A measure to change the state’s unemployment system would curtail worker benefits when the jobless rate is low. The Missouri House Special Committee on Employment Security is considering a plan authored by Republican Representative Scott Fitzpatrick of Shell Knob.
During a Tuesday hearing, Fitzpatrick noted Missouri is the only state in the country that has had to borrow money from the federal government in each of the last five recessions when the unemployment trust fund had more money going out than was being paid in through employer taxes.
If the state continues to owe money for two years, businesses start to lose their federal unemployment tax credits. According to Fitzpatrick, the credits are reduced by $20 for each employee in the first year, and climb to $40 and $60 in the second and third year.
The measure does several things in an effort to stabilize the trust fund, but the most controversial provision would immediately reduce the length of jobless benefits.
The proposal calls for a sliding scale of available weeks for unemployment pay, triggered by the jobless rate. If the rate was nine percent or higher, workers would receive 20 weeks of benefits. The eight graduated levels would bottom out at 13 weeks when the rate is under six percent.
The state’s current unemployment rate is 3.5% percent, which means benefits would be reduced by seven weeks if the bill were to take effect today.
During Tuesday’s Employment Security Committee hearing, Democratic Representative Doug Beck of St. Louis said people will be hurt by the decrease.
“There’s going to be a real possibility of people losing their houses, their healthcare and all these other things,” said Beck. “That’s a shame. It’s a safety net. I’ve never gone on unemployment and felt good about (it), and tried to game the system. Especially at $320 a week, you’re not going to game anything.”
Republican Representative Keith Frederick of Rolla thinks unemployed people go back to work when they realized their benefits are about to run out.
“I think it does reflect human nature that, you know, you’re probably going to say ‘Government says I deserve this, I’m going to take it as long as it’s there. And then I’m going to seriously go and find work’,” said Frederick. “I don’t think that’s everybody, but I think maybe a few look at it that way.”
Reid Forrester with the Missouri Department of Labor confirmed during the committee hearing that the current average benefit an unemployed Missourian receives is 12 weeks.
Republican Representative Jim Hansen of Frankford contends rural workers have fewer job opportunities, and should have their benefits left at the current span of 20-weeks.
“You don’t have as many job options in some of those areas to go find another job very fast when you’re on unemployment,” Hansen said. “I could find one quicker probably in St. Louis and Kansas City than I could in New London, Missouri or Center, or wherever.”
Another provision in the bill to keep the unemployment trust fund adequately financed would increase business contributions.
Under the measure, the fund would have to reach a reserve level of $120 million above the current benchmark before employers would receive the scheduled discount on their trust fund contributions. Another threshold to provide a further discount would also increase by $120 million.
Ray McCarty with the business group Associated Industries of Missouri told the committee the proposed boost in contributions would help insulate the fund from upcoming recessions.
“This bill allows you to keep $870 million, more than three-quarters of a billion dollars, where it is now,” said McCarty. “It’s up to $870 million that you can keep in the trust fund, before you start triggering reductions in the unemployment tax, which we think makes a lot of sense. That gives us $870 million if we run into another recession.”
Other groups speaking in favor of Fitzpatrick’s bill were all business organizations. They included the Missouri Chamber of Commerce, the Missouri Retailers Association, the Missouri Grocers Association and the National Federation of Independent Business Missouri. The state’s largest union organization, the Missouri ALF-CIO, was the lone group to testify against the measure.
Representative Beck was far and away the most vocal Democrat among the committee members. He said decreasing jobless benefits to keep costs down for businesses is unfair to workers.
“It’s frustrating to see this constant bashing of workers in the state,” Beck said. “I really wish we could go look at other options to raise the ability of our state, economically and everything else, instead of just trying to take it off the backs of workers.”
Beck is union pipe fitter in St. Louis by trade.
A third feature in the bill would require the state’s Board of Unemployment Financing to automatically convene if the state reached a certain level of debt to the federal government in unemployment compensation.
A fourth provision allows an employer to file an appeal for recovery of overpayments for unemployment benefits for 60 days from the effective date of the bill becoming law.
This year marks Fitzpatrick’s third go-around with the unemployment trust fund measure. He originally sponsored the bill in 2015, when it successfully passed and became law.
At that time, the House and Senate overrode a veto by then Democratic Governor Jay Nixon, although the Senate’s action occurred during a later meeting of the legislature known as the “veto session”.
In the spring of 2016, the state Supreme Court struck down the Senate’s override, which scratched the law from the books. An effort by Fitzpatrick to get the measure to the finish line last year died in the Senate after the House approved it. Fitzpatrick, who also chairs the House Budget Committee, is cautiously optimistic his legislation will once again become law in 2018.