Unemployment Compensation Reform on Tap

This week, the House is expected to take up SB 1030, which would change Unemployment Compensation guidelines to ensured continue benefits for about 45,000 Pennsylvanians and help bring the fund, now $3.8 billion in debt, into balance.

A few of the reforms SB 1030, as amended by the House, would address include:

  • Requiring those collecting benefits to actively seek a new job.  This would require taking actions like posting a resume on Careerlink, registering for employment services within 30 days, and applying for similar positions within 45 minutes of home.
  • Limiting the ability to collect both unemployment benefits and severance pay. Under SB 1030, laid off workers could get $11,000 in severance pay and still collect state unemployment benefits on day one.  Currently, there is no limit on collecting severance pay and unemployment compensation simultaneously.
  • Increasing the earnings necessary to qualify for unemployment compensation from $50 per week to 16 hours at minimum wage ($116 per week).
  • Tightening eligibility requirements for those who leave work voluntarily and extending the misconduct definition to include threatening co-workers, theft, certification expiration, or coming to work under the influence of drugs or alcohol. In the past, fuzzy definitions have allowed disruptive employees to qualify for benefits.

The amended bill now contains an estimated $140 million in savings [subscription to link].  This would be enough to balance the fund in 27 years. HB 916, Rep. Perry’s bill which was defeated on the House floor on second consideration in May, contained an estimated $632 million in savings, enough to pay back the $3.8 billion the state owes to the federal government by 2018.

Pennsylvania currently has one of the highest unemployment tax rates per employee. Moreover, when the fund is insolvent, as it is now, it triggers an automatic unemployment tax increase—that is, a higher tax for each job, making it more expensive to retain workers.

The current proposal is a good start, as fundamental changes are essential if Pennsylvania’s unemployment compensation fund is to remain solvent.