THREAD 1/n: @SenatorBennet just released a fantastic, comprehensive reform proposal for unemployment insurance (UI). He’s been working on it for months, it’s not intended to be a response to the COVID crisis, but should be considered as we think about UI reform moving forward.
2/n: Check it here: bit.ly/2UxVn2n.
3/n: @dylanmatt says it “answers an important need…legislation that expands UI even when Congress is too busy arguing to do so. If Bennet’s bill had been passed... we arguably wouldn’t have needed an emergency intervention by Congress in response.” bit.ly/3bp4CsI.
4/n: It does two big things: (1) strengthens regular UI; and (2) improves its ability to automatically stabilize the economy in a recession.
5/n: It strengthens UI along three dimensions: administration, benefits, and eligibility.
6/n: On administration, the plan provides $1bn for states for implementation. UI agencies, in regular times, are already stressed for resources. That’s why the federal government needs to step up.
7/n: Second, states that increase recipiency and those that have high performance will get bonus grants. The total bonus program is an additional $1bn.
8/n: On benefits, the plan mandates a 75% replacement ratio, with a benefit up to a maximum of 80% of a states average weekly wage. That means 75% of your wages are replaced. For the first time, there will be a national floor of what states provide to recipients.
9/n: It also replaces wages at 100% for the duration of the national public health emergency. The addition is federally financed.
10/n: It also requires that all states provide a minimum of 26 weeks of regular unemployment compensation, that states more fairly compensate tipped/disabled workers (who often can't receive benefits commensurate with earnings), and that states provide dependent allowances.
11/n: On, eligibility, a few big things. States use eligibility restrictions to exclude a lot of workers who should qualify for UI.
12/n: The Bennet plan requires the use of ABPs, which make it easier for workers with more recent earnings to qualify for benefits. This'll especially help recent entrants to the job market, often hit first when the economy deteriorates, and those with irregular work histories.
13/n: It also requires that states provide benefits to the partially unemployed, and to those only seeking or available for part-time work. (Some states disqualify on these bases).
14/n: The last part on eligibility: it expands the definitions “good cause” quits, so that employees who quit because of sexual assault, or because of job assignments that violate health/safety standards, are eligible for benefits.
15/n: The second big part of the plan, is to improve UI’s ability to counteract a recession.
16/n: It improves UI automaticity with reforms to the Extended Benefits (EB) program. Right now, EB benefits ramp up slowly and inefficiently.
17/n: The EB program isn’t well-designed to ramp up during a downturn. It doesn’t kick in early enough to stimulate the economy prior to or early in a recession. For more, see @gchodorowreich chapter here bit.ly/2QnCiyN.
18/n: Also, it uses the IUR (insured unemployment rate), which is an imperfect, imprecise measure of unemployment. States can also use the total unemployment rate (TUR), which is a better measure, but…
19/n Because the funding for EB is shared 50-50 between the state and fed govt, states have an incentive not to start EB, particularly when the economy is getting worse and they’re worried about budgets.
20/n: The Bennet plan would change that by providing full federal financing for EB.
21/n: Perhaps most importantly, it changes the trigger. Under the proposal, EB is triggered by the “Sahm Rule” (@Claudia_Sahm), which extends unemployment an additional 13 weeks, once the 26 weeks mandated (or more if a state provides) have been exhausted.
22/n: If the Sahm Rule is triggered, EB stays on until three conditions are met: (1) unemployment is falling; (2) unemployment is below 6.5%; and (3) unemployment is less than 1.5% above what it was when the Sahm rule triggered.
23/n: In addition to scrapping IUR and bringing in Sahm Rule, increases in TUR trigger additional weeks of EB. If the state or national unemployment rate hits 6.5%, the unemployed get an additional 13 weeks. There are additional extensions at 7.5%, 8.5%, or 9.5%
24/n: It also has an “Augmented-TUR.” This would capture shorter-term spikes in unemployment. Basically, it adds the increase over a period of time to the current TUR.
25/n So if on April 2019, TUR is 5.9%, but it was 4.9% in April 2018, the Augmented-TUR would be 6.9% (5.9+ (5.9-4.9). The TUR tiers (6.5%, 7.5%, 8.5%, and 9.5%) also apply to Augmented-TUR.
26/n: A few more fixes. EB currently has a “lookback” provision. If the unemployment rate is lower than what it was a year ago, individuals can’t receive EB. This hurts workers during prolonged, high unemployment recessions. The Bennet plan would eliminate these provisions.
27/n: All states triggered onto EB would receive a $50 increase in their weekly benefit amount, indexed for inflation. This would improve the countercyclical response to a recession, and put more money in the pockets of working families in difficult times.
28/n: Regular UI compensation is portable if you move to a different state, but EB benefits are not. This plan would change that.
29/n: It’s a comprehensive reform package that would solve a lot of perennial challenges in UI, but also improve its use as an automatic stabilizer.
30/n: It's built on work of ppl like @Claudia_Sahm, @EvermoreMichele, @NelpNews, @mboteach, @nwlc, @JayCShambaugh, @hamiltonproject, @IndivarD, @kaligrant...
@ChadCBPP, @CenterOnBudget, @pelhamprog, @LilyRoberts12, @arindube, @gchodorowreich and many others. Great to see their hard work reflected here.
31/n: Also, huge props to @EconCharlie and @kconnaughtonco in Senator Bennet's office.
32/32: Once we get through this crisis, we’ll have to begin the work of how we rebuild and not end up in this position again. @SenatorBennet, always thinking about the future, offers a great blueprint.
