Reforming unemployment

Members of the Legislature’s Labor Committee took on the difficult job of reforming the state’s Unemployment Fund, an issue lawmakers had been ducking for years, and are expected to report out a plan that will put the fund on solid ground for the first time in years. Though the reform is not comprehensive, it deserves enthusiastic support of the full Legislature.

The Maine Unemployment Insurance Program, funded by employer taxes, protects families in the event of job loss and supports businesses by allowing families to pay their bills. It is in such poor shape largely because the fund collects taxes on only the first $7,000 in an employee’s income, an amount set in 1983 and now the lowest in the nation. The low level of collection is matched by low disbursements to families — the average weekly benefit is $174, with a maximum of $227.

Four times since 1993 the Legislature, lacking the political will to do anything better, has either cut unemployment benefits or raised the unemployment tax rate slightly to keep the system from collapsing. The system continued to head toward collapse anyway. Without reform, it faces a $22 million shortfall next year that could grow to as much as $200 million over the next six years.

The Department of Labor this winter developed a solid plan to rescue the fund and that quickly became the leading and then sole bill considered by the committee, which made a few modifications to the proposal last week, further strengthening an already strong piece of work. Last Friday, the committee voted 8-3 to raise the taxable wage base to $12,000 and change the contribution rate to an array system, which bases the amount employers owe on their use of the system, redistributing the cost among 20 categories. The plan also tightens oversight of the system, although the committee eased some of the Labor Department’s recommendations on overpayment, misconduct and eligibility.

What the committee did not do, however, was examine the changing reasons — lack of transportation, lack of child care — that may cause job loss. Nor did it address the low benefit level. Christopher St. John of the Maine Center for Economic Policy told the committee that a survey of nearly 300 laid off workers from plants in Central Maine found that more than two-thirds reported the benefit level did not allow them to meet basic household needs; 30 percent of the workers ran out of benefits before they found new jobs. A figure worth investigating for other reasons: 40 percent reported that they received at least some of their benefits checks late.

The range and level of benefits are issues for another session. For now, lawmakers can and should support the Labor Committee’s plan to reform the Unemployment Fund. It’s a welcome change after years of near-collapse.