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Unemployment Insurance

Issue

Should unemployment insurance benefits be adjusted? When should extended unemployment insurance benefits be allowed?

Policy

Regular Benefits.

The Legislature should not enact a net increase in unemployment insurance (UI) benefits or expand eligibility for them. Minnesota already has one of the most generous benefit systems in the nation. In addition, increases in benefits or eligibility will ultimately increase employer UI taxes. Employers currently pay high UI taxes because the UI Trust Fund is being replenished until a sufficient balance is built up.

Extended UI Benefits.

The Legislature should only grant extended unemployment benefits if the following criteria are met. They are: (1) the employer is officially bankrupt; (2) the community is disproportionately affected by a layoff of the employer; (3) the community affected is in a remote location, where re-employment opportunities are limited; and (4) the employees receiving extended benefits attend job training/education that improves and diversifies their skills. Job training and education should concentrate on areas where there is a demonstrated shortage of skilled workers.

In addition, extended benefits should be limited to 13 weeks and only be granted if they are not available from the federal government. The Legislature also should consider a community’s plan for the development of its job base as it considers extended benefits. It should pay particular attention to the community’s plan to truly diversify its economic base.

Striking Workers.

The Legislature should not grant striking workers unemployment insurance benefits. One of the requirements to receive UI benefits is that the worker is available for work. Striking workers are not available for work because they are picketing or taking part in other strike activities. Therefore, they should remain ineligible for benefits.

Business Impact

If the Legislature increases UI benefits, its impact on employers will depend on a variety of factors including the employers’ wage levels and layoff experience. Expanding eligibility would likely affect employers that have more part-time and lower paid employees.

If UI extended benefits are financed by the state, they will reduce the balance in the UI Trust Fund even though the Trust Fund has not reached its recommended level. Extended benefits also will have an impact on the experience rating of companies whose workers receive benefits unless the Legislature acts to socialize the costs. This will increase their future UI tax liability.

Granting striking workers UI benefits will shift the balance of power in strikes toward the union because, for the first 26 weeks of a strike, employees would receive benefits limiting the financial impact of the strike on workers. This could make strikes last longer and cause the union to refrain from good-faith bargaining while its workers receive benefits.

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