WR expresses concern with unemployment insurance benefit bill

Jan 14, 2021
Written by wpengine

Washington Retail has testified with concerns on the unemployment insurance benefit bill, SB 5061, that holds average premiums at 2020 levels for one year but raises the average of monthly premiums by 116% over four years.

The means to provide benefits to unemployed workers are far too burdensome on employers, WR believes. The association is instead proposing alternative ways to ease the burden on employers while still allowing benefits to flow to needy workers.

The current state unemployment fund has a $1.8 billion balance from which to pay benefits after record levels of claims that resulted from the coronavirus pandemic in 2020.

The bill relies on the state taking a two-year federal loan of approximately $418 million. Unfortunately, if it is passed:

  • Employers would remain responsible for COVID-related benefit costs forced by mandated closures of businesses during the pandemic.
  • Employers would remain responsible for replenishing funds lost to organized theft from the UI trust fund.
  • Employers would be responsible for repaying the proposed federal loan, possibly including interest charges.
  • Employers would have to pay any proposed benefit increases this year.

The UI system is working well and performing admirably despite the crisis created by COVID related unemployment. What is needed is a short term, perhaps one-year, fix:

  • Allow funds to be transferred into the UI Trust Fund from state reserves if the fund reaches certain trigger points.
  • Further reopening businesses to allow more people to return to work. Over time the state can re-pay the state’s trust fund while avoiding penalties or costs associated with a federal loan.
  • Extend the time to replenish the trust fund by holding employers who were mandated to close harmless from COVID-related benefits.
  • Adjusting the social tax rate by eliminating COVID-related costs.

The weekly performance of the UI Trust Fund clearly shows that the number one priority is to get people working again. The fund might need a very short-term bridge to accommodate needed relief from COVID expenses, but it will replenish itself as people quit taking benefits and return to work.