Press Release: Can Pennsylvania Afford to Leave $273 Million on the Table?

Dollar symbol(updated 9/8/10- press conference to be rescheduled for later date)

Can Pennsylvania Afford to Leave $273 Million on the Table?

By modernizing unemployment insurance, Pennsylvania can receive $273 million from the federal government while supporting unemployed workers and families (and especially women)

PHILADELPHIA - When Pennsylvania's lawmakers laid out a plan last week to close holes in the state budget, they did not discuss an opportunity to gain much needed revenue for the Commonwealth through changes that could be made with simple alterations to unemployment insurance. Yet one bill, HB 2400, would give the Commonwealth the opportunity to do just that. The changes would not only bring funding to Pennsylvania; they would also ensure that more workers and families who paid into the unemployment insurance system earn their fair share of compensation upon being laid off from their jobs.

In 2009, the American Recovery and Reinvestment Act (ARRA) included incentives to update unemployment insurance compensation. To earn these incentives, states must institute an alternative base period by changing their method of calculating unemployment compensation to account for a worker's most recent earnings.

Currently, the most recent earnings are disregarded, while the earnings from two quarters before job loss are used instead. Instituting an alternative base period, which allows earnings to be calculated from a different quarter in a worker's earnings, would help alleviate this problem and help Pennsylvania qualify for ARRA funding. The Department of Labor and Industry estimates this change would benefit approximately 30,000 people each year.

"The current method of calculating benefits causes few problems for higher wage employees displaced from a long-term job," says Carol Goertzel, President/CEO of PathWays PA. "But the system hurts low-wage workers who experience short spells of employment in several service sector jobs as well as those who have worked part-time. If someone works irregular hours, has just started a job, or has received a raise in the quarter before the layoff, their unemployment coverage will not accurately reflect their wages."

In addition to creating an alternative base period, Pennsylvania would also need to make a few more changes to unemployment insurance compensation by covering part-time workers and employees who leave the workforce due to domestic violence. "Women are most likely to be affected by these changes in unemployment compensation," notes Goertzel. "From 2006-2008, 57 percent of part-time workers in Pennsylvania were women." Meanwhile, Pennsylvania has already recognized domestic violence as good cause for leaving a job in case law, but has not codified that change through legislative action.

Thirty-nine states have already taken advantage of the ARRA unemployment compensation incentive. In Pennsylvania, the $273 million brought in from the federal government would more than cover the $70 million per year cost of modernization while at the same time bringing the Commonwealth in line with the rest of the country. Taking action on HB 2400 is the smart thing to do for Pennsylvania's budget as well as their workers and families.


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