Legislature(2005 - 2006)CAPITOL 17
02/23/2005 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB7 | |
| HB147 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 7 | TELECONFERENCED | |
| *+ | HB 147 | TELECONFERENCED | |
| *+ | HB 150 | TELECONFERENCED | |
HB 7-UNEMPLOYMENT COMPENSATION BENEFITS CHAIR ANDERSON announced that the first order of business would be HOUSE BILL NO. 7, "An Act relating to the calculation and payment of unemployment compensation benefits; and providing for an effective date." REPRESENTATIVE CRAWFORD, co-sponsor of HB 7, began by stating that retaining a well-trained force of workers benefits the state economy, and providing an overdue increase in the weekly benefit amounts to these workers is critical and necessary in times of layoffs and other economical changes. Linking benefit amounts to actual living costs will assure that benefits are in harmony with the economy and retain the workers that live and work here. The reason we chose the average weekly wage is that it more closely tracks with the actual wages paid out. There have been times in the past when the average weekly wage went down when the prices actually went up. He went on to say that Alaska has been stuck at much lower employment benefit amounts than states that are comparable to us. He stated that the state is number 47 in the field of 50 in the speed at which the weekly wage is changed. He then went on to say that the state is at 35 percent of the national average weekly wage at $248. He indicated that at 50 percent of the weekly wage, this would put the state of Alaska at 23rd in the rankings. REPRESENTATIVE CRAWFORD stated that the state is spending their resources on the training of these workers and when the seasonal work is ended and the winter cuts off any other opportunities, they move out of state and take much better paying jobs down south. The benefit checks cannot equal or come close to this amount and so the state loses workers that it trained with its own resources to other states. He then said that the benefit must be closely pegged to the Alaskan economy or the state will continue to lose its skilled workers. 3:29:44 PM CHAIR ANDERSON indicates that this is a bill that was presented by himself and asked if it was commensurate with his own figures. REPRESENTATIVE CRAWFORD answered that it was in fact the same bill. REPRESENTATIVE LEDOUX asked how much this was going to cost employers to pay for a raise in unemployment pay rates. BILL KRAMER, Chief Officer, Office of Unemployment Insurance, Department of Labor and Workforce Development, answered that as far as this increase would affect employers, the cost would be about 12.4 million dollars. CHAIR ANDERSON asked how this would work. MR. KRAMER answered that in Alaska, the financing for our trust fund is shared amongst the employers (80 percent) and a tax on the workers themselves (20 percent). It will take a few years to take full effect on the employers and be felt by the workers. This will mean that the average employer will have an increase by 64 dollars per worker, hypothetically. CHAIR ANDERSON reiterated that 1/5th is paid by the worker and 4/5th of the amount is paid by the employer. REPRESENTATIVE LEDOUX asked if these ratios were based on the payroll. PATRICK SHIER, Chief of Tax, and Acting Deputy for the Employment Security Division, stated that annually his group calculated 75percent of the average weekly wages (the taxable wage base) that are contemplated in this bill. REPRESENTATIVE LEDOUX indicated that she was confused and asked if the limit for is about $24,000 for the yearly income benefit calculation. MR. SHIER stated that the limit is $27,000 and this is actually arrived at by adding all the wages per individual together and divided by the number of workers, and the answer is the annual average wage. They then take 75percent of this amount and this is the amount upon which is levied against the Alaskan employers as a tax. 3:37:21 PM REPRESENTATIVE LEDOUX asked if, though the passing of the bill, the benefit amount would advance from $24,000 to $35,000. She then asked if that was what this bill is designed to do. MR. KRAMER stated that it sets the new weekly benefit amount and the rating system that is in place; however, rates would increase to reflect the taxable wage base, as wages should increase over time to reflect cost of living increases. REPRESENTATIVE LEDOUX indicated her understanding of the issue. 3:37:34 PM REPRESENTATIVE CRAWFORD brought up the fact that Alaska's unemployment benefit pay had been $248 for a very long time and that before that it was at $212. These changes have to happen at least more than once a decade in order to keep up with changing economies, and enable these workers to be able to pay their bills without having to leave the state in order to do so. He then continued by asking if anyone had the year that this rate change took place. MR. KRAMER answered this by suggesting that the change occurred in January 1st 1997 when it moved from 212 to 248. REPRESENTATIVE CRAWFORD then asked how much earning and buying power had been gained or lost, and if that could be given as well. MR. KRAMER said he could do this and also try to show what the erosion effect of inflation has been on the benefits. 