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State Unemployment Compensation Programs: Immediate Reforms Needed
Ist Teil von
The Journal of risk and insurance, 1989-12, Vol.56 (4), p.649-669
Ort / Verlag
Malvern: American Risk and Insurance Association
Erscheinungsjahr
1989
Link zum Volltext
Quelle
PAIS Index
Beschreibungen/Notizen
Serious defects in state unemployment insurance (UI) programs require immediate reforms. Present defects include the relatively small proportion of workers who receive benefits; inadequate trust fund reserves in most states; greater difficulty in obtaining extended benefits because of a flawed insured unemployment rate (IUR) trigger; reduction in the effectiveness of experience rating; contestment of claims by employers because of experience rating provisions; reduction in real UI benefits; and a significant decline in the effectiveness of UI as an automatic stabilizer. Substantial amounts of new revenues must be found to pay benefits to a larger proportion of unemployed workers and to improve the solvency of state unemployment reserve accounts. These objectives can be obtained by increasing the taxable wage base, eliminating the maximum UI contribution rate, and eliminating the state IUR trigger for extended benefits. However, these reforms are unlikely to occur because of strong employer opposition to liberalization of state UI programs. Consequently, the authors argue that employees should be required to contribute to the program. The economic effects of a new UI payroll tax are examined in some detail. Employee contributions can substantially increase the proportion of unemployed workers who receive benefits, improve the solvency of state programs, increase the effectiveness of UI as an automatic stabilizer, and encourage greater interest by employees in UI programs.