March 26, 2010

First to Unemployment

Justin Katz

Rhode Island should not, under any circumstances, increasingly burden the state's employers with the costs of its unemployed, but clearly, something must be done to adjust for our long-term burden of unemployment. This conversation is therefore very necessary:

The state Department of Labor and Training on Wednesday proposed sweeping changes to Rhode Island’s unemployment-insurance system to try to restore the state's unemployment trust fund to solvency.

The plan would gradually raise the state unemployment tax paid by more than 30,000 employers in Rhode Island and cap or reduce benefits that an unemployed worker could receive.

The mix of solutions is a matter for extended debate, but this suggestion makes absolutely no sense to me:

Benefit changes would apply only to people filing claims in the future, not to those currently collecting, officials stressed.

Frankly, I see no justification for that distinction, except (maybe) to keep the state from having to recalculate anybody's benefits. It's not as if the currently unemployed invested more into the system, and it's not as if those who are still working will have additional time to prepare for a change in unemployment benefits that they don't yet know that they'll require.

Under the same logic, one could argue that no businesses that are currently making payments for their unemployment insurance should see an increase in their rates.

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"Benefit changes would apply only to people filing claims in the future, not to those currently collecting, officials stressed."

In a state with 11-12% "unemployed" the reasoning is obvious, and perhaps politically astute. If you count their spouses, that represents a block of about 20% of the voters who would certainly vote against any pay cut for themselves. That should be enough to prevent passage. If they did not vote directly, they would probably vote out any legislator that did.

Posted by: Warrington Faust at March 26, 2010 7:24 PM
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