The ink on the 2003 unemployment insurance reforms is barely dry and now unions and key Democrat legislators want to toss them out before they are completely phased in. Doing so is ill-advised and a setback for our state, which is slowly climbing out of a prolonged recession.
At issue is what is called “two quarter averaging.” Under the old law, seasonal workers mainly in construction, fishing and agriculture needed to work only during two quarters each year to qualify for benefits. The new law requires them to work during four quarters.
The total number of work hours required each year stays the same-more than 600. The difference is seasonal workers can no longer take their highest wages from six months on a job and qualify for higher payments during the other half-year when they draw unemployment. They must now average their wages over the entire year which, in effect, decreases benefits and forces them to work more.
Legislation, jammed through the House in Olympia on basically a party-line vote with Democrats supporting and Republicans opposing, reinstates the very system, which makes Washington the highest cost per worker ($695) state in the nation. The national average is $228.
According to the U.S. Labor Dept., unemployment statistics for the first quarter of 2004 Washington employer taxes are:
* 17 percent higher than Oregon,
* three and half times higher than California, Texas and Kentucky,
* five times higher than Utah and South Carolina, and
* 13 times higher than Georgia.
These states have major wood products, aluminum, and high-tech and aerospace manufacturing facilities, which we compete against for jobs and investment capital to modernize and expand.
In past years, low cost, reliable electricity offset the impact of other higher wages, costs to comply with state and local regulations, taxes and worker benefits like health insurance. That is not the case today. Commercial and industrial customers have all seen their electric bills dramatically increase. Whereas a decade ago, Washington had the lowest power costs, today industrial customer rates are the 23rd highest.
Designing a fair unemployment insurance system is difficult. The system itself is complicated, but it is crucial that we have a system that doesn’t kill jobs.
Getting a layoff notice is never easy. My father was an electrician who worked on construction jobs all of his life. He dreaded the days when projects ended, but he knew that is the nature of his chosen profession. Even though he banked part of his paychecks for a rainy day, going to the unemployment office was something he did as a last resort.
Between jobs he’d check the “call out board” at his union hall in Butte, Mont., and every Monday, he bought the Sunday editions of the Portland, Salt Lake City, Seattle and Spokane newspapers and scoured the help-wanted sections. At times, our family learned that providing for our needs meant he’d have to leave town during the week to work and come home on weekends.
For employers, the issue is cost. The fact is today costs matter more than ever before. They look at the ledger every day and see if there is enough money in the bank to make payroll and pay the bills. In our small business with 34 employees, every nickel counts, and unexpected increases in electricity, health care, taxes, workers’ comp and unemployment insurance hurt our ability to pay good wages and provide excellent benefits.
The last thing anybody wants is an employer closing up shop or relocating to another state or foreign country. We must give the 2003 reforms a chance to work, review the progress, and only then make necessary changes. Returning to the old costly system is not an option if our state wants people to get paychecks rather than unemployment vouchers.
Don C. Brunell is president of the Association of Washington Business.
