The Unemployment Compensation Hole

Yesterday, Secretary of Labor and Industry Sandy Vito testified before the House Appropriations Committee in the usual round of budget hearings. She reported that the unemployment compensation fund is $2.2 billion in the hole. Via PLS (subscription)

“As of 2011 an interest payment and a surcharge for an ease of understanding will begin to be imposed by the federal government on Pennsylvania employers,” Secretary Vito stated. . . “We estimate if we do nothing that the average cost per employee will go up about $189 by 2016.”

In December 2008, Gov. Rendell created a task force to address the Unemployment Compensation Fund. A variety of individuals including representatives from labor and business sat on the panel. Senator John Gordner (R-Columbia) is currently drafting legislation based on the task force’s recommendations. It’s likely the reforms will be limited to increasing taxes on employers and expanding the eligibility of benefits (or modernization) to qualify for a one time boost in stimulus aid. And it’s doubtful that any of the business communities recommendations will be heeded since most of them involve cutting benefits.

Today I wrote a commentary on the need to reform our unemployment benefits, addressing the fact the unemployment benefit extensions undermine economic recovery.