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Jobless in Ohio

The state's unemployment compensation fund is in sorry shape, and that jeopardizes a safety net benefiting all Ohioans

Published on Monday, Jan 07, 2008

In April 2006, state lawmakers received formal word about the increasing strain placed on the fund that provides benefits to unemployed workers. The Ohio Unemployment Compensation Advisory Council recommended a set of improvements. Unfortunately, lawmakers did not act, and now the troubles faced by the fund have deepened, a balance of $2.3 billion in 2000 declining to roughly $500 million at year's end.

If a deep enough recession strikes? The fund could go broke by the end of the year.

Clearly, lawmakers must address the problem. They will get help. Gov. Ted Strickland has asked the Urban Institute, a highly respected think tank in Washington, D.C., to examine the fund and make proposals for shoring up its structure and finances. Chances are the institute will discover what has been plain for years: The state of the struggling Ohio economy amounts to a heavy burden on the fund. In addition to the job losses has been the decline in employers, from 233,000 in 2000 to 227,000 today.

The advisory council, including business and labor leaders, proposed that employers pay unemployment taxes on the first $9,500 that each worker is paid, an increase of $500 over the current taxable amount. Worth emphasis is that since the 1990s, Ohio employers have paid less than the national average in unemployment taxes. More, 17 states index the taxable wage to inflation.

As part of its package, the advisory commission included a freeze on benefit levels. That step reflected a particular challenge. If the Ohio system faces a financial squeeze, it is not because the benefits are too expansive. The truth is, Ohio restricts eligibility more than most states.

Policy Matters Ohio, a Cleveland think tank, recently reported that the state is one of only three in which an employee earning minimum wage and working 29 hours a week would not qualify for jobless benefits. Ohio is part of a similar trio that denies unemployment compensation to employees working all year earning $9 an hour for 20 hours per week. The state is one of six in which an employee working 20 hours a week for a year would not qualify.

As the Policy Matters analysis points out, each state sets its own criteria for eligibility. In Ohio, a worker must earn on average at least $206 a week for at least 20 weeks to receive unemployment compensation. That translates into 30 percent of jobless Ohioans receiving benefits, the 40th lowest percentage among the states.

Without question, Ohio must take the necessary steps to repair the financial condition of its unemployment compensation trust fund. If it does not, the federal government eventually will mandate action.

In addressing the problem, the governor and legislators must keep in mind the first purpose — to cushion the fall of the unfortunate (and often their families), to prevent their slide into a poverty hard to escape. This program serves all of us, jobless benefits having a helpful multiplier effect for the economy. The positive result is likely to expand when state leaders set generous enough eligibility standards to make a difference in difficult lives.

In April 2006, state lawmakers received formal word about the increasing strain placed on the fund that provides benefits to unemployed workers. The Ohio Unemployment Compensation Advisory Council recommended a set of improvements. Unfortunately, lawmakers did not act, and now the troubles faced by the fund have deepened, a balance of $2.3 billion in 2000 declining to roughly $500 million at year's end.

Get the full article here.


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