Virgnia Must Do More for Our Unemployed

Since the recession began, Virginia's unemployment rate has nearly doubled as approximately 178,600 people have lost their jobs. As of December 2009, 274,900 Virginians were unemployed -- a rate of 6.7 percent.

In some places, unemployment has jumped to double digits, from 10 percent in Bristol to 20.3 percent in Martinsville. Many of these people are diligently seeking work and, in the meantime, are struggling to pay their daily expenses.

This increased unemployment has put a significant strain on our current unemployment compensation system. Indeed, this demand has depleted Virginia's Unemployment Insurance Trust Fund to levels requiring a loan from the federal government. As we struggle to continue benefit payments and to repay the federal loan and interest, employers will have to pay higher unemployment taxes to replenish the fund.

Last year, under the American Recovery and Reinvestment Act (ARRA), $7 billion was set aside to provide states with an incentive to modernize their unemployment compensation laws. While Virginia has already received approximately $62.5 million of this funding, current Virginia law does not allow the commonwealth to accept all of the recovery plan funding dedicated to unemployment benefits.

In particular, Virginia is required to expand eligibility to at least two of four groups specified by ARRA to ensure the state receives more than $125 million in additional recovery plan funding. The four groups in question include part-time workers, individuals enrolled in job retraining programs, workers with dependent children, and workers with "extraordinary circumstances," such as individuals who left their own jobs to accompany a spouse relocating to accept another job.

So to receive the remaining funds, a state would have to adopt, or already have in its law, two of the following provisions:

•Allow individuals who leave work for a compelling family reason, such as to care for a sick or disabled spouse or child, to accompany a spouse to a new location because of a job transfer, or to avoid being the victim of domestic violence; •Allow individuals with an established history of part-time work to meet the availability and work search requirements of the law by being available for and looking only for part-time work, and such individuals would not be disqualified for benefits if they refuse an offer of full-time work; •Allow up to 26 weeks of benefits to individuals who are enrolled in certain types of approved training that prepare them for entry into a high-demand occupation; or •Pay dependent allowances to individuals who are receiving unemployment compensation up to $15 per dependent, with a $50 per week cap. To receive payments under the ARRA, any changes a state makes to its law must be "permanent" (i.e., not subject to change except by repeal of the state's legislature).

Last year, Gov. Tim Kaine proposed adopting the provisions of the ARRA related to training and part-time work. However, those proposals were rejected by the House. This year, as a compromise measure, Sen. John Watkins introduced SB 239, which would adopt the training and compelling-family-reason provisions.

SB 239 defines a compelling family reason to include:

•Domestic violence, verified by such documentation required by the Virginia Employment Commission, that causes the individual to reasonably believe that the individual's continued employment would jeopardize the individual's safety or that of an immediate family member; •The illness or disability of a member of the individual's family; or •The need for an individual to accompany a spouse to a new location because of a relocation if it would be impractical to commute from the new location. Any benefits paid as a result of "compelling family reasons" would not be charged to the individual's employer, but to the "pool" and eventually assessed ratably against all Virginia employers.

The second set of amendments would have allowed up to an additional 26 weeks of benefits to certain individuals in approved training programs provided that:

•The individual had been separated from a declining occupation or laid off because of a permanent reduction in operations by his or her employer; •The training is designed to prepare the individual for entry into a high-demand occupation; and •The individual is making satisfactory progress in the training.

This amendment reflects the way Virginia's economy and work force has changed in the 70 years since unemployment compensation was created. We have gone from an agrarian and manufacturing-based economy to a more service-based, high-tech economy. As a result, we need to retrain skilled workers who must change industries and learn a new skill.

The typical example would be an individual who worked his entire career in a manufacturing job, only to have his employer go out of business as the rest of the industry declines. Without these additional benefits, such a worker could not complete necessary training to compete for new high-demand jobs outside of the manufacturing field because he could not have the time to work and afford basic living expenses during the time necessary to complete the training.

Unfortunately, the House Commerce & Labor Committee failed to report SB 239 due to a concern over the costs. These changes would cost approximately $20.1 million per year, raising employer taxes by an average of $2.44 per employee per year over the next eight years.

However, without these changes, employer tax rates will likely increase anyway as we continue to borrow funds from the federal government, with interest. Adopting these provisions would have allowed Virginia to receive $125.5 million that could be used to cover the cost of the expanded benefits, delaying any additional need to borrow federal funds.

More importantly, these changes would help modernize Virginia's unemployment laws to meet the realities of the 21st century economy and the needs of our current work force. Most of today's workers who need to balance work and family responsibilities often do not qualify for unemployment benefits -- and without benefits could not take steps necessary to compete for new jobs. Hopefully, we can revisit this issue next year, and perhaps the economic climate will by then have made the change more palatable.

Jennifer McClellan is a Democrat who represents Virginia's 71st House of Delegates District, which includes parts of Henrico and Richmond. She may be contacted at DelJMcClellan@house.virginia.gov or (804) 698-1071. Her Web site is www.jennifermcclellan.com.