Economy
6:27 pm
Tue June 12, 2012

Governor Signs Unemployment Compensation Reform Bill – Opponents Fear the Worst

Governor Tom Corbett has signed Senate Bill 1310, which will allow the state to sell as much as $4.5 billion in bonds to pay off its $3.87 billion debt to the federal government plus interest. It also limits eligibility for unemployment benefits to reduce spending. Some opponents have called the bill an attempt by the governor and the legislature to chip away at the unemployment system.

"On one side we do see the need for a bond issue, but to tie the bond issue to a number of system changes, permanent system changes that have been lobbied by the Chamber of Commerce for many years, is unconscionable," said Antonio Lodico, co-chair of the Mon Valley Unemployed Committee.

The bill aims to save about $276 million a year by limiting benefits for people who make the majority of their annual income over the course of a few months, such as construction workers, but Lodico said this is unfair.

"Certain industry groups who, by nature, attempt to work year-round, but many time have situations in which they have three or four very very strong months of work, then the rest of the year they take work where they can, a lot of those folks who get by on unemployment in those situations are now going to be cut off," he said.

Governor Corbett said the changes to unemployment compensation will mean more jobs for Pennsylvanians. "I'm pleased that we've made this important step toward putting Pennsylvania's financial house in order," he said, "this bill protects our workers while taking away a burden that has slowed job growth and investment."

Specifically, Corbett said the new law will:

  • Refinance the UC Trust Fund debt by issuing bonds at a low, fixed rate.
  • Reform employer taxes by increasing the taxable wage base from $8,000 to $10,000 and lowering the State Adjustment Factor.
  • Modernize benefit eligibility by increasing the base-year wage requirement from an average of 37 percent outside the high quarter to at least 49.5 percent. This change will not affect any current claimants, and will affect less than 10 percent of all claimants when the law goes into effect in January 2013.
  • Use 5 percent of employee taxes collected to establish a re-employment Fund for training initiatives to help jobless Pennsylvanians return to work.

Lodico said the fear is that those most in need of unemployment benefits will be left in the cold, and added people can't return to work if the jobs aren't there.

"Right now, I mean, we're still close to four people looking for every job that's out there," he said, "it's not like there's this magical jobs fairy that's going to come and appear and give all of these people jobs now, the jobs aren't there, I mean we're still in a major jobs crisis in this country and in the state."