Amid a national recession that hit Boeing and the rest of the state’s manufacturing sector particularly hard, state bids were being accepted for final assembly work on the 7E7 Dreamliner. With the memory of Boeing’s headquarter relocation fresh in their minds, state lawmakers were desperate to win.

Looking back on our successful incentive package, most recall only the 
$3.2 billion in tax breaks Boeing got. But Washington workers who have lost their jobs since that time -- and many businesses in our communities -- are paying a steep price because of what else corporate lobbyists got.

In the final hours of a second "overtime" session in June 2003, without so much as a public hearing and literally in the middle of the night, state legislators dramatically changed our state Unemployment Insurance (UI) system. Benefits were cut, eligibility was restricted, and a new tax system was installed.

UI is a "safety net" that provides partial wages on a temporary basis for workers who are unemployed through no fault of their own. The system has two main functions:

• Provide some wage replacement for workers who are involuntarily unemployed. In 2002, a state survey found that unemployment benefits were the sole source of income for 37 percent of claimants and a “major source” for 65 percent.
  

• Provide economic stability for businesses to counter the effects of unemployment and recession. The U.S. Department of Labor estimates that for every $1 of unemployment benefits, $2.15 of economic purchasing power is created. In other words, the $2 billion in state and federal benefits paid in Washington state in 2002 created Main Street purchasing power of $4.3 billion, keeping a significant number of small businesses afloat.

New data from the state Department of Employment Security shows the dramatic impact the 2003 UI benefit cuts have had on Washington families and their local economies.

In 2004, unemployed workers lost more than $51 million in benefits, costing the state economy some $110 million in purchasing power. With additional benefit cuts that began in 2005, assuming similar claim frequency and duration as last year, workers will lose another $109 million in benefits and the state economy will lose more than $234 million in purchasing power.

The new benefit formula hurts all workers, but particularly those with irregular employment schedules, like construction and farm workers. Some of them get $200 a week less than they would have before the 2003 changes.

Corporate lobbyists who pushed these changes now defend them by arguing that UI premiums in Washington are still more expensive than many other states (in truth, the majority of employers here pay premiums right at the national average). To these lobbyists, the UI system is nothing more than a cost of doing business, something that makes our state “uncompetitive.”

These bottom-line motivated lobbyists and shortsighted neo-conservatives think UI is just another “entitlement” to be defunded so it can wither on the vine. They are fighting merely to preserve benefit cuts now because voters put the “other party” in charge in Olympia, but given another 7E7-like perfect lobbying storm, they’d cut benefits even further.

UI is not charity; it is there to stabilize our economy. Yes, it helps our friends, neighbors and families struggling through job layoffs, but it also helps businesses survive in the communities hit hardest by unemployment.

I’m here to tell you that the 2003 gutting of our state UI system is costing people their cars, homes and dignity. And it’s hurting the businesses where those UI checks are spent on food, housing and other basic necessities.

Now that we can see the unintended consequences and negative economic impact of the legislature’s frenzy to “reform” the UI system, it’s time to repair some of the damage.