A Republican member of the Pennsylvania House of Representatives says he wants to reform the state's unemployment insurance system in part because the way benefits are currently calculated lets workers take a paid vacation for most of the year.
"This is a fairness thing," Rep. Scott Perry said in an interview with The Huffington Post. "What we're trying to accomplish here is to make sure the system is solvent for people who are truly needy."
Perry's bill would save the state $632 million a year through 2018, according to an analysis by the Pennsylvania Department of Labor and Industry. The measure would achieve most of the savings by changing the way benefit amounts are calculated. Under current Pennsylvania law, the size of a claimant's weekly check is based either on his highest quarterly earnings in the previous year or 50 percent of his full-time weekly wage, whichever is higher. (More detailed explanations are available on the department's website.) Perry would change the former method to base benefits on the average of a claimant's best three quarters.
While it sounds like a small, technical change, it would reduce payouts to unemployed workers by $463 million a year because 70 percent of claimants in Pennsylvania have uneven wages during the course of a year and would no longer receive benefits based on just their best three months. The average weekly payment would drop from $324 to $277, according to Sharon Dietrich of Community Legal Services, a nonprofit that advocates for the legal rights of low-income Pennsylvanians.
And the change would stop people from abusing the system, Perry said.
"We have people that might work only one quarter of the year and are making more on unemployment than somebody that works all year long at a sustained job," he said. "How is that fair?"
Is there a significant number of lazy, dishonorable Pennsylvanians with such a keen grasp of the state's unemployment compensation formula?
"Believe it or not, there are people out there that understand the system very well and use it in that regard," Perry said, adding that he learned of the problem from people who adjudicate unemployment claims. "It’s not a huge proportion of the unemployment-receiving population, but there are those individuals out there and that’s not the type of thing as a government, as a society, that we want to incentivize, in my opinion."
Dietrich, who strongly opposes Perry's proposal, does not believe such a problem exists.
"Not only have I never heard of it, I can't imagine it," she said. "I have been practicing [unemployment compensation] law for 25 years, and I wouldn't understand benefit calculation enough to manipulate the system. UC benefit calculation is arcane, technical stuff. I simply don't believe that laypeople would know how to game the system in that way, much less that they are doing it."
Also, people who voluntarily leave their jobs aren't eligible for benefits except under very specific circumstances.
Perry's bill would reduce the massive deficit in the Pennsylvania's unemployment trust fund, which has borrowed $3.8 billion from the federal government. Perry said he doesn't think the unemployed should have to settle for low-paying jobs.
"We’re not asking anyone, and this bill doesn’t ask anyone, to take a job of appreciably lesser pay than what the person was normally apt to receive prior to their unemployment," Perry said. "We’re asking them to take jobs doing the same type of work at the same type of pay if those jobs are available. We understand that people have bills to pay and their living standards to maintain, but if there are jobs available which allow them to do that I think it’s appropriate for them to take those jobs and it’s inappropriate for them to stay on unemployment if those jobs are available in reasonably close proximity to where they live."
Perry's bill also includes a provision that will preserve the state's eligibility for the federal Extended Benefits program, which gives the long-term unemployed their final 20 weeks of assistance in states with high unemployment rates. In several other states in recent months, including Michigan and Missouri, Republican lawmakers have paired measures to keep Extended Benefits with measures to reduce state benefits. If no law is passed, 45,000 Pennsylvanians will stop receiving EB checks after June 11.
The state House of Representatives will consider Perry's bill on Monday.
Correction: An earlier version of this story incorrectly reported that the bill would save $632 million through 2018. The bill will save $632 million each year through 2018.