Policy Matters Blog
Guest blogger: Ohio’s race to the bottom on jobless benefits
February 16th, 2016
In a blog posted last week on the National Employment Law Project’s website, my colleague Claire McKenna and I featured the latest data regarding recipiency rates, which measure the share of jobless workers receiving unemployment benefits. In 2015, only 27 of 100 jobless U.S. workers got unemployment compensation benefits, repeating the prior record-low recipiency rate reached in 2014. In contrast to 2015’s recipiency rate of 27 percent, for the decade of the 2000s, 39 percent of U.S. jobless workers received state unemployment benefits.
In Ohio, just 24 percent of unemployed workers received benefits in 2015. Ohio’s recipiency rate has been below the national average for all but a handful of years over more than three decades. That’s partially because many low-wage and part-time workers are already excluded from Ohio’s unemployment compensation program, something that Policy Matters Ohio has documented over the past 15 years. Clearly, Ohio’s below-average performance on recipiency is a significant factor when considering proposals to further restrict unemployment benefits here.
Recipiency rates have been used by many observers as one measure of state performance on unemployment compensation since as early as 1984. Such mainstream organizations as The Brookings Institution, U.S. Department of Labor and the Urban Institute have looked at recipiency rates and sought explanations for why states vary so widely in terms of benefit recipiency. In 2015, for example, North Dakota’s recipiency rate was 66 while Florida’s was just 11.
While there is debate over the best statistical measure of recipiency and what level of recipiency represents an acceptable rate, there is no question that looking at rates provides a valid way to judge the performance of states. Critics of using recipiency rates want to avoid discussing how poorly Ohio and other restrictive states are doing on this performance measure. And when you look at the details on state recipiency rates, you can see why they want to change the subject.
States like Alaska, North Dakota, and Wyoming have well-financed unemployment compensation programs with recipiency rates over 40 percent. What stands out in this comparison over time is that these small states pay attention to unemployment compensation fund solvency, and adjust payroll taxes to ensure adequate trust fund reserves. In contrast, Ohio abandoned forward-financing of its trust fund in the 1980s and has needed to take financing actions for more than a decade, but failed to do so.
Remarkably, House Bill 394, a bill purportedly designed to address Ohio’s unemployment compensation fund solvency, contains only a single provision to fix the recognized flaws built into Ohio’s unemployment compensation tax mechanism. The provision is an insufficient, temporary increase in the amount of wages that employers pay tax on. The bill instead relies upon benefit cuts that likely will take Ohio from its current below-average recipiency level of 24 percent toward the bottom-feeder status of Florida (11), Georgia (13), and North Carolina (13). These three states have adopted similar approaches to setting the available weeks of benefits as those found in House Bill 394. Given that Ohio’s program has had lower levels of recipiency for years, this one-sided bill does not represent the balanced approach claimed by its proponents.
Rick is a staff attorney with the National Employment Law Project.