WASHINGTON, DC— Yesterday, Senators Kennedy, Snowe, Rockefeller, Warner, and Cantwellintroduced a bill to encourage states to modernize their unemployment insurance systems.The Unemployment Insurance Modernization Act would make $7 billion in incentive paymentsavailable to states to encourage them to expand eligibility for benefits and provide training toworkers struggling with long-term unemployment.
"In today’s insecure economy, too many working families are just one pink slip away fromfalling into poverty. While our unemployment insurance program has always been a bedrockof security for working families in troubling times, the system has not kept pace with ourchanging economy. It leaves many workers – especially low-wage workers – out in the cold,unable to collect benefits.” Senator Kennedy said. "Our bill would encourage states to updatetheir unemployment insurance systems to address the new challenges facing workers. Itwould help long-term unemployed workers get the training they need to find new jobs. And itwould give states the resources and flexibility they need to revitalize their programs andbetter serve working families."
“The Unemployment Insurance Program is vital tool that provides millions of American workerswith benefits each year and we must ensure that this system evolves over time to take intoaccount major changes in our economy,” said Senator Snowe. “This legislation is a criticalinvestment to help families in Maine and across the country get the help they need in periodsof instability. By modernizing the UI Program, we are encouraging states to improveresources and increase flexibility to help American workers stay on their feet and support theirfamilies.”
“Unemployment insurance is a crucial safety-net for those who have lost their jobs. More thananything it provides valuable peace of mind to families that they can continue to make endsmeet, put food on their table and take care for their kids,” Senator Rockefeller said. “But theprogram is more than just financial assistance, it’s also about training and educationprograms. Our legislation will provide states with the resources needed to update theirprograms so they better reflect the challenges of our modern economy.”
Senator Warner said, “In periods of unemployment, workers need a sound program of trainingand benefits to find new and rewarding opportunities. This bill will provide importantresources to states like Virginia, as they improve their programs to help workers and theirfamilies in times of need.”
Senator Cantwell said, “We have an obligation to provide families with a safety net that meetsthe demands of today’s changing economy. Too many people today are struggling to maketheir house payments and put food on the table while they worry about where the nextpaycheck will come from. This legislation gives states the federal resources they need tomodernize the nation’s unemployment system so we can provide critical support to familiesduring these economic times.”
Below is a summary of the bill.
The Unemployment Insurance Modernization Act
The Unemployment Insurance (UI) program must be reformed to address fundamental shiftsin the economy. The UI system provides needed benefits to millions of U.S. workers eachyear. But the system needs to be updated to better assist today’s more highly mobileworkforce and long-term unemployed workers left behind by declining industries. Today, manyunemployed workers do not qualify for benefits because their most recent work is not takeninto account. Others exhaust their benefits before finding work, joining 1.1 million long-termunemployed workers and an additional 1.5 million discouraged job-seekers struggling to getby. For these reasons, only 35% of unemployed workers currently collect unemploymentbenefits.
The UI Modernization Act uses $7 billion in incentive payments to encourage states to updatetheir UI systems. The bill rewards states for: (1) removing barriers that block coverage forlow-wage and part-time workers; (2) ensuring a more family-friendly UI system; and (3)helping dislocated workers increase their skills. It also provides $500 million in funding tostates to improve the administration of their unemployment compensation systems. Theincentive and administrative payments are both fully paid for from the UI trust fund andthrough an extension of the existing FUTA surtax (assumed in the President’s budget).
The UI Modernization Act would give states the resources and flexibility they need to passimportant reforms. Each state would have a chance to receive a share of the $7 billion setaside for incentive payments. To receive one-third of its allotted funds, a state must adopt an“alternative base period” allowing workers to meet eligibility requirements by counting theirmost recent wages. This makes the system — which has traditionally relied on wage data thatis up to six months old — more accurate and helps workers who have recently satisfiedearnings requirements to collect the benefits they deserve. States that have already adoptedsuch a system would also receive these incentive payments.
States that adopt or have adopted two of the following reforms benefiting workers will receivethe additional two-thirds of their share of funds:
• Family-related needs: Providing unemployment compensation for workers who havevoluntarily left their jobs due to the illness or disability of an immediate familymember, the relocation of a spouse for employment, or domestic violence.• Job training: Providing training benefits to unemployed workers laid off from a“declining” occupation who are enrolled in a state-approved training program for entryinto a high-demand occupation.• Part-time work: Providing unemployment compensation benefits to individuals seekingpart-time work.• Uniform 26 weeks: Raising maximum compensation caps so that all long-termunemployed workers can receive a full 26 weeks of benefits.• Child Assistance: Paying unemployed workers at least an extra $15 per week for eachof the worker’s dependents.