Senate Bill 5061, legislation that would prevent a drastic increase in unemployment taxes for businesses and increase the minimum weekly unemployment benefit for workers, will receive a floor vote today.
This bill has been a months-long project for its prime sponsor, Sen. Karen Keiser (D – Des Moines). After working with business, labor, the governor’s office and her legislative colleagues, she believes a substitute bill is poised to pass.
Ahead of floor action today, I clarified a few points with Sen. Keiser about the bill’s amendments and provisions related to the minimum weekly unemployment benefit.
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Michael Goldberg: Can you discuss the version of SB 5061 you will be bringing to the floor today and how the bill has evolved?
Sen. Karen Keiser: The floor striker amendment that we will offer today as a substitute bill includes new intent language, specifically intent language that says clearly this is not the final bill on unemployment. We have many other issues to deal with over the next year and we will most certainly be returning to the issue in further efforts to improve the system.
If you recall, the underlying bill had a five year lookback on the experience rating. Current law is four years and the business community would like to keep it at four years. That means that the trust fund will be a little healthier and it also means that the tax bills will go up a little bit faster, which is a little bit concerning, but I’m willing to work with them. Finally, it maintains conformity with federal law by moving the effective date of Senator King’s committee amendment to January of 2022.”
MG: There is concern among some labor advocates that Sen. King’s amendment will create a new a new “subminimum benefit” for workers who struggle to get enough hours. For these workers, they could end up earning less under this bill as amended than under current law.
KK: The intent of increasing the minimum benefit is to give every low-wage worker who works enough hours to qualify for unemployment an increase of about $75 per week. The floor striker we’re offering today amends the date of implementation. Nobody who is currently receiving benefits will see any decrease in their benefit. That will not happen. And anybody that files next year will see the increase.
An import reminder is that this is an insurance program. This is not a welfare program. It isn’t only a benefit, it is an earned insurance payment. It’s earned by working at least 680 hours of employment that has insurance premiums paid on those hours.
An awful lot of people work in casual labor positions that have no coverage, and they really have a hard time qualifying because they don’t have an employer paying for those insurance premiums. It’s an inequity that exists in the system that I’ve tried to address but there are complications.
It’s complicated because it’s a joint program with the federal government. For instance, federal law eliminates anybody who is an undocumented worker from receiving any unemployment insurance no matter how many hours they work that have had premiums paid on them. It’s totally unjust.”
MG: Since workers cannot collect UI if they quit their job, why is it necessary to cap the minimum benefit at employment level wages? Wouldn’t current limits on collecting UI eliminate the incentive to quit in order to earn more through UI?
KK: Here is the principle: it is not fair for people going to work everyday to have somebody who is not working earn more. Say somebody is working ten to twenty hours per week and is laid off. They would probably qualify for a minimum benefit. Would it be fair for somebody who is going to work everyday, and facing the health risks of working everyday during the pandemic, to have less take home pay for working. Is that fair?
This happened last summer for some workers because they weren’t getting minimum benefits, they received regular benefits plus $600 per week. Many of them were earning more than people who were going to work everyday, such as grocery store workers and bus drivers. That’s part of the genesis of this. That was not fair either.”
MG: How do workers with mixed income sources — such as gig workers — factor in as the UI calculation is only based on wage income?
KK: It depends on whether somebody is paying premiums for those other income sources. Self-employed people can actually opt in and pay the premiums themselves and they would qualify for unemployment benefits. But somebody has to pay the premiums. This is an insurance plan, not a welfare benefit.
We have to keep the trust fund healthy in order to continue to pay premiums when we have these horrible events like pandemics, recessions, etc. Whenever those events happens, and it seems like they happen every ten years these days, people depend on the trust fund of unemployment premiums that have been paid by employers. It’s 100% employer paid.”
MG: Do you have any sense of how this bill might change in the House, assuming it passes?
KK: Well it better pass because if it doesn’t, unemployment taxes for employers are going to increase April 1st of this year, in some cases by 500-600%. It will put people out of work and it will put businesses out of business. This is urgent business that needs to be attended to.
I cannot predict what will happen in the House, but I have been working with members of the House Labor Committee. I’ve also been working with both the labor community and the business community, and the governor’s office. It’s a heavy lift but it’s urgently needed.
MG: Any parting words on this bill before it hits the floor today?
KK: This bill will set aside and smooth unemployment taxes for employers to the tune of about $1.2 billion. In terms of the minimum benefit, that will help mostly people earning somewhere between $20,000 and $27,000 annually in wages. This really helps some of the lowest wage workers in our system and it will serve as an economic stimulus.
One of the best ways to stabilize and stimulate the economy is with unemployment benefits, because people spend it. They don’t put it in savings accounts because they have to spend it to pay the rent. So it’s vitally important to both people’s lives and the economy.”
This interview has been edited for clarity and length.
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