MISSISSIPPI FORUMBy Warren Yoder
Just when we need it the most, thousands of Mississippi workers are being denied unemployment benefits because of a broken, outdated system. When the national unemployment system was created in 1935, the work force was made up predominately of full-time, male workers. Today, that work force includes more part-time and female workers. Although America’s economy has changed, our state unemployment insurance system has not. This spring, fewer than 4 of 10 Mississippi workers qualified for unemployment benefits.
Because of the base period the state uses to consider eligibility, workers can have up to six months of their most recent earnings excluded when determining eligibility for unemployment benefits. This rule disproportionately hurts low-wage workers, because monetary qualification is based on earnings during the base period. A Mississippian can work more than other employees, yet not receive unemployment benefits simply because they are paid less. This is one of the reasons low-wage workers are half as likely as higher wage workers to receive unemployment benefits.
Recognizing the need for reform, Congress provided funds through the 2009 American Recovery and Reinvestment Act for states to modernize their unemployment insurance system. Mississippi is eligible for nearly $60 million of this incentive funding. Should the state adjust its base period, as mentioned above, and consider workers’ most recent earnings, Mississippi can receive as much as $21.7 million. It can receive another $37.4 million by making two of the following four changes:
• Allow unemployment compensation for certain people seeking only part-time work (More than 40% of women heading families with children work part-time).
• Allow unemployment compensation for persons leaving work for compelling family reasons, such as domestic violence, illness or disability of an immediate family member, or the need to accompany a spouse whose employment is beyond commuting distance;
• Allow unemployment compensation for permanently laid-off workers who need extra unemployment benefits to continue participation in training authorized under the Workforce Investment Act;
• Allow a dependent allowance of at least $15 per dependent for workers who qualify for state benefits.
The Mississippi Department of Employment Security has adopted some reforms in recent years, including allowing victims of domestic abuse and workers forced to relocate because of military service of a spouse to remain eligible for unemployment benefits.
Opponents of reform claim the changes will increase employer taxes and threaten solvency of the state trust fund. But the National Employment Law Project estimates the federal dollars would cover the additional benefit costs for up to 4.5 years, after which Mississippi can determine whether to eliminate or scale back the reforms to ensure system solvency without raising Mississippi business taxes. Even should the state choose to keep the reforms after federal dollars are gone, concerns about cost are exaggerated. Many newly covered workers will be low-wage workers who receive 25 percent to 40 percent smaller benefit checks. The National Employment Law Project estimates that the average payout from the state unemployment trust fund will increase by only 4 percent to 6 percent in a typical year -- certainly no threat to solvency.
In truth, additional unemployment benefits could provide a boost to the state economy when it's most needed. According to the U.S. Department of Labor, every $1 paid in jobless benefits causes the economy to grow by more than $1, because these benefits are spent immediately and have multiplier effects. Thus, $56.1 million in stimulus funds for unemployment benefits could generate almost $100 million in economic activity for Mississippi.
More important than the potential boost in economic activity are needs of struggling families. Almost 40,000 Mississippi workers could benefit from this money. These families are suffering from the greatest recession since the Great Depression. They did not get fired because of misconduct, and they did not stop looking for work. They are not strangers; they are sisters and brothers, neighbors and friends, fellow church members, and fellow Mississippians.
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Yoder is executive director of the Public Policy Center of Mississippi.
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Copyright (C) 2010 by the Mississippi Forum. 3/10
