HARRISBURG, PA – The Pennsylvania Chamber of Business and Industry today applauded state lawmakers for approving a comprehensive UC reform plan that will restore solvency to a UC system in debt to the federal government to the tune of nearly $4 billion.
“Pennsylvania’s unemployment compensation fund is broke; job creators are feeling the strain of debt-related tax increases; and the long-term stability of this important safety net for out-of-work individuals is in jeopardy,” PA Chamber President Gene Barr said. “These reasonable changes not only address the staggering debt but also responsibly deal with the contributing factors that helped bankrupt the system.”
Barr said statistics clearly show that Pennsylvania’s UC system suffers from a spending problem, not a revenue problem, due in part to an overly generous benefits system and broad eligibility requirements that have allowed people with little legitimate attachment to the workforce to still receive benefits.
Pennsylvania is third nationally in UC payouts annually, despite an unemployment rate that has been well below the national average for several years, and has a UC tax rate that is among the highest in the country.
As a result of the federal debt alone, Pennsylvania employers paid about $350 million more this year in UC taxes than the prior year.
“By refinancing the debt, employers will have more predictable and less costly debt payments rather than being subject to job-crushing, growth-stifling automatic federal tax increases,” Barr said. “And by tightening eligibility requirements, the system will continue as intended – a safety net for those with a legitimate attachment to the workforce who are out of work through no fault of their own.”
Barr said the plan will save approximately $2.34 billion between 2013 – when the pending law takes effect – and 2019, when the UC Trust Fund is expected to be completely solvent.
The bill does not impact current benefit levels, but does freeze maximum benefit rates through 2019.
Barr said overall, the eligibility adjustment would impact less than 10 percent of UC recipients in 2013 by requiring that claimants earn slightly more – 49.5 percent versus 37 percent – outside the highest quarter of their base year in order to receive benefits.
“These reforms are necessary to restore long-term solvency to the system,” Barr said. “We applaud lawmakers for taking the steps they did to shore up the UC safety net for those most in need in a responsible manner that will not jeopardize economic growth, which is critical to getting Pennsylvanians back to work.
“We encourage lawmakers to address additional concerns that are a drain on the UC system, including passing legislation that would prevent certain retired state workers who have already begun to collect a pension from being eligible for UC benefits.”