Joint Committee on Labor and Workforce Development, In Support of House Bill 1799; An Act Relative to Reform of the Unemployment Insurance System, Testimony of Christopher Anderson

Thank you, Chairman McGee and Chairman Torrisi for the opportunity to submit written testimony on this important issue.

The Massachusetts High Technology Council was formed in 1977 by technology CEOs to make Massachusetts the most competitive place in which to create, operate, and expand high tech businesses.  That remains our mission today. Council members employ hundreds of thousands of skilled workers in all of Massachusetts’s key technology sectors, including computer hardware, life sciences, software, medical products, semiconductor, defense technology and telecommunications.  Our members include the executive leadership of tech employers such as EMC, Boston Scientific, Analog Devices, Genzyme, and Wyeth Biopharma.

For decades, the state’s UI system has been a competitive disadvantage for Massachusetts employers and among the most costly in the nation.  For global technology companies, the Massachusetts UI system is a significant cost burden not faced by companies in leading technology nations, like China and India, or states, like North Carolina or Florida.  We must adopt a comprehensive set of reforms to make our UI system competitive for the long term while protecting the benefits of those currently without a job.

The Council applauds the Legislature for some revolutionary reforms in the recent past that have improved competitiveness in the Commonwealth.  Expedited permitting and the establishment of the $100 million MORE fund are signs of promise.  But unemployment insurance reform remains an issue of paramount importance to the business community. 

We believe that these programs along with making the capital gains and estate tax more competitive, and boosting the resources available through the state’s matching grant fund to enable Massachusetts to compete for large scale R&D grants, form the bedrock of a comprehensive economic strategy that needs to be considered.

In keeping with the long standing belief of the Council and its membership that Unemployment Insurance reform is a necessity, we strongly endorses House Bill 1799, An Act Relative to Reform of the Unemployment Insurance System, sponsored by Rep. Bradley Jones.

For over 15 years, the Council and employers who have lower payroll tax options in every other state, have recommended the following fundamental and long-overdue additional UI reform measures:

• Providing Benefits for 26 Weeks – Currently, all unemployed workers in Massachusetts are eligible for 30 weeks of benefits and in 48 other states benefits last 26 weeks.  We strongly recommend a review of duration and other non-wage benefits, such as the dependency allowance.
• Strengthening Eligibility Requirements – Massachusetts currently allows an individual who has been working for 15 weeks to be eligible for the same benefits as someone who has been in the workforce for 20 years.  We recommend a minimum of 20 weeks, which is still low but more competitive with other state systems.
• Replacing Rate-Setting Mechanism - We suggest creating an automated rate-setting system that accounts for Trust Fund balance, unemployment data and economic conditions.  A new rate-setting mechanism will make UI costs more stable and predictable without the need for annual legislative action.

Employers fund 100% of state Unemployment Insurance bills, so any increase in base costs means more money out of employers’ pockets.  However, if the reforms outlined above are adopted, then the additional costs expected of the employer community to return the UI Trust Fund to solvency will be justified