UI “Reform”: Let’s Count the Savings (this won’t take long)

House Speaker DeLeo said again this week that he plans to couple legislation to increase the minimum wage with changes to the unemployment insurance system that businesses want. Meanwhile, the coalition that secured far more signatures than necessary to put the minimum wage increase on the November ballot, Raise Up Massachusetts, has taken the position that pairing the two bills is unacceptable.

So as the standoff continues, let’s take a closer look at one of the UI changes that top every corporate wish list: eliminating the “lenient qualification requirements” that allow Massachusetts workers to qualify for UI after 15 weeks of work in the prior year, when many states require 20 weeks. Some facts:

  • An unemployed worker in Massachusetts who has worked for only 15 weeks receives benefits for a far shorter time than someone with a longer work history – so parity is already built into the system.
  • People whose work histories are short because they work in jobs clearly intended to be seasonal positions are not eligible for UI. In his Globe column stating that they are eligible, Scot Lehigh must have forgotten about the part of the UI law expressly excluding them. Not even business groups are making this claim.
  • According to Associated Industries of Massachusetts, one of the largest employer trade associations and a big advocate for this change (and therefore without any reason to lowball its potential savings), estimates that it will reduce costs by $30 million annually. Let’s put that number in context: the total amount of money collected in 2012 to pay the UI benefits earned by unemployed workers was $1.767 billion. Thirty million dollars represents 1.7 percent of that total.

The argument from business, therefore, is that Massachusetts needs to try to become a more competitive place for employers by revamping our “antiquated and expensive” UI system so that it excludes more unemployed workers and leaves them to fend for themselves unless our state’s tattered safety net can help them. All for employer savings of (at most) 1.7 percent, and at a social cost that hasn’t been estimated yet. Got it.

2 thoughts on “UI “Reform”: Let’s Count the Savings (this won’t take long)

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