On March 13, the House Ways and Means Subcommittee on Income Security and Family Support held a hearing on efforts to provide economic security for Americans and on potential legislation to establish wage insurance.
Chair Jim McDermott (D-WA) said, “A generation ago, a modest safety net was created to help Americans weather a short-term economic storm resulting from a seasonal layoff in many industries. Today, I believe the economic data shows many Americans are losing jobs that will never return to their communit[ies]. In some instances, the job loss is a result of global trade, but to blame it all on trade would be incorrect. We are seeing changes in our economy for a whole host of reasons, and our present system of assisting Americans is not addressing the economic challenges and reality of the 21st century.” Rep. McDermott continued, “Wage insurance is one idea, and I also think that encouraging the states to make improvements in their unemployment programs is another approach that can help Americans weather the economic storms many are experiencing.”
“There are many reasons why comparatively few unemployed workers receive unemployment insurance. One is they don’t know they’re eligible for it,” testified Robert Reich, former secretary of Labor during the Clinton administration. He continued, “Another reason is that far [more] women are in the labor force today than before, and many of them are working part-time in order to preserve enough time to take care of children or parents. Women are still the major unpaid caretakers of American society.” Mr. Reich added, “The current unemployment insurance system is full of holes because it was designed for a time when almost all workers had full-time jobs with predictable wages, when relatively few women were in the workforce, when most families did not depend on two incomes, and when unemployment was due to a temporary downturn in the business cycle. None of these conditions holds true any longer. So it’s no surprise that the system is failing.”
Mr. Reich recommended to the committee the creation of a “three-legged stool” of support that would provide workers with employment security. The recommendations include: providing “income support while unemployed [which] requires…filling the holes in the current unemployment insurance system; easy access to training and skill development that leads to a new job paying at least as much as the old; and wage insurance during the transition period providing workers who can only find a new job paying less than the old with a portion of the difference in pay.”
Thea Lee, assistant director of public policy at the AFL-CIO, stated, “Wage insurance does not help workers get good jobs. On the contrary, the most frequently invoked rationale for wage insurance is that it promotes ‘rapid reemployment’ by encouraging workers to look for, consider, and accept lower-paying jobs they would not otherwise take. Getting workers to take bad jobs does not fit within any good jobs strategy we would propose.” Ms. Lee cautioned that many advocates of wage insurance have proposed diverting resources from “existing programs that assist displaced workers” to wage insurance programs and recommended that Congress study the “many unanswered questions about a universal wage insurance program including potential harm to workers.”
Howard Rosen, visiting fellow at the Peterson Institute for International Economics, stated that “the current UI [unemployment insurance] system does not assist workers who seek part-time employment, workers who voluntarily leave one job in order to take another, or workers who experience long-term unemployment. New entrants and reentrants into the labor market are not currently eligible for UI, since these two groups of unemployed [workers] do not fit well with one of the program’s original objectives, i.e., insuring against the risk of involuntary job loss.” Mr. Rosen added that these groups may not have enough work experience to meet the base period requirement the period during which a worker’s most recent wages are used to determine UI eligibility. “[R]eentrants into the labor marker who are actively seeking employment are not eligible for UI. As a result, women who decide to postpone returning to work after childbirth and workers who return to school or who take up training following a job loss can be ruled ineligible for UI.”
Speaking about Rep. McDermott’s proposed legislation, Maurice Emsellem, policy director for the National Employment Law Project, stated, “The draft UI modernization bill rewards those states that allow families to work part-time and collect UI benefits, thus removing state eligibility provisions requiring workers to seek full-time work to qualify for UI benefits. Part-time work has now become a necessity for many more workers to accommodate their family responsibilities or to find the time necessary to go back to school and improve their skills, Today, one in six workers is employed part-time, and most of them are women workers.” He continued, “More than 30 years ago, the Ford Administration issued a directive urging states to ‘change by legislation the legal inequities between the sexes’ in the operation of UI laws. Given the gender inequities that continue to plague the UI program, we strongly support the following ‘family friendly’ provisions [providing benefits to women who leave work due to domestic violence, when their spouse is forced to move to a job in another area, or due to family illness and disability] adopted by the UI modernization bill.”
Douglas Holmes, president of UWC Strategic Services on Unemployment and Worker’s Compensation, said: “Before large-scale new programs are enacted, we should properly fund the features of the system we have in place now in order to evaluate the most effective methods and best state practices in returning unemployed workers to work.” Mr. Holmes continued, “Contrary to the suggestion that the employer-funded UI system has ‘holes’ that are in need of fixing, this system works as it was designed, to pay unemployment compensation benefits to those who demonstrate a workforce attachment, become unemployed through no fault of their own, who are able, available and actively seeking suitable work. The system was never designed, nor should it be ‘reformed’ to assure cash payments to every individual who is currently not working.”
