the Beacon Journal editorial board
For the past decade, Ohio lawmakers have all but ignored severe problems with the state’s unemployment compensation fund. They pushed aside a compromise package of improvements put together by the 12-member Unemployment Compensation Advisory Commission. Now state Rep. Barbara Sears, a Maumee Republican, has proposed a repair bill that has emerged from the extensive work of a legislative study committee. Is it the necessary fix?
Unfortunately, the proposal falls far short of what the state needs. Sears rightly describes the give required from both the employer and employee sides in any effective overhaul. That spirit held when the advisory council made its recommendations years ago. At the same time, it is crucial to make an accurate assessment of the problem. That involves recognizing the imbalance is not due to excessive benefits for those who lose their jobs through no fault of their own.
Yet that is the signal the Sears bill sends: Benefits must be curbed to ensure the system is structurally sound. As it is, the proposal would increase the taxable wage base on which employers pay state unemployment taxes, from the first $9,000 each employee makes to $11,000. The tax base would remain there until the fund reaches a minimum safe level, sometime near 2025, according to projections. Then, it would return to $9,000.
Most telling, the expansion of the wage base would not translate into a tax increase. The tax rate on employee earnings would be reduced. Thus, the projected drop in annual benefits — from roughly $1 billion today to around $600 million to $700 million during the next decade.
The fund would achieve sustained solvency and stability by slashing benefits and narrowing eligibility. The maximum number of weeks for benefits would shrink from the current 26 to a sliding scale between 12 weeks and 20 weeks, depending on the jobless rate. As the think tank Policy Matters Ohio notes in an analysis, Ohio would be alone in requiring eligible workers to have wages earned in at least three quarters of the year, and in deducting Social Security payments from unemployment compensation, which the state eliminated eight years ago.
These and other obstacles invite concern because Ohio already makes benefits available to a smaller share of the jobless — just 23 percent — compared to other states, ranking 36 out of 50. Its current eligibility standards are among the most restrictive in the nation.
Thus, if the objective is to strike a balance in achieving improved finances, it is imperative to examine the revenue element. That $9,000 threshold has not changed since 1995. Apply an inflation calculator, and that base climbs to $14,052 today. The current national average is $13,407. Surely, there is room for Ohio to expand its base without placing an undue burden on employers, just as there are avenues to clipping some benefits.
What does not address the problem in a fair way is a tax cut.
At the moment, the Sears proposal appears on the fast track to passage at the Statehouse. That would be a shame. Better for lawmakers to slow down and take the decade-old guidance of the Unemployment Compensation Advisory Commission, now abandoned, without members and essentially out of business. This balanced panel arrived at a balanced plan, one that served employers and workers, both sides having a part in solving the problem.