Parade of Horribles: Sliding Scale Scheme for Unemployment Insurance Duration
Today, county level unemployment rate data was released and tomorrow, policymakers plan to consider the bill to overhaul our state’s unemployment insurance system in a House committee. In December 2012, we now know that unemployment rates by counties ranged from a high of 16.6 percent in Scotland County to 5.9 percent in Orange County. The state average was 9.5 percent for that month. In light of one aspect of the unemployment insurance bill that kind of variation suggests that unemployed workers will be treated differently by the system based on where they live.
That’s because the bill under consideration includes a provision that establishes a sliding scale for the minimum and maximum duration of weeks that an unemployed worker can receive unemployment insurance benefits based on the state unemployment rate. (We should note that no other state has a sliding scale for the minimum number of weeks while only two states (Florida and Georgia) have a sliding scale for the maximum number of weeks.)
The affect of this provision will be that in counties where the labor market makes it much more difficult to find work, workers who are unemployed will face significantly reduced weeks that are reflective of the state average not local conditions. In the 2001 recession, forty six counties had unemployment rates higher than the state unemployment rate to a level that should push them into a longer duration. In the “boom” year of 2006, twenty three counties faced similar conditions. The result is that their residents who are out of work and receiving unemployment benefits will have fewer weeks than the local labor market conditions merit as policymakers have acknowledged by setting up this very scheme. In fact, depending on the county’s unemployment rate, the loss in weeks could be as high as eight meaning two full months without a modest, temporary wage replacement.
Another disturbing affect of this provision is that the benefit duration will effectively be cut in half from the current 26 weeks. Even in previous periods of recession, the state unemployment rate did not reach a level that would merit a maximum duration on the new sliding scale scheme of more than 15 weeks. During most of the time, the duration of weeks will hover at a mere 12 weeks.