Angry Business Groups Say They’ll Pay for One-Time Federal Bargain – Labor Strongly in Favor

Karen Lee, commissioner of Washington's Employment Security Department.

By Erik Smith

Staff writer/ Your Healthcare Today

OLYMPIA, Jan. 20.—As unemployment skyrockets, lawmakers are considering expanding benefits as a way to collect $98 million in free money being offered by the federal government.

            But business groups say the state ought to think twice about it. When the federal money runs out, business will have to pick up the tab, in the form of increased unemployment-insurance tax rates.

            The offer comes as part of a federal push for “modernization” of unemployment-insurance laws. The feds last year offered states a menu of changes and asked them to pick and choose, and in Washington’s case, one more change will do the trick. At the urging of labor interests, the state Employment Security Department is asking for an expansion of unemployment benefits for part-time workers. A more expansive proposal from Rep. Steve Conway, chairman of the House Commerce and Labor Committee, would also extend benefits to employees who quit their jobs voluntarily under extreme hardship.

            An exasperated business lobby, already reeling from dramatic recession-fueled unemployment-insurance rate increases, says this bargain is more like a deal with the devil.

            “What we’re talking about doing here is accepting one-time money to establish a permanent benefit, and employers are going to have to pick it up in perpetuity once the federal money runs out,” said Amy Brackenbury, lobbyist for the Building Industry Association of Washington.

            No Cost to State Government 

Best estimates from the House committee put the cost of the Employment Security plan at $36 million every two years. Conway’s plan would cost $72 million. But the impact would come at no cost to state government, because business pays the cost of the benefits.

The feds offered the money to states last year as one of their many strings-attached offers of federal recovery money. Total amount available to the state was $147 million, and Washington already has collected $49 million of that amount, because it already had one of the favored measures in place. Washington already allowed workers to use an alternate “base year,” rather than the previous year, to calculate unemployment benefits.

Last year lawmakers passed another of the changes on the federal menu – allowing unemployed workers to collect benefits if they quit for compelling family reasons. But the state doesn’t collect the rest of the prize until it passes a third measure.

Business interests would prefer a tweak to the state’s underutilized job-training programs. Some $20 million a year already is being set aside for that purpose, and not all of it is being spent. That makes it the lowest-cost option to business.

But the governor’s office has taken the side of the Washington State Labor Council, and is asking the Legislature instead for an expansion of benefits for part-time workers.

Conway said the state’s budget nightmares make the $98 million payout attractive. “The question is what change do we make to get it?” he said. “It would be shameful not to do something. It’s there for us.”

Governor’s Choice

Karen Lee, commissioner of the Employment Security Department, said the choice was the governor’s call. But in testimony before the House Commerce and Labor Committee, she defended the decision.

Under current law, workers who are employed less than 17 hours a week can receive benefits if they look for part-time work. But if they work longer than that, even one week of a year, they are required to seek full-time work. And if a full-time worker loses his or her job, and is forced by personal circumstances to seek part-time work, he or she becomes ineligible for benefits. The change would enable those workers to seek part-time employment.

 “We chose part time from among the unemployment insurance modernization options because it speaks to why the unemployment insurance system was created in the first place. Unemployment insurance is meant to be a safety net for people who work and lose their jobs through no fault of their own. And the question for all of us and for the Legislature is that – should the safety net exclude people who are willing and able to work less than full time, often in jobs that no one else wants?”

            Conway’s more expansive proposal also would extend benefits to workers who quit their jobs voluntarily because of abuse or dangerous workplace conditions. The Employment Security Department would be given discretion to judge whether a reasonable person would quit.

            Either bill would qualify the state for the federal money.

            Strong Labor Support

            Union organizations support both ideas. Rebecca Johnson, spokeswoman for the Washington State Labor Council, said that as the economy recovers, many employers are staffing their businesses with part-time positions. Full-time work is harder to find. At the same time, some former full-time workers find that they have compelling family reasons to seek part-time work – an ill family member, for instance. And she said the arbitrariness of the state law means that a part-timer who picks up a shift for a coworker sometime during the course of a year will be required to seek full-time work.

            Expansion of the state’s voluntary-quit rules also gets labor’s nod. Johnson pointed to a state Supreme Court case in which a woman was denied benefits even though it was established she worked in a hostile environment. The woman “worked for a construction company with a verbally and physically abusive boss who would not only verbally berate his employees but also was in the habit of throwing whatever was in his hand, which was often tools or boxes of nails.”

            The measure would “right what right now is an unjust system to workers who are working in very difficult situations and are forced to quit.”

            Raises Business Hackles

            Business lobbyists say it’s hard to imagine a worse time to expand benefits – and thus unemployment taxes. Organizations testifying against the measure include the Washington Roundtable, the Association of Washington Business, the Washington Retail Association and the National Federation of Independent Business.

            Said the Retail Association’s Mark Johnson, “It’s kind of silly that we’re trying to attract $98 million in one-time funds, but we’re putting in place a permanent change to our system that will vastly outspend what we get in return, so to me the dollars and cents don’t make sense.”

            Conway said the part-time benefit expansion might not be as expensive as people think, because many workers maintain falsely that they are seeking full-time work in order to receive benefits.