3:39:58 PM REPRESENTATIVE ROKEBERG indicated that although he would like to support the chair, he would like to have some information on the costs on employers and what the impact was on payroll deduction on employers and employees. He concluded that there was no way he would support this bill in any way, shape, or form unless this information was supplied. CHAIR ANDERSON asked if Representative Rokeberg had asked the chamber for this information. REPRESENTATIVE ROKEBERG retorted that it was not his bill and not his responsibility. This committee should be getting pertinent information regarding all aspects of a bill and it is up to the sponsor of the bill to do so. He indicates that in regards to his own businesses, he is agitated to find his payroll costs going up and he wants to know the rationale behind this change. He then postulates that it would cost him $2000 a year to pay for 'rocking chair' money for someone that wants to take some time off. He ended by stating that if he is forced to pay this, then he wanted to know why. He asked what the physical impact would be on business owners. REPRESENTATIVE CRAWFORD answered by stating that he was sure that Representative Rokeberg did not mean that skilled workers that get on unemployment are really taking 'rocking chair' money. He then went on to say that this about workers trying to take care of their families and take care of their bills. He then apologized for Representative Rokeberg and indicated that his previous statement was probably not intended to sound like the unemployment benefit was a vacation for workers. 3:43:45 PM REPRESENTATIVE GUTTENBERG continued by stating that his own experience indicated that retention is the critical issue here- not in defining what the benefits are or not. He said that he has seen a lot of people leave the state and that it was the low unemployment for those that make over $27,000 a year. MR. KRAMER indicates that he would have to get back to him regarding this question. REPRESENTATIVE GUTTENBERG restated the question and then said that this was really the key issue here and asked if this were true. He then asked how long they are normally unemployed. 3:45:31 PM MR. KRAMER answered that the average duration is 14.8 weeks and that the average benefit is 190 a week. He said that the Representative was correct in saying that this is pertinent to the highest end of the employment benefits. REPRESENTATIVE GUTTENBERG pointed out that there is a difference between the higher end worker and the lower end worker. He then added that the lower end worker would not go back to work as fast as the higher end worker would go back to work. He indicated that he would like to see a number on this. MR. KRAMER reiterated this request and said that what was being asked was the difference in the average unemployment duration between a low-end and the high-end person receiving benefits based on what they received as a worker REPRESENTATIVE GUTTENBERG indicated that this is what he meant. MR. KRAMER indicated that he would look into this. REPRESENTATIVE GUTTENBERG pointed out that his people were not adding to the bottom but they were adding to the top. 3:47:56 PM CHAIR ANDERSON answered that these dynamics were important to the committee. He then went on to say that he endorsed the HB 7 generally but that he would like to take into consideration what Representative Rokeberg has brought up. He said that as much as he would like to push this out, he is going to hold it and ask for new information be given to the committee regarding the costs to the employers. 3:48:47 PM REPRESENTATIVE CRAWFORD asked the gentleman from the Unemployment Office if he could bring back the history of the percentage that these tax rates have climbed. He indicated that the in the time he has been in Alaska, he could not remember a time when the change was significant. He reflected that when he first came to Alaska, the weekly amount was $190 and the current weekly amount was $248, and that this amount was not a big change from what it was thirty years ago. He added that after moving only 38percent over thirty years, he would be interested in knowing how this relates to inflation rate over time. MR. SHIER listed the questions on subjects that the committee has asked for: dates of increase and impact of economical inflation, cost impact on the employers and employees, and some discussion on how the average tax wage base will act over the coming years if there are measurable impacts of this legislation. REPRESENTATIVE LEDOUX stated that she really appreciate getting answers to these questions. REPRESENTATIVE ROKEBERG asked if the gentleman could also supply the committee with an analysis of the cost impacts on the employer and the employee, and supplant this with real life examples of percentage changes. Also the average time that they are unemployed- further debate on whether it is for retention or is it a structure [culturally accepted way of life] for these higher end workers that is somehow regarded as part of the annual income that they plan on having. He then pointed out that this is unlike the lower end workers that work year round and lose their income only when something unforeseen happens. 