WSLC Legislative Update -- February 17, 2006

Spend Presidents Day
in Olympia!

A public hearing on the Unemployment Insurance reform bill, SB 6885, is set for Monday, Feb. 20. All union members and other supporters are urged to attend Monday’s hearing and show your support for this critically important bill. The House Commerce and Labor Committee hearing will be at 1:30 p.m. in House Hearing Room C of the John L. O’Brien Building.

With just 20 days left in the session, it has become clear that the business lobbyists' strategy to reinstate the most extreme and unnecessary of 2003's Unemployment Insurance benefit cuts is to delay, delay, DeLay.

If they can amend the UI Reform bill, SB 6885, in some way -- any way -- over in the House, they can force a second Senate vote, where the bill was approved 25-22. Their hope is that lawmakers will either run out of time for such a reconsideration, or that the business lobby can impose a full-court press of Senate arm-twisting to deny the amended SB 6885 that 25th vote necessary for passage. (Disgraced U.S. House Majority Leader Tom DeLay was notorious for such aggressive last-minute deal-making in order to sway one last congressman to his side. That's why so many recent laws -- from CAFTA to each year's budget to the Medicare prescription drug plan debacle -- have passed the U.S. House by a single vote.)

Without legislative action, the most severe of the 2003 unemployment benefit cuts, four-quarter averaging of benefits, will be automatically reinstated in 2007. Only six states use the most-punitive three- or four-quarter averaging formulas, whereas 33 states calculate benefits based on income in the highest single quarter. Eleven states use two-quarter averaging, like Washington always did prior to 2003.

To their credit -- and earning the gratitude of working families throughout this state -- the State Senate recognized that SB 6885 will return Washington to the mainstream on UI benefits, save businesses a bundle on their UI taxes, and enact the "highest priority" recommendation to come out of the UI Task Force. The nation's leading expert on state UI systems, Dr. Wayne Vroman of the Urban Institute, was hired to analyze Washington's post-2003 system and said that permanently restoring two-quarter averaging should be the very first order of legislative business.

Labor concurs with that assessment and remains willing to work with the business community to address other concerns they have about the system. In fact, there is a title-only UI bill that came out of the House (HB 3278) that is the perfect vehicle for any business-labor agreement that can be reached on side issues in the coming days.

But SB 6885 represents Dr. Vroman's "highest priority" recommendation and organized labor urges the House -- where Democrats have a far stronger majority than they do in the Senate -- to enact this critically important change swiftly and without amendment, just as the Senate did.

In order to slow and change SB 6885, business lobbyists who want to reimpose unemployment benefit cuts, and their supporters in the legislature, have adopted a set of talking points to try to confuse the issue, mischaracterize the bill and ultimately, just delay, delay, DeLay.

In organized labor, our "talking points" tend to be a little less sophisticated, but at least they are understandable. Case in point, here's one about SB 6885 that came out of the WSLC Legislative Conference on Thursday: "Don't change anything -- not even the %#!@-ing font!" (All rights reserved: Pete Crow, United Association of Plumbers and Pipefitters union.)

So as a courtesy to our readers, we offer this Talking Points Redux explaining business lobbyists' key arguments:

1. SB 6885 would "gut" the bipartisan 2003 UI reform bill! The truth is that SB 6885 retains many of the benefit cuts established in 2003, including freezing the maximum benefit amount and setting it at 63% (down from 70%) of the state's average wage, reducing the maximum potential weeks of benefits from 30 to 26 weeks, increasing denials for voluntary quits, and imposing one of the nation's most severe misconduct statutes which employers can use to deny fired workers their benefits. According to Dr. Vroman, if two-quarter averaging is permanently restored, the combined cost savings to business between 2006-2010 will be $1.05 billion. SB 6885 also retains the labor-opposed volatile 40-rate UI tax system sought by the business community.

2. UI taxes in Washington are three times the national average! First of all, some averages aren't very useful. Average your net worth with Bill Gates's and you're both billionaires. (Drinks are on you!) Business lobbyists like to say that Washington employers pay more than $850 per employee in UI taxes, on average. They get that "average" by multiplying the U.S. average tax rate of 2.8% times Washington's taxable wage base of $30,500. That makes two flawed assumptions: that everybody in this state makes more than $30,500 a year and that half of the employers pay above the "average" and half below. The truth is that more than half of Washington's employers are in the lowest two rate classes (paying 0.80% and 0.93%).

According to the good and nonpartisan Dr. Vroman, when you compare actual UI taxes that employers paid, the average UI taxes in this state are less than twice the national average (1.91) and further reduced (1.61) if the cost savings from 2003's SB 6097 and last year's HB 2255 are factored in.

Employers pay somewhat more in UI taxes in Washington because the state's average hourly wage ($16.07 in 2004) is higher than the nation's ($13.98), and also because our state historically has a 20% higher rate of unemployment than the rest of the nation. Why? For one thing, because people like to live here. People are more likely to come here without a job previously lined up, or try to stay after they get laid off, than they are in... say... Idaho with its enviable 3.4% unemployment rate in December 2005. Washington's unemployment rate was 5.3%, slightly higher than the 4.9% national rate, ranking us right around 16th in the nation.

Bottom line: The majority of employers (51.4%) in Washington state pay less than a penny per hour in UI taxes, and their maximum potential UI tax per worker is less than the national average of $283 a year.

3. If SB 6885 is approved, UI taxes will go up (insert any number here) percent! Dr. Vroman said permanent restoration of two-quarter averaging does not require any tax increase. If SB 6885 passes without amendment, employers' taxes will go lower because of the $1 billion in cost savings to business.

4. SB 6885 will take the UI Trust Fund to dangerously low levels -- no, make it completely INSOLVENT! ("Yeah, that's the ticket!") The truth is that, as of December 2005, the UI Trust Fund balance is $2.3 billion, with 16 months of reserves in the fund, and growing. The U.S. Department of Labor recommends that states try to maintain a 12-month reserve. Dr. Vroman says two-quarter averaging can -- and should -- be restored without harming our ability to maintain that DOL standard, including in times of recession.

5. SB 6885 will reimpose "LIBERAL construction" of our state's UI system. SB 6885 would restore the language in place for 70 years prior to 2003 that says Washington's UI laws should be "liberally construed" to benefit the unemployed worker. All that means is that in gray-area cases involving unique circumstances, the unemployed worker gets the benefit of the doubt. This tie-goes-to-the-worker liberal construction language is included in the UI laws of 43 states. It is part of the UI mainstream, L-word notwithstanding.

That's enough of the how-does-this-effect-business perspective for one union newsletter. SB 6885 is about having some compassion for people who have lost their jobs through no fault of their own. People who have come to Olympia to testify about how losing hundreds of dollars a week in UI benefits because of 2003's unnecessary cuts meant losing their cars, their homes and even their families while they struggled to find new jobs.

It's time to set this business vs. labor garbage aside and do the right thing. Last year's HB 2255 stopped the bleeding, now it's time to dress the wound and begin the process of healing. We are asking State Representatives to follow the Senate's lead and pass SB 6885, without amendment.

Bills have until one week from today, Friday, Feb. 24, to pass policy committee; until Monday, Feb. 27 to pass fiscal committee; and until 5 p.m. Friday, March 3 for floor votes approving any non-budget bills. The sessions ends Thursday, March 9.