Wesley Muller/Louisiana Illuminator
People in Louisiana who lose their jobs would see half the unemployment benefits currently available if a proposal being considered in the legislature is approved.
House Bill 340, sponsored by Rep. Troy Romero, R-Jennings, passed the House Committee on Labor and Industrial Relations in a 7-5 vote along party lines Thursday.
Currently, laid-off employees in Louisiana can claim up to 26 weeks of unemployment benefits in a 12-month period. Romero’s bill would reduce the duration of unemployment benefits to a base of 12 weeks based on a sliding scale indexed to the state’s average unemployment rate. A recipient would be entitled to an additional week of benefits for every half percentage point increase in the average unemployment rate in excess of 5%.
The most anyone could receive would be 20 weeks of benefits if the average unemployment rate is equal or greater to 8.5%.
Over the past few months, Louisiana’s unemployment rate has been under 3.5%, the lowest ever recorded. Excluding the temporary spike during the coronavirus pandemic, the state’s average unemployment rate over the past decade was 5.7%, according to federal data.
Romero said he wants to reduce the unemployment taxes businesses pay and shore up the state’s unemployment trust fund. Louisiana’s GOP lawmakers have continuously filed legislation to reduce worker benefits over the last few years.
“It’s going to be difficult; it’s going to be a challenge,” Romero said. “But if we don’t move forward with progress, this state’s going to continue to do what it does, and that’s to be last.”
Unemployment benefits replace a small portion of a laid-off employee’s lost wages. The maximum weekly benefit is about $275. Workers who quit their jobs or are fired cannot claim the benefits.
Employers pay a tax between 0.09% to 6.2% of a worker’s wages into the state’s unemployment trust fund, but many receive a federal tax credit to offset most of the cost. As a result, unemployment benefits are largely funded by the federal government.
Louisiana Workforce Commission Deputy Secretary Margaret Mabile told the committee Romero’s bill will mostly hurt low-income workers.
“This isn’t people that don’t work,” Mabile said. “If they don’t work, they’re not in our workforce. So this bill is attacking individuals that are currently employed who may need assistance until they can get reemployed.”
She said the current 26-week allowance gives laid-off workers time to find training and increase their skills to find better employment.
“It’s these individuals that are in our lower income (category),” Mabile said. “When you take them off unemployment, you’re pushing them right back into poverty. You’re pushing them back into a workforce, and most of them now have to pay for childcare. We’re not making any exemptions for the cost of going to work.”
Employers won’t really save any money, and the state will pay out smaller amounts in unemployment benefits but won’t be able to use that money for other things because it will pile up in the restricted unemployment trust fund, she said.
“(Businesses will) pay the same in taxes,” Mabile said. “All we’re gonna do is grow our trust fund tremendously…It’s not a savings account.”
Romero said lawmakers could then enact new legislation to use the money or lower the unemployment tax rates.
Another goal of the legislation is to ensure Louisiana never has to borrow money again from the federal government to shore up the trust fund like it did during the coronavirus pandemic, Romero said. Other states with programs similar to the one he’s proposing, such as Florida, didn’t have to borrow money, he added.
LWC Secretary Ava Cates said Florida also had some of the worst unemployment benefit responses during the pandemic. The improper payment rate of unemployment benefits in Florida was about 40%, while Louisiana’s rate was about half that, she said.
“Our trust fund was among the healthiest in the country, consistently rating among the top 10,” Cates said. “So the trust fund was healthy prior to the pandemic.”
One of the proposal’s most significant consequences, Cates explained, would happen during times like the pandemic that cause unemployment rates to quickly spike. Laid-off workers would be locked into fewer benefits for an entire year based on unemployment rates of the previous month, she said.
Unemployment rates also differ greatly according to geographic areas within the state. Metropolitan areas are always significantly higher than other parts of the state, Cates said. According to the National Employment Law Project, sliding-scale programs like the one Romero is proposing disproportionately hurt communities of color.
Republicans on the committee remained unconvinced by the LWC leadership’s testimony.
“If we need to make changes, we’ll make changes,” Romero said. “I think going forward, the state’s going to be better off by doing this, I really believe…Once it’s in place, I think you’re going to see some positive results.”
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