Last week, the House Insurance Committee heard opponent testimony regarding House Bill 394, legislation intended to fix Ohio’s broken unemployment compensation (U/C) system. Numerous labor and anti-poverty groups, as well as the American Civil Liberties Union of Ohio, provided testimony in opposition to the bill.

A key theme throughout all of the opposition testimony was that there should not be any changes or reduction in benefits and that employers have not been contributing enough to the system. Essentially, many groups claimed that the system was currently imbalanced because employers don’t pay their fair share into the unemployment system. Opponent after opponent stated that the taxable wage base in Ohio, currently at $9,000, was far too low and should be permanently raised much higher than even the $11,000 called for in the bill.

However, these contentions are misguided, at best. The state U/C fund is entirely funded by employers. Thus, employers are the only ones contributing to the fund or paying any share. The key to addressing Ohio’s broken unemployment system is not confined to only looking at what is paid into the system through employer contributions. Equally important for a balanced solution to the system’s problems are the benefits paid out to claimant employees.

Raising the taxable wage base on which employers pay state unemployment tax from $9,000 to $11,000 amounts to a 22% increase. Additionally, employers are paying 350% more, or $105 per employee, to pay off the existing federal debt Ohio incurred in order to continue paying out benefits during the 2008-09 recession. To say employers haven’t been paying their fair share, when employers are the only ones paying any share, is simply absurd and fails to take into account all of the factors that make up the U/C system.

Another provision that opponents of the bill took issue with was the reduction in the number of potential weeks of U/C. The bill would allow for a sliding scale of 12 to 20 weeks of U/C depending upon the state’s unemployment rate. Currently, individuals can claim up to 26 weeks. Many states made changes to the number of weeks available in response to the Great Recession and tied the number to the state unemployment rate. These changes help to increase solvency in the fund and reduce the average duration of unemployment.

In order to find a realistic solution to the long term solvency issues with Ohio’s U/C system, concessions must be made by both sides. Ignoring the benefits side of the equation prevents the development of a balanced fix. HB 394 is an approach that increases employer contributions but also addresses what is paid out in benefits. The bill is scheduled for a hearing on Wed., Dec. 2, when the committee will hear further testimony.

Ohio Chamber Staff Contact: Don Boyd, [email protected].