Critics say a bill to shore up the state’s unemployment compensation fund would cut benefits to jobless workers and deny assistance to most low-wage workers at the same time that Ohio employers pay among the lowest unemployment taxes in the nation.
"Ohio’s solvency challenge is due to a lack of revenue and not because of atypical benefit costs," Ohio AFL-CIO President Timothy W. Burga told a House committee reviewing the proposal Wednesday.
"Ohio employer taxes have been lower than the national average for 19 of the last 21 years. In fact, employers pay a state tax percentage into the system on the first $9,500 an employee earns, well below the current national average of $13,782."
The labor leader said data from the U.S. Department of Labor show that, on average, Ohio employers paid $251 per employee last year in state unemployment taxes, compared with the national average of $337.
Despite seven hearings before the House Government Accountability and Oversight Committee, House Bill 382 had attracted virtually no testimony until Wednesday, when Burga and four others detailed their concerns.
"Both sides want it 100 percent their way," said Rep Kirk Schuring, a Canton Republican trying to broker a compromise between business and labor.
"We’re trying to have balance, but it’s not winning the day. This has always been contentious. We’ll keep working on it."
Schuring said he’s looked at what businesses in neighboring states pay "and, at first blush, it doesn’t seem way out of whack."
Ohio’s unemployment-compensation system is financed by taxes paid by employers — a federal tax to cover administrative costs and a state tax paid into a trust fund to provide up to 26 weeks of benefits to qualified jobless workers.
But with insufficient reserves when the Great Recession hit in late 2007, Ohio was forced to borrow $3.4 billion from the federal government to pay jobless benefits.
The state paid $257 million in interest on the loan and, because the debt was not repaid within the federal government’s two-year grace period, businesses paid $1.4 billion in additional federal unemployment taxes before the loan finally was paid off.
Ohio’s fund is projected to go broke again — in 2020 if there is a moderate recession or in 2021 without one.
Schuring’s bill seeks to restore solvency to the fund with equal contributions from business and labor.
It would generate about $370 million a year from 2019 to 2030 by raising the taxable wage base paid by employers to $11,000 per employee, up from $9,500. On the employee side, workers would pay a new co-insurance payment of 10 percent of the amount paid by the employer. In addition, benefits would be frozen for 10 years, the maximum number of weeks paid cut to 24 from 26, and additional payments for dependents reduced.
"House Bill 382 attempts to achieve solvency primarily through reducing benefits for laid-off workers," Graham Bowman, an attorney with the Ohio Poverty Law Center, testified Wednesday.
He urged lawmakers to change eligibility for benefits that currently requires claimants to make 27.5 percent of the statewide average weekly wage, or $256 a week in 2017.
"This means a worker who earns minimum wage must work more than 30 hours per week to qualify. ... Unfortunately, many low-wage workers work for employers who offer less than 30 hours per week," Bowman said.
Hannah Halbert, a researcher with Policy Matters Ohio, also rejected the notion that the bill would require equal contributions from business and labor.
"Unemployment compensation benefits in Ohio are not overly generous, and cutting benefits as the bill would do would make Ohio an outlier among states," Halbert said.
"The debt resulted not from overly generous benefits, but from high levels of unemployment, especially long-term unemployment, and a fund that was one of the least solvent going into the last recession."
ccandisky@dispatch.com
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