NELP: Vermont Budget Cuts Would Undermine Jobless Safety Net

From the National Employment Law Project
For Immediate Release: April 26, 2010
Contact: George Wentworth, National Employment Law Project, (860)257-8894


NELP:
Vermont Budget Cuts Would Undermine Jobless Safety Net

Vermont – The National Employment Law Project (NELP) today criticized proposals being considered in the Vermont State Senate that would cut benefits as part of a legislative plan to restore solvency to the state’s unemployment trust fund.

“The benefit restrictions are among the most severe being proposed in the entire country,” said George Wentworth, a policy analyst with NELP who specializes in unemployment insurance policy. “There are currently 34 states that have seen their trust funds go in to debt since the beginning of the Great Recession, but none has adopted a package of cuts as tough on the unemployed as the one proposed by the Douglas administration.”

NELP cited proposed changes to the formula for calculating an unemployed worker’s benefits as particularly harmful. In testimony before the Senate Finance Committee last month, Wentworth pointed out that only four states – Arkansas, Kentucky, Louisiana and West Virginia – use “the 4-quarter averaging” formula which drives down weekly benefits by placing added emphasis on any recent gaps in employment. The average benefit amount for an unemployed Vermont worker is currently about $304 – which ranks 25th in the nation.

In addition, NELP criticized the proposal to bring back the idea of a “waiting week” for unemployed workers – a provision that was repealed from Vermont law ten years ago. The proposal would impose a one-week disqualification on the first week of every claimant’s unemployment.

In his testimony last month, Wentworth noted: “At a time when over 40% of (unemployment insurance) claimants are unemployed for six months or longer, does it make sense to start every worker’s bout of unemployment by de-stabilizing the worker’s family finances? …Jobless workers get no waiting week on their rent payments, mortgages or utility bills.”

NELP spoke last month in support of proposed increases in the wages that are subject to unemployment insurance taxes and has cited Vermont as one of many states that did not engage in the necessary forward financing to withstand increases in jobless claims.

“The insolvency of Vermont’s trust fund is not the result of workers exploiting an overly generous system. Insolvency is the result of a prolonged recessionary economy and years of under-funding the UI system. …(T)hese cuts are not necessary to make Vermont’s trust fund solvent. They are merely further punishing the victims of a tough economy,” said Wentworth.

Earlier this month, NELP released “Understanding the Unemployment Trust Fund Crisis of 2010,” which lists the trust fund balance of every state and jurisdiction in the country as of March 31st, and estimates how many months of remaining funds each state has. The study found that, at the time of publication, 33 states had fully depleted their unemployment benefit funds, forcing them to borrow billions from the federal government in order to maintain the safety net for millions of unemployed workers.

###