get benefits if all those states revamp their unemployment systems to qualify for money that is included in the federal stimulus package.

In 11 of the states, Republican governors or legislatures have refused to modify the rules governing unemployment insurance to qualify for about $1.7 billion in stimulus funds. The other 12 states have made only some of the changes, not applied for the funds or not taken legislative votes on the changes. Although the states have until 2011 to change the laws, the reality is that many states need the money now and the workers really need it now.

The five states with the largest number of jobless workers eligible for the expanded unemployment insurance are Texas, Florida, Pennsylvania, Missouri and Indiana. There are more than 169,000 people in those states alone who are missing out on nearly $1.6 billion in benefits.   

In some states, “politics is in play,” says Maurice Emsellem of the National Employment Law Project (NELP). Governors such as Rick Perry of Texas and former Alaska Gov. Sarah Palin refused to accept the funds.  

The Republican governors’ claim that changing the laws would lead to tax increases down the road is not really true, he says. The economic crisis has severely stretched state unemployment trust funds, and several states have laws that require tax hikes when the trust funds run low. But the stimulus funds would go into the state coffers immediately, preventing the mandated tax increases. The federal funds could pay for about seven years of expanded benefits, he says.

[The $3.1 billion] would build funds when they need it most. This little increase in benefits is not going to be the straw that breaks the camel’s back to determine whether taxes are going up.

Emsellem adds that once state lawmakers and employers look carefully at the program, they realize that everyone would benefit from the changes. He credits AFL-CIO state federations for playing a key role in building coalitions to push through the changes in several states.

States can get one-third of the money by relaxing their rules on the length of employment needed to qualify for jobless benefits. They can get the rest by providing just two of four kinds of unemployment benefits: extra money for the workers’ dependents, for part-time workers, for those in training programs or for those who quit because of “compelling family circumstances”—such as fleeing domestic violence or caring for a sick relative.

Meanwhile, the Labor Department last week agreed to release $89.2 million in unemployment insurance funds to Wisconsin after the state updated its UI program to reflect the 21st century workforce.

Labor Secretary Hilda Solis said:

Wisconsin has now updated its law to make it easier for workers who become unemployed for compelling family reasons and workers who are upgrading their skills to be eligible for benefits. These changes not only help workers, but will contribute to the state’s overall economic recovery.

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