WSLC Reports Today -- April 14, 2009

The following letter was sent this week to all Washington State Senators from the Washington State Labor Council's Jeff Johnson, Special Assistant to the President:

Dear Senators:

This past Friday the House passed SB 5963 by a vote of 53 to 45. The bill was amended from the version you passed earlier in the session in two ways. First, it retains some discretion that the Commissioner of the Employment Security Department currently has in determining eligibility for workers who voluntarily leave their work due to extraordinary circumstances that lie outside the 11 listed reasons in the statute. Second, it restores the benefit formula to where it had been from 1970 to 2005. However, the benefit formula is restored only after any state or federal additional benefits have expired and only insofar as the trust fund remains above eight months in reserves.

On behalf of the Washington State Labor Council, AFL-CIO I am asking you to consider voting yes to concur with the amended House version of the bill. I do so because I think that this the right thing to do and because in these difficult times you have a unique opportunity to help workers, employers and the economy by voting for concurrence.

In the next couple of weeks you will here much about this bill. In the next several paragraphs I hope to be able to put some context around the amended bill.

The business community will argue that the amended version of the bill will provide less of a UI tax rebate over the next six years. They are right -- instead of a $385 million tax rebate there will be a $224 million tax rebate. However, once the economy returns to normalcy the structural tax changes made to the system, in this bill, will lower tax contributions into the system by $1.6 billion. So there are significant short, medium and long-term savings for employers.

We don't begrudge the employer community these savings, even though we are a bit skeptical of the feasibility of the timing and of the magnitude of these changes. However, we would like legislators to recognize that $367 million, or one-third of a billion dollars of the existing trust fund balance, is due to benefit cuts made in 2003 and 2005*. Restoring the benefit formula to what it had been since 1970, while leaving most of the benefit reductions in place, allows workers to receive a small benefit rebate as well.

* [$367 million in benefit cuts were made between 2004 and 2008 : $75 million due to 3- and 4-quarter averaging of benefits; $68 million due to lowering the benefit formula; $128 million due to lowering the maximum benefit; and $96 million due to lowering the maximum weeks of UI eligibility.]

Some will argue that this bill will be bad for Boeing and that it might require them to leave the state. Well, only Boeing knows how future production in Washington State fits into their worldwide supply model, but it seems implausible that a restoration of one small benefit to unemployed workers would cause such a reaction. The WSLC and five of our affiliated unions that represent workers at Boeing want the company to manufacture as much as they can in Washington State and that is why we have always been supportive of investments in higher education, workforce training, transportation. etc., that benefit Boeing and the healthy economic environment we are known for in Washington State.

Restoring the benefit formula after the additional state and federal dollars expire will provide the unemployed with between $8 and $19 additional benefits per week. Eight dollars a week to a worker receiving the minimum UI benefit represents a gallon of milk ($2.79), a dozen eggs ($1.69), a loaf of bread ($3.20), and two apples ($.68). While this is an insignificant cost to the system, it is meaningful to the unemployed. According to an ESD survey (2002) nearly 4 out of 10 unemployed claimants relied entirely on UI benefits as the source of their families income.

We heard in the floor debate in the House that there was some kind of deal that the stimulus bill (HB 1906) was the labor bill and that SB 5963 was the business bill. If so, this comes as a surprise to us. Over the December holidays the Governor asked Dave Johnson (of the Washington State Building and Construction Trades Council) and me to work with Craig Cole and Steve Mullin from the business community and her staff and ESD on a UI stimulus bill. The goal was to come up with policy that would provide an immediate, positive jolt to the economy -- something that could be done on 2009. This ruled out the discussion of the UI benefit formula until we dealt with legislation that addressed the conformity issue.

The group came up with a $400 million stimulus package more or less divided equally between additional benefit payments and immediate tax relief. Much to our surprise the larger business community rejected tax relief for 2009. While this did not make any sense to the labor community, we respected that it was their choice to make. As a result about $200 million in additional UI benefits from the state will help support individuals/families from May 3 to December 31, 2009. This stimulus to the economy will also help keep lights on in many homes and in many businesses on Main Street.

So SB 5963 was the vehicle to discuss long term changes to the UI system. As mentioned above, as amended in the House, it provides $224 million in tax savings over the next six years and $1.6 billion in lower tax contributions over the long run. It also restores a familiar benefit formula and some discretion by the Commissioner of ESD.

During a legislative session where you have to make so many very difficult decisions that will have dramatic impacts on individuals and families, you also have that rare opportunity to help both workers and employers by concurring with the House version of SB 5963. We hope that you can do this and stand ready to answer any questions that you might have of us.

Thank you.

Jeff Johnson
Special Assistant to the President
Washington State Labor Council, AFL-CIO