Editor’s note: This oped is by Christopher J. Curtis, a staff attorney for Vermont Legal Aid, Inc.
If you could restore the unemployment fund without cutting benefits and with less of an impact on employers would you do it? Of course. Yet the Douglas Administration continues to preach doom and gloom regarding the insolvent Unemployment Insurance Trust Fund unless it gets its way which includes higher taxes on employers and cuts to laid-off workers and their families. Another proposal would even tax workers to solve the problem.
What the Administration has failed to tell most Vermonters, however, is that there is a better way to solve the unemployment fund problem: one that minimizes the impacts to both employers, avoids benefit cuts to laid-off workers and their families, and doesn’t tax working Vermonters.
Thirty-five states are raising employer contributions to restore their unemployment insurance funds, while just three have made very minor benefit cuts. The Douglas administration’s plan is far and away the most radical benefit grab in the nation.
A legislative study committee tasked with reviewing this issue spent months talking to employers, workers, and policy experts and came to the conclusion that the fund could be solvent by 2016 with smaller increases in the taxable wage base of employers through that year and no benefit cuts to unemployed workers. That’s a win-win for Vermonters.
Inexplicably, neither the Administration nor a bill introduced in the Senate have been able to solve this thorny problem without hammering working Vermont families as a prerequisite to restoring the fund. The Administration’s plan would also levy higher taxes on employers through 2015 than the study committee’s approach. The Administration likes to say it has a “balanced” approach to this problem. But, the Administration’s “balanced approach” simply offers “pain” and “more pain.” That is hardly the kind of “balance” most Vermonters want or need.
The key to restoring the fund is to make adjustments to employer contributions over time, and eventually to index contributions to the fund so that corrections ensuring solvency are made automatically in the future. Shifting the burden onto the backs of the unemployed or Vermont workers is not good for the economy, and destabilizes families who can least afford it. Cutting benefits take stimulus money out of the pockets of Vermonters who need it, and who are spending it right away. Estimates show that proposed benefit cuts would result in more than $100 million taken out of the economy over four years. In tough economic times that is a recipe for prolonging the recession. A long overdue adjustment to employer contributions is something everyone has agreed is essential – including the Administration and employers – and it would minimize the harm to Vermonters and the impact on the Vermont economy.
Cynics might suggest that the attempt to shift the burden onto the unemployed and working families is the beginning of an attempt to force workers to ultimately pay for what has traditionally been an employer-sponsored insurance plan. Unemployment insurance has been part of the cost of doing business since its inception, and it has been a remarkably effective way to maintain workforce readiness during periods of temporary economic uncertainty. That bedrock principle of the fund should remain intact.
Vermont’s leaders should do everything possible to put the unemployment fund on the road to recovery as soon as possible – but not at the expense of Vermont’s labor force. Twenty-five years of inaction with respect to the taxable wage base created this shortfall, and it will take time and effort to restore the fund. But, the notion that unemployed workers and their families, or employees should pay to solve a problem they did not cause is both unjustified and unreasonable.
It is also far outside the mainstream of what other states are doing to deal with this problem – 35 states are raising employer contributions to restore their UI funds, while just 3 have made very minor benefit cuts. The Administration’s plan is far and away the most radical benefit grab in the nation. Its approach would destabilize families and impede the ability of Vermont workers to get back to work as quickly as possible by putting a hole in the economic lifeboat that keeps them afloat.
When former U.S. Secretary of State Dean Acheson would get exasperated with harried, panicked aides, he would say: “Don’t just do something, stand there!” Vermont lawmakers have wisely resisted the Administration’s attempts to create a panic mentality on this important issue. The best way to restore the unemployment fund is to do the one thing that everyone agrees on: gradually adjust employer contributions over time to minimize the pain over the next few years and ensure the long-term viability of the fund.
