How To Fix Ohio's Unemployment Fund Stirs Debate
Gov. Mike DeWine is calling on state lawmakers to take on the task of finally finishing a reform of Ohio's unemployment compensation system. The legislature has fallen short of accomplishing this, though bills have been proposed multiple times over the last decade.
In 2008 and 2020 Ohio's unemployment insurance fund was tested by a national recession, and failed both times.
This resulted in the state needing to borrow money from the federal government to payout unemployment benefits. Those billions of dollars in loans had to be paid back with interest.
Ohio plans to use COVID recovery dollars to pay the current $1.4 billion it owes the feds this time around, but DeWine wants lawmakers to make the fund solvent.
"So we're recommending we pay off the debt, but we still are left with a structural problem," DeWine says.
Ohio businesses are currently paying into the unemployment system based on the first $9,000 of an employee's taxable wages.
Tim Burga, Ohio AFL-CIO president, says that's the lowest taxable wage base compared to Ohio's five bordering states, and increasing the fees on businesses will shore up the fund.
"When you look at how frontline workers have put their health on the line to get us through this pandemic I think we're going to see an opportunity where the employers will understand that they need to step up and just do the average with what the rest of the country is doing to help move the system into a solvency place," Burga says.
Here's what the unemployment wage base is for each state that borders Ohio:
- Indiana, $9,500
- Kentucky, $11,100
- Michigan, $9,500
- Pennsylvania, $10,000
- West Virginia, $12,000
Roger Geiger, Ohio Chapter of the National Federation of Independent Business executive director, agrees there needs to be what he calls an "honest discussion" on increasing the taxable wage base in Ohio. But says fixing the unemployment fund means finding a balance.
"You can't tax your way into solvency, that's not fair to Ohio employers. And I agree, you can't cut your way into solvency in terms of cutting benefits. It's got to be a combination of the two," Geiger says.
As Geiger explains, ways to address potential cuts to benefits, which are controversial for groups representing workers, includes decreasing the number of weeks in unemployment payout, changing the increased benefits for people with dependents, and freezing payout increases until the fund is solvent.
Kevin Shimp, Ohio Chamber of Commerce's director of labor and legal affairs, says his group is ready to have conversations about reforms but says it's going to take more than what he calls "tax hikes" on businesses.
"Reforms should include changes to the inputs and the outputs of the system," Shimp says.
Burga says keeping employee benefits in place will make Ohio competitive.
"Ohio is always known as a state that has compassion for its workers, therefor it attracted the best and brightest workers in the country," Burga says.
But business groups, such as Geiger's NFIB, say solely relying on increased fees on businesses will put a burden on companies that can impact wages and hiring.
Bills have been proposed on this issue for more than a decade. Republican leaders in the Ohio Senate and House have said they want to take a closer look at addressing the state's unemployment structural issues.
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