By now you have probably heard that Georgia owes a lot of money to the federal government, $736 million to be exact, for helping us pay state unemployment insurance (UI) benefits.
What hasn’t received enough attention, however, is how Georgia got into this mess. For more than a decade Georgia employers were given unprecedented tax breaks – allowed by our state government year after year to contribute very low amounts, or in some years nothing, into the unemployment trust fund.
We know this strategy didn’t create jobs because for the past 54 months, Georgia’s unemployment rate has exceeded the national average. What did happen was that employer tax breaks depleted the unemployment trust fund and when the recession kicked in, Georgia had to start borrowing.
Now that it’s time to repay the loan, we would expect Georgia to devise a plan that would more fairly and adequately fund our state’s UI system while protecting UI benefits. For example, ask the 30-40 percent of employers, who in 2011 paid only $2.87 per employee per year, to pay their fair share, not the price of a cup of coffee. We would expect Georgia to broaden the tax base, by increasing the taxable wage base that has remained at $8,500 since 1990. If the taxable wage base followed the same trajectory as wage growth, it would be more than $16,000 today.
Well, SB 447 chose a different path. The bill asks laid-off workers to help repay the loan by forgoing 6-14 weeks of UI benefits. This would take Georgia’s maximum number of UI benefit weeks to 12-20 weeks from 26 weeks the lowest in the country.
The other six states with maximum weeks of less than 26 are more generous than Georgia under SB 447 — two are at 25 weeks, three are at 20 weeks, and one is at 12-23 weeks. SB 447’s new low would hurt 125,000 Georgia families, 80,000 of them to the tune of $1,560 – a 23-percent reduction.
In addition — come January 2013, under current federal law, the impact of a reduced state maximum would be calamitous – with unemployed Georgians going from 73 weeks of total federal and state UI benefits to 20 weeks or less.
It’s true that SB 447 proposes a modest $1,000 increase to the taxable wage base and a 50 percent surcharge. That is simply not sufficient. Employers at the minimum will increase to $3.56 per employee per year from $2.87 to a cup of coffee and a donut.
Some legislators argue that we can’t ask more of employers because in 2012, under federal UI law, they will contribute an additional $21 per employee per year, which amounts to 1 penny per full-time hour per year. How burdensome? Really?
SB 447 is a race to bottom. Cutting UI benefits will hurt Georgia families and local economies. We know that a dollar of UI is nearly doubled in Georgia’s hardest hit economies because it is spent immediately on rent, groceries, and school supplies.
We shouldn’t ask Georgia’s unemployed to pay for employer tax breaks. It will drag Georgia down to a new all-time low and that is just wrong.