Feb. 13 (Bloomberg) -- The stimulus legislation would revamp the 74-year-old U.S. unemployment compensation program by encouraging states to give benefits to those who quit their jobs to care for ailing relatives.
The provision, sponsored by Representative Jim McDermott, is in the $789 billion compromise reached by House and Senate negotiators. Critics say the change would undermine the original intent of the Depression-era program as a cushion only for people whose jobs disappear.
“It’s fundamentally at odds with the basic tenets of unemployment insurance: temporary cash payments for people who lose their job though no fault of their own,” said Douglas Holmes, president of UWC-Strategic Services on Unemployment and Workers Compensation, a Washington-based group that represents employers. “Unemployment insurance is not public assistance, it’s not a family support program, it’s not food stamps.”
House and Senate votes approving the bill and sending it to President Barack Obama for signature could come as early as today.
The provision is part of a broader effort to update the jobless program. Unemployment in the U.S. climbed to 7.6 percent in January, the highest level since 1992. Obama has said the economic stimulus bill will help create as many as 4 million jobs.
A $7 Billion Fund
The stimulus measure includes a $7 billion fund to reward states that adopt changes in unemployment benefits. Among actions required to qualify, states would have to provide benefits to people who quit a job for a “compelling family reason” such as caring for a sick or disabled member of their immediate family, or because of domestic violence. Workers could collect benefits only when they started looking for a new job.
“We’re telling single mothers who have to quit their job to care for their child, or women in an abusive relationship who have to quit to get away, you can draw unemployment insurance checks when you are ready to go back to work,” McDermott, a Washington Democrat, said in an interview. “Most states say you can only draw a check if you are fired. We’re giving states incentives to move beyond that.”
An Expansion
McDermott, who has long pressed for an expansion of the unemployment insurance program, said expanding unemployment payments meets the goals of the economic stimulus package, he said.
“The money from these checks are in the economy within 20 minutes of the checks being cashed,” he said. “People who get it aren’t putting the money in their IRAs, they aren’t putting it in savings accounts, they are spending the money to keep their head above water.”
James Sherk, a labor analyst at the Heritage Foundation in Washington, said the measure is too lenient in its requirements to receive unemployment insurance.
“Lax qualifying provisions would encourage abuse,” he said.
Unemployment insurance is paid by states from taxes collected from employers, and was enacted as part of the Social Security Act of 1935. To qualify for a share of the $7 billion in incentives, states would also have to meet other requirements, such as extending unemployment insurance to certain part-time workers.
McDermott said he supported the change in part because the Family and Medical Leave Act, which lets workers take unpaid leave, doesn’t cover small companies, part-timers and certain lower-wage workers. It limits time off to 12 weeks.
The Complaint
Critics say one of their complaints is that the provision is too vague in defining an illness.
“If someone leaves their job to care for someone in their family with a cold, they shouldn’t be getting insurance,” Holmes said. “In any event, this has nothing to do with economic stimulus.”
The National Employment Law Project estimates that 19 states would automatically qualify for about $1.5 billion in funding based on policies that meet the requirements of the provision in the stimulus package.
The economic stimulus package also would allocate funds to continue extended unemployment benefits, providing as much as 33 weeks of extended benefits through 2009. The proposal would also provide an extra $25 each week to recipients.
The provision, sponsored by Representative Jim McDermott, is in the $789 billion compromise reached by House and Senate negotiators. Critics say the change would undermine the original intent of the Depression-era program as a cushion only for people whose jobs disappear.
“It’s fundamentally at odds with the basic tenets of unemployment insurance: temporary cash payments for people who lose their job though no fault of their own,” said Douglas Holmes, president of UWC-Strategic Services on Unemployment and Workers Compensation, a Washington-based group that represents employers. “Unemployment insurance is not public assistance, it’s not a family support program, it’s not food stamps.”
House and Senate votes approving the bill and sending it to President Barack Obama for signature could come as early as today.
The provision is part of a broader effort to update the jobless program. Unemployment in the U.S. climbed to 7.6 percent in January, the highest level since 1992. Obama has said the economic stimulus bill will help create as many as 4 million jobs.
A $7 Billion Fund
The stimulus measure includes a $7 billion fund to reward states that adopt changes in unemployment benefits. Among actions required to qualify, states would have to provide benefits to people who quit a job for a “compelling family reason” such as caring for a sick or disabled member of their immediate family, or because of domestic violence. Workers could collect benefits only when they started looking for a new job.
“We’re telling single mothers who have to quit their job to care for their child, or women in an abusive relationship who have to quit to get away, you can draw unemployment insurance checks when you are ready to go back to work,” McDermott, a Washington Democrat, said in an interview. “Most states say you can only draw a check if you are fired. We’re giving states incentives to move beyond that.”
An Expansion
McDermott, who has long pressed for an expansion of the unemployment insurance program, said expanding unemployment payments meets the goals of the economic stimulus package, he said.
“The money from these checks are in the economy within 20 minutes of the checks being cashed,” he said. “People who get it aren’t putting the money in their IRAs, they aren’t putting it in savings accounts, they are spending the money to keep their head above water.”
James Sherk, a labor analyst at the Heritage Foundation in Washington, said the measure is too lenient in its requirements to receive unemployment insurance.
“Lax qualifying provisions would encourage abuse,” he said.
Unemployment insurance is paid by states from taxes collected from employers, and was enacted as part of the Social Security Act of 1935. To qualify for a share of the $7 billion in incentives, states would also have to meet other requirements, such as extending unemployment insurance to certain part-time workers.
McDermott said he supported the change in part because the Family and Medical Leave Act, which lets workers take unpaid leave, doesn’t cover small companies, part-timers and certain lower-wage workers. It limits time off to 12 weeks.
The Complaint
Critics say one of their complaints is that the provision is too vague in defining an illness.
“If someone leaves their job to care for someone in their family with a cold, they shouldn’t be getting insurance,” Holmes said. “In any event, this has nothing to do with economic stimulus.”
The National Employment Law Project estimates that 19 states would automatically qualify for about $1.5 billion in funding based on policies that meet the requirements of the provision in the stimulus package.
The economic stimulus package also would allocate funds to continue extended unemployment benefits, providing as much as 33 weeks of extended benefits through 2009. The proposal would also provide an extra $25 each week to recipients.