3:51:46 PM MR. SHIER answered that his group has industry specific material that addresses this. REPRESENTATIVE ROKEBERG queried the gentleman as to the philosophy behind unemployment compensation. He then inquired as to the mission statement that defines [unemployment security]. MR. KRAMER agreed that his group would bring back the needed information. CHAIR ANDERSON chuckled, and summed up the task as one that would take a decade. REPRESENTATIVE ROKEBERG continued by stating that there are other evidence that can show more explicitly why there might be a need for an increase. If you are making the case for an increase, you could get a comparison to state average payouts instead of average maximum payouts. This is a better indicator of what is going out of the state. In the present packet we are only looking at the maximum payout of $248. MR. SHIER answered that this was positively the case and that the chart that is presently in the hands of the committee is reflective only of the maximum payout amount. He then indicated that he would seek out a comparison between the states and the state of Alaska and then create a chart that identified and compared average weekly payouts, rather than maximums. CHAIR ANDERSON agreed, and said there are other factors that need to be looked at and reasoned with. REPRESENTATIVE ROKEBERG went on to say that the lower end of the scale ($190) was more important if you wanted to really help lower end employees [during periods of unemployment]. He then said that this bill the way it is written does not address what the average worker receives and seemingly only helps the upper end worker. This bill does not help anyone who doesn't make the upper limit of income. Even the income of the legislator, a mere $24,000 a year, is not impacted. REPRESENTATIVE CRAWFORD answered that we had talked about moving the maximum benefit down to the 27 thousand dollar level, but this would be much more expensive to the trust fund. What we are trying to do is maintain a much larger percentage of people at the bottom end. This was the cheaper way to go overall. 3:56:30 PM REPRESENTATIVE CRAWFORD stated that people at the income maximum are only allowed to get 35percent of their wages. This is not enough to pay bills and maintain life. REPRESENTATIVE ROKEBERG said that it might be interesting to debate whether raising or lowering the pay scale or doing what we are doing with this bill is the better choice. REPRESENTATIVE CRAWFORD agreed that he would really like to see the lower end raised as well. CHAIR ANDERSON announced that Representative Rokeberg apparently wants to include everyone here. 3:58:07 PM CHAIR ANDERSON kept public testimony open and asked for people to testify. JOHN BROWN, President, Central Labor Council, stated that he understood that HB 7 had gone around three times, and noted that it hadn't changed. The department of labor has put out good documents that showed the diaspora of workers out of Alaska. As an example, he noted the case of an electrical operating engineer. The equipment that we use is very expensive and the training of the workers is just as expensive. These workers, when they get laid off, have to either change industries or face layoff periods that severely challenge them economically. The training that goes into these people is wasted when they change industries. This being said, it is obvious that the construction industry is big here in Alaska and the waste that goes into training these workers over the years is phenomenal when they leave the industry to have more predictable employment. He ended by stating that this bill needs to be passed and that the committee has been hearing this same bill over and over for years. RAYMOND SMITH, Business Manager, Painters, and Allied Trades Union 1140, urged the committee to pass HB 7. He indicated that the so-called 'rocking chair' that he gathered did not give enough to support himself, yet he had to support the family. He did not take vacations, but spent the time looking for other jobs. This industry by nature is not a year round employment. He ended by urging the committee to pass the bill. 4:02:58 PM ROYCE ROCK, Carpenters Labor Union 1281, urged the committee to pass HB 7 onto the Senate, and that this is becoming rather a nuisance and tenacious. This bill has been held over and held over and it needs to be passed. The cost of this is 12.4 million dollars but the truth is that 20percent is paid by the employees and this is rare in the United States. The amount given as a monthly benefit as