Cutting unemployment is wrong direction for Ohio
Posted November 03, 2016 in Press Releases
Benefit cuts won't improve system solvency and will hurt workers, businesses and communities, Policy Matters testifies.
Today Policy Matters Ohio urged the Joint Committee on Unemployment Compensation Reform, a committee addressing system solvency, to avoid cutting the number of weeks of unemployment insurance available to Ohio workers. The average duration of unemployment benefits is just 14.6 weeks and the majority (66 percent) of Ohio claimants were earning wages in the quarter following their initial claim. A smaller share of Ohio recipients exhausts their benefits than in 45 other states.
“Ohioans prefer to work. They are not treating unemployment insurance as an entitlement program. But some, like the nearly 70,000 Ohioans who claimed more than 20 weeks in benefits last year, struggle to find employment in an economy that still has fewer jobs than it had sixteen years ago,” testified Hannah Halbert, researcher with Policy Matters Ohio.
Twenty-six weeks of unemployment, the national standard since 1968, gives job seekers time to come to terms with job loss, assess opportunities, and engage in education and training. Through House Bill 394, legislators proposed to use a sliding scale to set maximum duration. If the proposal were in place today, unemployed Ohioans would have just 12 weeks to find work, making Ohio’s system one of the weakest in the nation. Only nine states have a maximum duration lower than the national standard of 26 weeks.
Halbert encouraged members to recognize that cuts have real consequences to workers, businesses, and communities. Research shows that duration cuts drive faster than average declines in the share of unemployed workers who get assistance. Even under the current unemployment insurance system, a smaller share of unemployed workers in Ohio receive unemployment benefits than many other states.
“This committee has heard considerable testimony on the harm our high monetary rules already cause low-wage workers. Further limiting this already low share who receive benefits will push families into deep crisis. Instead, we need a balanced approach that addresses our inadequate funding of unemployment insurance,” said Halbert.
Cutting benefits is a poor instrument for achieving solvency, and not just because it will harm Ohio workers, their families, and the local businesses dependent on their spending. As HB 394 demonstrated, much of these cuts are passed through to employers in the form of lower tax rates-- the very opposite of what is needed to reach solvency. In prior testimony, Policy Matters offered a proposal that would make the system truly solvent, avoid benefit cuts, and expand coverage to more low-wage Ohio workers.
Policy Matters Ohio is a nonprofit, nonpartisan state policy research institute with offices in Cleveland and Columbus.