Ohio Needs to Rethink its Unemployment Compensation System
Posted June 05, 2002 in Op-Eds
Unemployment insurance is crucial, temporary support for
workers who lose their jobs through no fault of their own. Last
year, more than 350,000 Ohioans received benefits, averaging
$254 a week.
Many jobless workers in Ohio are not eligible for insurance,
however. Ohio has among the highest earnings requirements in
the country. To qualify for unemployment, Ohioans must earn
$172 a week for at least 20 weeks. This discriminates against
workers who may have put in just as many hours as others, but
don’t make enough per hour.
Ohio is the only state in the nation where a minimum-wage
worker employed 30 hours a week does not qualify for
unemployment insurance. The typical part-time worker in Ohio
who makes $8 an hour and works 20 hours a week wouldn’t
qualify, either. These requirements mean that many of those
who leave welfare to go to work will not earn enough to receive
benefits if they lose their jobs. These same workers may be
most at risk under the “last hired, first fired” rule of thumb.
Ohio wasn’t always this stingy. At one time, it only required
claimants to earn $20 a week to qualify, but the amount was
raised in the early 1980s when the fund was in trouble. It was
not reduced even when the fund recovered.
Part-timers also have problems qualifying for unemployment
insurance if they seek jobs with the same hours as the jobs they
lost. A clerk who lost a 30-hour-a-week job may not get
benefits if she seeks an identical position.
Women, who make up 70 percent of Ohio’s part-time workforce
of 1 million, are disproportionately affected by this rule. It may
help explain why last year, only 36 percent of unemployed
women in the state received unemployment benefits, compared
to 51 percent of unemployed men, according to a recent study
of state systems.
Recognizing that part-time work is now crucial to our economy,
a number of states allow claimants to seek part-time work and
receive benefits. In California, part-timers can qualify if they are
looking for jobs with similar terms as those they lost if there is
reasonable demand for part-time services.
Unemployment insurance benefits are financed by employer
taxes, not from the state budget. Employers pay different rates,
based on how much they have paid into the system and how
much has been paid out in claims to jobless workers they once
Though tax rates are beginning to go up, as they always do
after unemployment claims rise, Ohio cut taxes more than most
states when the economy was expanding in the 1990s, and
continues to tax employers less than most states. Last year,
unemployment tax rates in Ohio ranked 35th among states
compared to the amount of wages paid.
The state can afford to widen eligibility so that more workers
can collect benefits. It should lower the earnings requirements
and expand eligibility to those employed for 20 weeks at 20
hours a week at the minimum wage. That would provide vital
support for tens of thousands of jobless workers every year,
and would better fit the needs of today’s workforce.
Reforming the system would probably cost less than $25 million
a year. That’s small potatoes for a system that last year paid
out $1.2 billion in benefits. The Ohio Department of Job and
Family Services (ODJFS), which runs the unemployment
insurance system, expects the state’s unemployment trust fund
to stay above the $1 billion level for the next few years.
One reason for that is Ohio’s fund, like that of other states,
recently received money from the federal unemployment
insurance trust fund.
An advisory council that is responsible for recommending
changes in unemployment-insurance law agreed recently that
some of the newly received money should go for administrative
costs and system upgrades. The council, which is composed of
state legislators and representatives from business and labor
appointed by the governor, also named a subcommittee to
consider changes to the system, including broadening
availability of benefits for lower-wage and part-time workers.
It’s time the unemployment compensation system provided
support for these workers, too, so they can survive job setbacks
and still meet basic needs.