Chamber of Commerce plan would slash Ohio unemployment benefits
One thing the COVID-19 pandemic and recession have made clear is that unemployment compensation (UC) not only makes sure people who have been laid off can get by, it also bolsters the larger economy by keeping people spending money and paying their bills.
So it’s confounding that the Ohio Chamber of Commerce wants Ohio lawmakers to amend the state budget to include major cutbacks in UC benefits. This includes drastic reductions in who could receive benefits, how much those who do qualify get, and how long they get them. Specifically, the plan would:
- Reduce the maximum number of weeks of regular benefits from the national standard of 26 to at most 20. The sliding scale the chamber proposes of 12 to 20 weeks based on the state unemployment rate would currently mean a maximum of just 13 weeks of benefits.
- Increase the requirement for how much you have to work to qualify for benefits beyond what is required by any other state. Ohio long has required that people work 20 weeks out of the year to qualify; the proposal would require work in three calendar quarters, disqualifying those who don’t.
- Cut maximum weekly benefit amounts for 2022 and 2023 to half of the state average weekly wage, or $509. Nearly a sixth of all claimants have dependents and typically have been able to claim benefits higher than that.
- Result in the end of federally paid benefits in place until early September, including the $300 a week of extra benefits being paid to nearly all UC claimants, and the extra 53 weeks of benefits available until then. Under the American Rescue Plan, states can’t cut the number of weeks or maximum benefits and continue to pay these federally provided benefits. Hundreds of thousands of Ohioans would be affected by such cuts.
- Restore the earlier practice of offsetting unemployment benefits by Social Security retirement income, harming older workers and reversing legislation approved unanimously in both houses of the General Assembly in 2007. Only one other state — Minnesota — has such an offset on the books, but the state doesn’t actually use the offset.
Benefit cuts proposed by the chamber are an extreme scheme that would take Ohio far outside the mainstream and reduce benefits even when hundreds of thousands of workers have realized how crucial those benefits are.
The national standard for the maximum duration of benefits is 26 weeks. Of nine states that reduced their maximums after the Great Recession, three — Michigan, Kansas and Georgia — restored the full 26 weeks during the pandemic. Some of those adopting lower maximums saw receipt of benefits drop to shockingly low levels: Just prior to the pandemic, less than 10% of unemployed workers in North Carolina and 11.3% in Florida were receiving benefits. Ohio, which long has provided benefits to a smaller share of our workers than the national average, would further reduce the number of people getting benefits if this sliding-scale and 20-week maximum were enacted. That would undercut the UC system by reducing crucial assistance to unemployed workers and the positive effect of such aid on the economy.
The chamber attempts to capitalize on reports of fraud against the UC system by making Ohio taxpayers reimburse the UC trust fund for fraudulent payments from March 2020 through 2021. Experts say no other state mandates that taxpayers pick up the tab for employers this way.
Similarly, the plan would make taxpayers responsible for paying interest on debt employers are now accumulating because the UC system was underfunded for decades. While states occasionally use other revenue sources, the standard practice is for employers to pay additional tax to defray such interest. After Ohio paid hundreds of millions of dollars in interest on loans after the Great Recession, the General Assembly acted in 2016 to make employers responsible for such charges.
The Chamber of Commerce proposal was put forward as a way to bring solvency to the Ohio UC system, which has been one of the weakest in the nation for years. However, benefits aren’t the reason Ohio’s fund has been so weak. As a share of wages, Ohio benefits were below average every year between 2010 and 2019. Jobless Ohioans go back to work when they can: They use the full amount of their UC benefits less than in all but a handful of states.
UC solvency is a national issue that needs a national solution. Ohio lawmakers have compounded the problem by setting employer taxes so low. Tax levels in Ohio were the same or lower than the national average every year but one between 1996 and 2019. Ohio employers pay taxes only on the first $9,000 in each worker’s wages. Only nine states and Puerto Rico set that amount lower. Along with its multitude of benefit cuts, the chamber proposes a meager increase in the wages on which UC taxes are paid, from the current $9,000 to just $9,500. If Ohio’s taxable wage base had just risen with inflation since it was last raised more than 25 years ago, it would now be well over $15,000.
The House may well avoid this proposal in its upcoming version of the biennial budget. Legislators should continue to reject these drastic benefit cuts throughout the budget process, or in separate legislation.