Updated March 18 at 8:54 a.m.
As the state Senate considers a bill that would increase benefits for laid-off Vermonters, business leaders are objecting to higher unemployment insurance payments, saying the change could hurt their enterprises when the pandemic subsides.
The legislation, S.10, proposes increasing maximum weekly benefits for unemployment insurance recipients by 20% for a year and making permanent $50-a-week payments to recipients who have dependent children.
It would also delay for several years a massive increase in taxes businesses pay into the Unemployment Insurance Trust Fund, which is currently slated to take effect in July.
In separate letters sent to Senate leaders Wednesday morning, the Vermont Chamber of Commerce, the Associated Industries of Vermont, and the Vermont Retail and Grocers Association each laid out concerns about the proposed benefit increases and urged legislators to reconsider the proposals. The Vermont chapter of the National Federation of Independent Business and the Associated General Contractors of Vermont sent a joint letter expressing similar concerns.
The higher benefits would incur a large cost for employers, which are ultimately on the hook for maintaining the health of the unemployment trust fund, some business leaders argued.
Others said higher jobless benefits could be a disincentive for unemployed people to seek work, and could hobble employers’ efforts to fill empty positions as they exit the pandemic.
“The composite impact of the legislation has the potential to significantly slow economic recovery by providing a clear disincentive for workers to return to work when it is safe and economically feasible to do so,” the Vermont Chamber wrote in a letter to Senate President Pro Tempore Becca Balint, D-Windham.
The Senate passed over a scheduled vote on S.10 on Wednesday afternoon. It is now expected to take a preliminary vote on the legislation Thursday.
The question of whether to increase benefits while delaying the tax hike for businesses has driven debate over the bill since it was sent to the Senate Committee on Economic Development, Housing and General Affairs earlier this year.
The bill originated as a proposal by the Department of Labor to delay the employer tax hike for several years, as the state’s Unemployment Insurance Trust Fund was healthy enough to give employers breathing room in the pandemic’s waning months.
Labor interests soon demanded that if businesses’ unemployment taxes were going to be delayed, laid-off workers should also reap some benefit from the legislation. That led the committee to draft the proposed 20% benefit increase.
Sen. Kesha Ram, D-Chittenden, later proposed adding the permanent dependent benefit, too.
“The whole country’s calling this a ‘she-cession,’” Ram, a member of the economic development committee, told lawmakers last week, referring to the nationwide unemployment surge that has disproportionately affected women. “We know that Vermont is an intense outlier on that front.”
As many as 73% of people receiving unemployment benefits in Vermont were women at one point during the pandemic — a greater percentage than in any other state. At least 10 other states already offer some form of dependent-based unemployment benefit.
However, business owners fear that a scenario that played out last spring — when federal relief boosted maximum unemployment payments above $1,000 per week — could repeat itself. Employers struggled then to attract workers.
On a national scale, experts dispute the argument that higher pandemic-related benefits have disincentivized people from reentering the workforce. In Vermont, nonetheless, employers have found it difficult throughout the pandemic to fill empty jobs.
“We hear on a daily basis from member businesses that they cannot find enough workers,” said Erin Sigrist, president of the retail and grocers’ association. “They also couldn’t find enough workers to fill positions before the Covid-19 pandemic.”
Sen. Randy Brock, R-Franklin, was the lone economic development committee member to vote “no” when the panel endorsed S.10 last week. Constituents who own businesses had told him a benefits hike might continue to make it challenging to find workers, Brock said.
“When we sweeten that benefit in such a way that it doesn’t encourage people as much as it should to go back to work, that’s concerning,” Brock, the Senate minority leader, told VTDigger last week.
Business leaders are also concerned about having to cover the cost of benefit hikes in the years ahead. The Legislative Joint Fiscal Office and the labor department have projected that the dependent benefit proposal would draw between $40 million and $50 million from the unemployment trust fund — which employers replenish through unemployment taxes — over the next three fiscal years.
“It is simply unnecessary and unwarranted to add to these long-term costs by arbitrarily increasing state-funded UI benefits,” Associated Industries of Vermont leaders wrote in their letter to lawmakers.
Legislators and lobbyists who have pushed for bigger unemployment payments called the business leaders’ letters a discouraging response to an attempt at compromise. Their opposition is “misplaced,” said Sen. Michael Sirotkin, D-Chittenden, the chair of the economic development committee and one of the bill’s sponsors.
“I feel there’s somewhat of a lack of appreciation for how hard the Legislature has worked to produce this reduction in their taxes, from an extremely healthy trust fund that can also afford to pay small increased benefits to workers,” Sirotkin said.
The agreement for higher worker benefits and a tax delay would be a mutually beneficial one for Vermont workers and employers, said David Mickenberg, a lobbyist who represents Working Vermont, a coalition of public- and private-sector unions, and the Vermont Building and Construction Trades Council.
“It’s really discouraging that some in the business community are putting out the message that ‘we want everything, and they get nothing,’” Mickenberg told VTDigger. “To me, that’s not what Vermont’s about. We’re about helping our fellow neighbors and communities.”
Correction: An earlier version of this story misspelled David Mickenberg’s name.
