Bill to Dismantle Federal Unemployment Insurance Advances in Congress

NO JOBS” Act sets stage to divert aid from long-term unemployed while need remains great

Washington, D.C.—Less than five months after federal unemployment insurance (UI) for the long-term jobless was renewed through the end of 2011 as part of a deal to extend tax cuts for the wealthiest two percent of Americans for two years, some in Congress are looking to break that agreement and raid the unemployment program’s meager funding while leaving in place the generous tax cuts. 

A bill voted out of the House Ways and Means Committee today would allow states to transfer federal UI funds away from helping the long-term jobless and use them instead for other purposes, including tax breaks for corporations.  The bill, ironically dubbed the JOBS Act (HR 1745 in the House) by its sponsors, Representative Dave Camp of Michigan and Senator Orrin Hatch of Utah, is the worst of all worlds:  It would cause job loss; sets the stage to strip away insurance benefits that the long-term unemployed need, earned, and are counting on; rewards states for their failure to adopt responsible UI financing policies; and gives companies yet another tax break at the expense of workers.

“The “NO JOBS” Act approved by the Ways and Means Committee is no solution for the ongoing unemployment crisis.  There are ways to meet the goals of maintaining benefits for the long-term unemployed, promoting job creation, and easing burdens on states and employers—but this bill does none of that.  Instead, it sets the stage to reward states for years of bad UI funding policies and corporations for relentless lobbying to cut UI contributions, all at the expense of the long-term unemployed—and without creating any jobs, “ said Christine Owens, executive director of the National Employment Law Project. 

“Last December, Congress made a promise to unemployed workers and the nation that federal unemployment insurance would be maintained throughout 2011 for hardworking men and women, who, through no fault of their own, lost their jobs and are struggling to find new ones in what remains the worst job market since the Great Depression.  The NO JOBS Act breaks that promise to these most vulnerable Americans, but honors the deal for our nation’s wealthiest.  That’s just wrong,” said Owens. 

More than four million workers currently receive federal unemployment benefits through either the Emergency Unemployment Compensation or Extended Benefits programs, which Congress earlier renewed through 2011.  The NO JOBS Act would allow states to take the $31 billion allocated for these programs and spend those dollars on reducing federal and state unemployment taxes for businesses.  It also would allow states to reduce the number of weeks of federally funded benefits, reduce the amounts paid, or eliminate them entirely.  One provision would allow a state to take the federal benefit funds and use them to finance its depleted unemployment trust fund rather than collect employer taxes, or use them to pay regular state benefits instead. 

State UI trust funds face undeniable challenges, but in large measure, they are insolvent because state legislatures have given in to business pressure to cut unemployment insurance taxes even during periods of economic boom, rather than making sure their trust funds were ready for the inevitable rainy days. 

“The NO JOBS Act sends the wrong signal to states that have mismanaged their unemployment trust funds for years and were therefore woefully unprepared to help their residents through this last recession.  That regrettable mismanagement and failure to plan should not be remedied at the expense of unemployed workers who desperately need the help to survive, and who are doing the economy good by putting that money right back into local businesses by spending on necessities,” said Owens. 

The nation’s unemployment rate remains exceptionally high at 9 percent, with 22 states facing even higher rates.  Nine states, including California, Florida, Michigan, and Nevada, continue to face unemployment rates of more than 10 percent.  And the record rates of long-term unemployment will persist as long as there is only one job available for every 4.5 unemployed workers.   

“We have choices to make in how we solve problems and crises, and the Camp-Hatch bill is the wrong choice,” Owens said.  “The recession has not ended for millions of America’s workers and their families—and it is simply wrong to threaten the thin lifeline of support they rely on.  If Congress wants to help employers and states without hurting the unemployed, it should move quickly to pass legislation introduced by Senator Durbin, which provides a comprehensive solution to the state UI trust fund solvency problems and the tax increases employers are facing—without damaging the very families the UI program exists to support.”

UnemployedWorkers.Org urges you to call your Representative and your Senators in Congress toll-free at 888-245-0215.

Tell them to oppose Rep. Camp’s and Sen. Hatch’s bill to dismantle the federal unemployment insurance program.

Tell them to oppose stealing benefits from unemployed workers.

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