Harry Moroz

Stimulating Modernization

Along with funds to continue the extended unemployment benefits program and to increase the weekly unemployment benefit by about $25, the House stimulus bill includes $7 billion in incentives for states to modernize their unemployment insurance systems. Currently, as the National Employment Law Project quite thoroughly documents, state low-wage and part-time workers are often excluded from unemployment benefits. This results from eligibility criteria that exclude a worker’s most recent earnings (making it difficult for low-wage workers to accrue enough earnings to qualify for unemployment assistance if they are sacked) and that exclude unemployed part-time workers by requiring that they look for fulltime work.

The modernization provisions of the House bill would provide funds first to states that allowed workers to count more recent earnings towards unemployment insurance eligibility (called an “alternative base period”) and then to states that adopt two of the following four conditions: benefits are not denied because an individual is only seeking part-time work; benefits are not denied if an employee leaves work for a compelling family reason like domestic violence or a spouse’s relocation; benefits are available to an individual enrolled in a job training program; and unemployed individuals are provided at least a $15 weekly stipend for each of their dependents.

NELP estimates that 500,000 workers would be eligible for unemployment benefits after modernization and that 19 states would immediately qualify for funding, while “Most of the remaining states would qualify for enough funding to pay for several years of new program improvements.”

Inclusion of the unemployment insurance modernization provision in the House stimulus should remind us that stimulus and good, long-term policymaking are far from mutually exclusive (If this is the argument against putting more transit funding in the stimulus package, I hope this example persuades the naysayers otherwise). Indeed, as we’ve pointed out repeatedly in this space, unemployment benefits are one of the best means of stimulating economic growth, while modernization will protect a workforce of low-wage workers who are twice as likely to be unemployed as high-wage workers and one increasingly made up of part-time workers.

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Posted at 12:55 PM, Jan 28, 2009 in Economy | Employment
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