House to vote on bill to increase max unemployment benefits
Alaska’s unemployment benefits would rise for the first time since 2009 to provide up to half of average lost wages under a bill heading for a House floor vote on Feb. 16.
The current maximum weekly benefit amount of $370 only replaces 36 percent of the state’s average wage according to House Majority Leader Chris Tuck, D-Anchorage, who introduced House Bill 142. That’s about a third of the state’s average weekly gross wage amount of around $1,020 with fulltime employment.
On Feb. 9, the bill was passed out of the House Finance Committee and is up for a floor vote on Feb. 19.
An increase of the maximum weekly unemployment benefit to $510 is proposed to bring Alaska up to the U.S. Department of Labor recommendation that unemployment insurance cover 50 percent of lost wages, Tuck said.
It would increase in two stages to $458 in 2018 and then to $510 in 2019.
Currently, the state ranks 39th in the nation in maximum weekly benefits, according to Tuck’s sponsor statement on HB 142. He compared Alaska to Washington state’s $681 per week while Oregon’s unemployed get up to $490 and California’s maximum is $450.
Yet, the federal poverty level for a family of three in Alaska for 2016 was $25,200 a year or $2,100 a month. The maximum unemployment check possible for a single parent with two children is $370 plus $24 per child under 18. That amounts to only $1,800 a month, which puts it below poverty level.
A single wage claim currently brings $252 per week maximum, or $1,008 a month.
At a Feb. 8 House Finance Committee meeting, Rep. Paul Seaton, R-Homer, questioned how much the bill will increase costs to the state. The insurance tax is paid by the state for state employees, said Legislative Finance Division Director David Teal.
Kelly Cunningham, an office of Legislative Finance analyst, told Seaton the costs would be rolled into salary adjustments for state employees.
“You won’t see those. The $230,000 per year would be spread across agencies and rolled into increases next year,” Cunningham said.
The fiscal note to accompany HB 142 is undetermined, Teal explains, and no money is thus far designated to accompany the increase. The amount could be absorbed in each department budget, depending on how it is handled administratively, he said.
“That’s the governor’s choice. It may come in terms of efficiencies via the department’s budgets. It won’t be much money in the grand scheme of things, so there may be a recommendation to just absorb it,” Teal said.
The State of Alaska pays 100 percent of all unemployment insurance contributions, Teal said.
For private employers the impact if this bill passes will mean an increase in their unemployment insurance tax. Businesses typically pay a certain amount of money into an unemployment insurance trust fund, based on the number of employees they have, their history of laying people off, and the current tax rate. That trust fund then provides the money needed for benefits when a former employee is approved to receive the unemployment benefits. In Alaska, approval for benefits comes on a case-by-case basis, according to the Alaska Department of Labor.
Alaska is one of only three states that require employee contributions in the private sector. In New Jersey and Pennsylvania, employees contribute .09 percent and .08 percent, Tuck found in researching his bill.
In all other states, employers pay 100 percent of the unemployment insurance tax.
In Alaska, employees pay significantly more — 27 percent of their own unemployment insurance premium while the employer is responsible for 73 percent, according to state figures.
The cost per employee is estimated to increase to $58 per employee earning the full taxable wage base in 2019, or about $40,000. It would go up to $84 in 2020.
The bill has the support of labor groups such as AFL-CIO Fairbanks Building and Construction Trades Council to help workers remain living in the state and “maintain a pool of skilled workers even when times are lean,” according to a resolution the council signed.
The Alaska Workforce Investment Board also supports the increase.
The National Federation of Independent Business-Alaska group has expressed opposition to the bill because “it will increase the tax on small Alaskan businesses,” according to a letter from state director Dennis DeWitt.
“One thing that was interesting when I was doing the research was when looking at it nationwide – the number one job creation is mass transit and the next, number two was employment benefits,” Tuck said. “A dollar in unemployment benefits increasing creates jobs. That’s because when buying food and taking care of the mortgage, it directly keeps the money flowing and you can gauge your economy according to how your money is flowing through it.”
Naomi Klouda can be reached at [email protected].