“Just as builders know to check the roof on a sunny day after a big storm, economic experts know that during periods of job growth, like the one we’re experiencing right now, it’s important to make sure our unemployment insurance system is ready for the next recession.
“Unfortunately, many states seem to be tearing new holes, rather than getting ready for the next storm. Those state policy choices are dangerous not just for workers in specific states, but also for our national economy.
“Well-functioning unemployment insurance is our first line of defense in keeping economic downturns from spreading and worsening. As bad as the last recession was, it would have been far worse without unemployment insurance, including the extended benefits that Democrats fought to continue until jobs were available.
“Extended unemployment benefits prevented 1.4 million home foreclosures between 2008 and 2012. And every dollar of unemployment benefits produced between $1.50 and $2 in additional economic activity, stimulating the economy and ensuring that other businesses did not have to lay off workers because of a drop in demand.
“Of course, we could have done even more to mitigate the impact of the recession had our Republican colleagues here been willing. In 2013, the Congressional Budget Office estimated that the Republican decision to prematurely end unemployment benefits for the long-term unemployed before millions of Americans could find work cost us 200,000 jobs and slowed the recovery.
“Unfortunately, the majority of states have ignored the lessons of the last recession and are not preparing their insurance programs for the next recession. Indeed, many are actively reducing the likely effectiveness of a strong unemployment insurance system.
“As of the end of 2015, only 18 states were prepared to pay a year of benefits in a recession. The rest of the states did not meet minimum standards of trust fund solvency. Utah, which is represented at our hearing today, is one of the few states that indexes its taxable wage base and has a solvent trust fund. My home state of Texas, like most states, would quickly run out of money to pay benefits in a recession. And while I'm pleased to hear that Florida is continuing to improve the solvency of its trust fund, it has apparently done so by making collection of insurance benefits earned in Florida more difficult for unemployed workers to obtain than in any other state in the nation.
“Fifteen states have cut benefit levels, and the average unemployment benefit replaces significantly less than half of wages. More than 30 states have changed eligibility to end UI altogether for some workers who receive other earned benefits or work in specific job categories. Nine states now provide less than 26 weeks of unemployment benefits, the lowest level seen in about 50 years.
“As the Government Accountability Office noted in a recent audit, with long wait times by phone and in person, abandoned calls, dropped calls, blocked calls, and long delays in claims processing, many states have created practical barriers to eligible unemployed workers obtaining their benefits. This at a time when states are serving a declining numbers of workers.
“We all agree that states should make sure their unemployment trust funds are protected from fraud and errors. Individuals, employers, and identity thieves that steal from the trust funds should be punished. But some states seem to have forgotten why they are safeguarding the funds -- to pay workers the benefits they have earned when they collect them.
“In addition to failing to hold states accountable, this Congress has starved the Employment Service, which plays a critical role in connecting unemployed workers with employers, and especially in preventing long-term unemployment by providing targeted reemployment services to those likely to encounter the greatest challenges in finding new work.
“The cost of a well-funded trust fund is reasonable for employers. For example, Wyoming has indexed its UI tax to maintain steady trust fund balances and currently has the best-prepared trust fund in the country. And a Wyoming employer with a low layoff rate pays as little as $69 per employee, per year, in state UI taxes. As we saw in the last recession, the benefits of that modest investment - for workers and our economy - will be substantial.
“It’s time for some accountability from the states regarding why workers are not getting earned unemployment benefits and state trust funds remain in the red. And, it’s past time for this Congress to take some action."
