Unemployment Insurance split commission fails to meet recommendations

The group that has spent the past year studying potential reforms to keep the state unemployment system solvent over the long term is poised to make only two formal recommendations: that the goal be to achieve target balance recommended by the federal government and that state labor officials do more to promote a program that allows workers to collect partial unemployment benefits to replace some wages lost due to reduced hours.

In more than two hours on Tuesday, divisions within the 21-member Unemployment Insurance Trust Fund Study Commission were exposed as Democratic lawmakers and officials Unions on the panel were largely unable to influence business groups to support their reform proposals.

The state’s unemployment insurance trust fund was overwhelmed by the unprecedented spike in unemployment in the early months of the COVID-19 pandemic, forcing the state to turn to federal loans to keep the flow going. benefits. An independent valuation of the fund, conducted for the state by KPMG and released earlier this year, estimated the fund’s balance as of November 30 at $2.94 billion, but highlighted three issues: federal loan obligations , outstanding employer credits and a refund due to the federal government – ​​which collectively push the fund toward a structural deficit of $115 million.

There was so little agreement among committee members that the chairpersons’ plan to accept the minutes of Tuesday’s meeting as it was winding down so that the committee’s work could be completed was rejected. Instead, the group will meet once more – after a layoff of at least two weeks so as not to conflict with the Senate budget debate – to adopt minutes and formally put end of his work.

“We made these recommendations in hopes of reaching an agreement, which would mean that not everyone would agree with every side, but they would try to reach a consensus,” said Senator Patricia Jehlen, co-chair of the committee, during a discussion on a particular subject. recommendation. She added, “So I’m just saying that if people want all their concerns addressed, I hope they will consider the concerns of other members with other interests.”

When the group convened for its 11th meeting on Tuesday morning, the co-chairs of the group had proposed seven draft recommendations to be included in the commission’s final report. But early on, reps Josh Cutler and Jehlen announced they were no longer suggesting the group adopt language suggesting a study of portable benefits for gig economy workers.

Things didn’t go much better for the other co-chairs’ recommendations.

After sending in a small handful of amendments — the commission approved a suggestion by Black Economic Council of Massachusetts designate Shanikwa Davis, and rejected a few amendments from Massachusetts Retailers Association President Jon Hurst — Cutler called for a vote on the entire list of the presidents’ six remaining recommendations.

Ten members of the commission voted to recommend the whole sequel, but nine voted against the wording of the recommendations. Although the package won the support of a simple majority of members of the voting committee (Secretary of Labor and Workforce Development Rosalin Acosta and Director of the Unemployment Assistance Department , Richard Jeffers, both abstained), it fell short of the two-thirds threshold that Cutler said the commission had set as its bar.

The commission voted exactly the same when Cutler and Jehlen presented only their first two recommendations – adjusting and then indexing the salary base used to set unemployment insurance rates and reducing the table of experience rates over time. time to allow for moderate, manageable rates and predictable revenue growth.

“These two recommendations alone, if implemented in a proper, gradual and predictable manner, would get us to solvency,” Jehlen said.

The 10 members who voted in favor of the recommendation were: Cutler, Jehlen, Evan Horowitz of the Tufts Center for State Policy Analysis, John Drinkwater of the AFL-CIO, Richard Marlin of the Mass Building Trades Council, the CEO of CapeWind and the former Senator Dan Wolf. , Davis, Hannah Tanabe of Greater Boston Legal Services, Stephanie Herron Rice of the Justice Center of Southeast Massachusetts, and Daina Estime of the Minority Neighborhoods Union.

The nine members who voted against the recommendation were: Hurst, Chris Carlozzi of the National Federation of Independent Business, Kelsey Cintolo of the Mass Competitive Partnership, Steve Clark of the MA Restaurant Association, Brooke Thomson of the Associated Industries of Massachusetts, Eileen McAnneny from the Mass Taxpayers Foundation, Christopher Anderson from the MA High Technology Council, Karen Andreas from the North Shore Chamber of Commerce and Carolyn Ryan from the Greater Boston Chamber of Commerce.

Hurst had proposed that the salary base should only be adjusted once the cost of any borrowing to support the fund is paid in full and discussion of his proposed amendment sparked a back-and-forth among committee members who ended up on opposite sides of the vote on the recommendation.

“I still think a lot of the discussion is based on some sort of misunderstanding of what increasing the taxable wage base does. It doesn’t raise taxes. So the idea that we should suspend that burden until bail is made has no rational basis because it’s not an additional burden it’s a change of who pays but not necessarily an increase in taxes, at least in my estimation “said Horowitz.

Carlozzi replied that he thought it would represent a tax increase for some companies in times of high inflation and rising wages.

“I think an increase in the taxable wage base translates into higher taxes for a lot of these companies at this point. And that would be coupled with additional assessments as part of that. So it would be a ‘an overall cost increase. I guess we can call it what we want, a fee or an assessment or a tax increase, but the overall cost will increase for businesses depending on wages as well as some of those costs and assessments,” he said.

Horowitz claimed what Carlozzi said was “not true” and attempted to illustrate his point.

“If you had $100 and I say you have to pay tax on the first $10 at a rate of 10%, then you owe $1. If I say you have to pay tax on the first $20 at a 2.5% rate, owes you $1,” he said. “I increased the taxable salary base from $10 to $20, but I adjusted the rates. There’s no increase in your tax burden or fees or anything.”

Carolyn Ryan, senior vice president of policy and research for the Greater Boston Chamber of Commerce, stepped in to mediate, but also expressed her own concerns about the set of proposals recommended by Jehlen and Cutler.

“I think the problem is not that everyone has the same $100 in this case. So for some companies it will be an increase and others it could be a flat level or a reduction. But depending your salary levels, you could see, I think, an increase,” she said. “From my perspective, I think that recommendation and others are true, there’s not a lot of parameters around what’s on offer and it gives me pause…generally I have some concern about the lack of detail.”

The only recommendation that at least two-thirds of the commission could agree to on Tuesday was that the Executive Office of Labor and Workforce Development “should create a strategy to promote and accelerate WorkShare program applications to industries that would benefit from the program.

“The WorkShare program is underutilized because it is not a well-known program. It helps keep a business open and operational while allowing employees to be paid when their hours are reduced, while reducing the burden on the trust fund for unemployment,” Cutler says.

This recommendation was adopted with 13 members in favour, four against (Thomson, McAnneny, Anderson and Andreas) and three abstentions (Davis, Carolozzi and Cintolo).

“So kumbaya, which hit the two-thirds mark. So I knew there was something that could bring us together, and that was WorkShare,” Cutler said.

Jehlen said the commission voted unanimously in November to adopt the recommendation that the goal of the trust fund is to achieve a high cost multiple of 1.0 over time, which reflects the target recommendation. solvency report from the United States Department of Labor.