it stands now at $968, is pretty low and we are a laughing stock when we go out to the lower 48. MR. ROCK addressed Representative Rokeberg's concerns by clarifying what the mission of the unemployment benefits was. He pointed out that they are in place to sustain the economic communities welfare, which included both the local economy and the worker itself, and that ultimately, unemployment was set up for the welfare of the society, and benefited everybody. MR. ROCK indicated that he disagreed with putting the top level at $37,750. He stated that this came from negotiations made two years ago when the amount was moved up to set a limit for getting the high end of the benefits. He continued by saying that the average worker only gets $35,000 a year, so the maximum benefit is never received. MR. ROCK urged the committee and the house to pass this bill and Gave hope that the Senate would finally have an opportunity to hear the bill. He ended by stating that this bill had been heard for too many years to still be debated and that the political games had to stop. REPRESENTATIVE ROKEBERG rebutted the last comments by pointing out that the committee had one new member on the committee and that she needed to be brought up to speed on the issue. He continued by stating that this committee that needed to do the "heavy lifting" on this bill and make it the best bill packet for it to go forward. He then said that he was not going to stand in the way of the bill, but he felt that he would not be doing the sponsors any favor by not making sure these questions are answered. MR. ROCK answered by stating that he appreciated these comments and urged the committee to help Representative Ledoux get through the issues and get this out of the House. CHAIR ANDERSON, referring to Representative Rokeberg, concurred terms of procedure and said that the Representative asked some substantive questions. However, he indicated that he also heard what the testifiers were saying. REPRESENTATIVE ROKEBERG chortled that the bill package is incomplete and that it was inexcusable for the sponsor not to include information on the bill and its impact on business owners. CHAIR ANDERSON agreed and said that Representative Crawford needs to have this put together in a better way. REPRESENTATIVE CRAWFORD answered that he would do this and provide any information that is being requested. He then added that he was not complaining about this concern of Representative Rokeberg. REPRESENTATIVE ROKEBERG commented he understood this, but that some of the testifiers were complaining about his concerns. REPRESENTATIVE CRAWFORD stated that they can complain if they wish, [since they are the public]. DAVID FORD, Business Manager, Ironworker Union 751, stated that the workers that work in the more weather challenging parts of the state cannot support their families during the long winter months of unemployment on the compensation currently being given out by the state. He then pointed out that the senior members of the crew and highest paid are kept on and the least skilled workers or lowest paid are laid off. He added that these are also the young apprentices that these are the future ironworkers, and when they leave to find work, they do not come back. Since the amount of unemployment is so low, they have to leave the state. Seasonal work needs to be bridged from month to month. CHAIR ANDERSON kept public testimony open. 4:12:12 PM REPRESENTATIVE GUTTENBERG stated that if you take a highly skilled worker, and give him a job from spring to the winter, he will off work for the rest of the year. The unemployment benefit, or stipend, is what keeps him in town and on-call. He stated that being on-call keeps the worker in place and in state. He concluded that people coming up here that are highly skilled are not native to the northern latitude and are not adapted to the environment. He then added that employers need local workers who are adapted, and this little bit of money is what keeps them around instead of leaving the state. He ended by stating that they are not sitting in their "rocking chair" gathering free money. 4:14:46 PM REPRESENTATIVE CRAWFORD stated that the reason we are behind is that are at 35 percent of the average national weekly unemployment wage. He Gave an example using his father who lived in Longview Texas back in 1935. He said that his father worked at a paper that shut down leaving him unemployed. He said the unemployment check that he received for this time of joblessness was half of his regular salary which was $36 a week at the time. He stressed the point that Alaska, in the 21st century, should pay its unemployed and laid off workers a reasonable wage comparable to a time in America when the economy was severely depressed. CHAIR ANDERSON announced that he was pleased with the testimony. He mentioned that if the committee can get the requested facts, that the bill would go forward with more time. [HB 7 was held over.]
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