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Employers Give Senate’s Unemployment Insurance Bill Mixed Review

Feb 6, 2014Council in the News, State House News Service

NOTE: The Massachusetts High Technology Council emailed out a statement criticizing the Senate’s bill mid-debate, while the AFL-CIO said ahead of the debate that it was in favor of the legislation.

By Andy Metzger

Aiming to stabilize business costs for the next few years and provide rate relief to employers with good employee retention records, the Senate passed an unemployment insurance reform bill Thursday that got mixed reviews from business leaders.

Sen. Dan Wolf, a Harwich Democrat and part-owner of Cape Air, said the bill is revenue-neutral, will provide four years of rate stability and better distinguishes between “who uses the system and who doesn’t” when determining the level of taxes paid by businesses to pay for jobless benefits.

“This bill will provide financial predictability, reward positive employment histories with lower costs and foster a healthy economy that supports the business community,” Senate President Therese Murray said in a statement. “These reforms strike a careful balance between providing businesses with a helping hand without taking that same hand away from the unemployed.”

Senate Minority Leader Bruce Tarr and his small caucus were outvoted along party lines in their efforts to scale back the state’s 30-week benefit period, the longest of any state, and attempts to tighten up benefit eligibility, which the Retailers Association of Massachusetts said is the easiest in the country.

“There’s some underlying changes that need to be made that weren’t made with regard to eligibility standards, benefits, and they’re – I admit – very hard to make, but they do put Massachusetts out of the mainstream,” said National Federation of Independent Business State Director Bill Vernon, after the 33-4 vote. “The good part obviously is the rate-structure has been changed.”

Vernon said under the Senate bill – which lowers rates for businesses with steady employment records and increases them for businesses that lay people off – companies in the construction and landscaping business that go through regular layoffs will see their costs go up.

“We’re rewarding our good companies. That’s a good thing,” said Vernon, who said the reforms would not offset the additional costs businesses would experience with an increase in the minimum wage. The Senate voted to raise the wage from the $8 per hour rate today to $11 per hour in 2016.

The House this year plans to pass a minimum wage increase in conjunction with unemployment insurance reforms, according to plans outlined by House Speaker Robert DeLeo.

Tarr said the size of unemployment benefits is nearly double that of every other state, though he said the Republicans would not seek to reduce that, attempting instead to increase eligibility requirements and provide new economic triggers that would reduce the 30-week timespan when benefits can be paid out. Every state besides Massachusetts and Montana, which provides benefits for 28 weeks, allows the unemployed to collect for 26 weeks, and Tarr argued the federal government would step in once 26 weeks of state benefits expire.

Wolf, who also championed the minimum wage increase, noted that on Thursday members of the U.S. Senate had blocked efforts to extend federal unemployment benefits, said the federal government cannot be counted on and was later unswayed by Tarr’s efforts to account for federal support in his amendment.

“We believe that it falls short of some of the critical elements that we need to address some of the cost-drivers in the system,” Tarr said before the final vote, expressing hope that the issue would come up again for debate. Tarr acknowledged “important steps” in the bill, while asserting the reforms need to extend beyond “merely an accounting exercise.”

Criticizing an agency that he says has caused “frustration,” Sen. Mark Montigny, a New Bedford Democrat, included language in the bill that he said would “tie the hands of the bureaucracy” in the Department of Unemployment Assistance, giving it 30 days to approve or deny an application.

Sen. Gale Candaras, a Wilbraham Democrat who is running for Hampden County Register of Probate this year, said older people who are long-term unemployed have the hardest time finding work, and included a measure that would create a commission to study that issue.

“It is a silent catastrophe filled with shame and despair for the older, unemployed worker,” Candaras said.

The Massachusetts High Technology Council emailed out a statement criticizing the Senate’s bill mid-debate, while the AFL-CIO said ahead of the debate that it was in favor of the legislation.

In its analysis posted online, Associated Industries of Massachusetts said the unemployment taxes would be based on three years of taxes rather than just one, reducing “rate shock,” and would close a loophole that lawmakers say allows seasonal workers to collect unemployment benefits while out of the state half the year.

“I see nothing here that would cause organized labor concern,” Jon Hurst, president of the Retailers Association of Massachusetts told the News Service before debate began.

The mechanics of the bill freeze unemployment rates this year – avoiding a costly bill for business due at the end of the first quarter – and set out a schedule for rates in the next three years, while increasing the taxable wage base from $14,000 to $21,000.

“Small businesses see that as a permanent tax increase. The rates go up and down,” said Vernon. He said many of the reforms sought are difficult politically, and said he believes an adjustment in eligibility and a reduction in the number of weeks the benefit is paid could be possible in the House.

Wolf said the maximum weekly benefit is $679, and said the dollars paid out in unemployment benefits go right back into the economy. The new rates will mean the most stable employers pay $153 per employee per year, while the companies with the most layoffs pay $2,337 per employee per year.

Increasingly, the Massachusetts High Technology Council is stepping up to create, execute, and lead critical statewide competitiveness strategies. Fostering a vision for our innovation economy under the MassVision2050 banner, the Council solidifies its position as a thought leader providing valuable insights to navigate emerging technologies, facilitates long-term planning, and reinforces the Council's commitment to excellence and action in the evolving Massachusetts tech-driven economy.

To learn more, contact Council President Chris Anderson.