WASHINGTON — A top economic adviser to President Barack Obama Monday said Congress should reform unemployment benefits to protect workers in the event of another recession.
Jason Furman, chairman of the White House Council of Economic Advisers, stressed the importance of expanding the taxable wage base for states to have enough money to provide at least 26 weeks of unemployment benefits to a wider range of ex-workers, including part-timers.
Considering record low interest rates, we have “less room for conventional monetary policy to respond for recessions, which makes the improvement of automatic stabilizers including unemployment benefits all the more important than it ever has been,” Furman said at the Washington-based Center for American Progress. The policy research group has close ties to the Democratic Party.
Unemployment insurance is a joint federal-state program meant to replace a percentage of the lost wages of newly unemployed workers. Employers pay into the rainy-day fund on behalf on their employees. To be eligible for benefits, workers must have sufficient earnings history and have lost a job through no fault of their own. And they must be actively seeking work.
Furman proposed raising the taxable wage base for unemployment fund from $7,000 to $46,000 to make the jobless benefits program more solvent. (Most states already exceed $7,000 — the highest, Washington state, is $44,000.) To offset, the payroll tax rate for unemployment insurance would go down.
The insured unemployment rate, which measures the percentage of ex-workers who file unemployment benefits, has been declining for seven years. The most recent rate of continued claims of unemployment was an all-time-low of 1.6% for the week ended June 25, from a peak of about 5% in June 2009, toward the Great Recession’s end.
“The present structure of unemployment benefits is a mess,” said Rep. Sander Levin of Michigan, the top Democrat on the House Ways and Means Committee, which has jurisdiction over a slew of tax and revenue related policies including unemployment compensation.
Levin said one of the reasons for the disenchantment of people with government today is the government’s message of “tough luck“ to those losing their jobs during tough economic times.
On the Republican side, an aide to Ways and Means Chairman Kevin Brady, the Texas Republican, said in a statement, “There needs to be more emphasis on reemployment to help people who that have lost their job, through no fault of their own, get back to work.
“More needs to be done to better utilize and coordinate the programs we already have,” the GOP aide said.
Published in conjunction with 