Legislature(2021 - 2022)ADAMS 519
04/20/2021 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB100 | |
| HB126 | |
| HB79 | |
| HB80 | |
| SB22 | |
| HB151 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 79 | TELECONFERENCED | |
| += | HB 80 | TELECONFERENCED | |
| += | SB 22 | TELECONFERENCED | |
| += | HB 126 | TELECONFERENCED | |
| += | HB 100 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 151 | TELECONFERENCED | |
HOUSE BILL NO. 151
"An Act relating to unemployment benefits during a
period of state or national emergency resulting from a
novel coronavirus disease (COVID-19) outbreak; and
providing for an effective date."
Co-Chair Merrick indicated that Mr. Klouda would provide
his testimony regarding HB 151.
10:59:27 AM
NOLAN KLOUDA, EXECUTIVE DIRECTOR, CENTER FOR ECONOMIC
DEVELOPMENT, UNIVERSITY OF ALASKA (via teleconference),
reported he had been invited to make a few comments related
to the state's economic situation and unemployment benefits
related to HB 151. He reported that in March, the state was
still down about 22,000 jobs. He highlighted that the state
had not experienced much real employment recovery happen
since the previous November when the state had experienced
much higher job losses related to seasonality. He was not
seeing clear improvement in the employment market, and
Alaska was lagging slightly from some of the U.S.
employment numbers and U.S. job reports. He and many of the
economists in the state thought it would not return to
previous 2019 employment levels for 3 years to 5 years. He
suggested the state was looking at a prolonged period of
many jobless individuals well into the future.
Mr. Klouda indicated he had also been asked to speak about
the unemployment benefits provided during the pandemic
through a couple of acts of congress that made the
unemployment benefits more generous. They had sparked some
controversy around the question of whether they had
disincentivized work whether they were encouraging people
not to return to the workforce when they were able to.
There had been several studies that spoke to the issue at
the national level, none specific to Alaska. However, he
thought they were pretty important and illuminating. Most
studies indicated that the more generous pandemic
unemployment benefits, especially the extra $600 from the
Coronavirus Aid, Relief, and Economic Security (CARES) Act
that expired last summer, did not decrease employment (the
number of people who were actually employed). There were
several studies that looked at how there were different
levels of generosity in those benefits. Some people had
more than 100 percent of their prior wage replaced and some
that had less than that depending on what they were making.
In theory, those people who were receiving more on
unemployment had less reason to go back into the workforce
when they were able to. However, studies did not show that
to be the case. Generally, it did not have an effect
overall on employment numbers.
Mr. Klouda continued that there had also been some research
done when the benefits expired at the end of July. The
economists looked for an effect where employment might
increase if those benefits expired which they did not. Some
states were more generous than others and vice versa. The
less generous states did not see employment rebound any
faster than anywhere else. States that were paying slightly
less in UI benefits did not see people returning to the
workforce in any greater numbers. Some studies found that
job search intensity decreased slightly. In other words,
there was a small decline in people looking for work.
However, it was generally dwarfed by the fact that fewer
jobs were available. Early in the pandemic one study
reported that job openings decreased by about 64 percent
but job applications had only fallen about 20 percent (job
openings decreased approximately 3 times as fast as
searching for work).
11:03:41 AM
Mr. Klouda also noted that the more generous UI benefits
seemed to have a strong stimulative affect on spending. The
money paid to unemployed individuals was typically spent
quickly into local economies. One report found that
individuals who were unemployed were spending about 44
percent more in their local economies as a result of the
benefits. It was money that circulated to local businesses
and probably helped local economies by spending,
circulating money, and creating jobs. He was happy to
answer any questions.
Representative Wool heard from several business owners
about their difficulty in hiring employees due to the
additional unemployment benefits of $600 per week paid with
CARES Act funding. He suggested that if a person worked in
a higher paying job they might not be influenced. However,
for individuals working for lower wages, finding employees
had been an issue. He had spoken with several people in the
restaurant and hospitality industries who paid their
employees under $15 per hour. He made some computations and
speculated that for those employees on unemployment with
the addition of CARES Act funding they might receive around
$800 per week or about $20 per hour, more than they had
ever made per hour. Waitresses and bartenders received tips
but those were down due to Covid. In the lower salary
range, it had been difficult to find a workforce. He
wondered if industry specific studies had been done.
Mr. Klouda had heard the same feedback from business
owners. Much of the work his center did was focus on
helping businesses and implementing programs. It seemed
pervasive in the state. Even though it was anecdotal, he
had a difficult time completely discounting it because of
how common the concerns were. He thought it was a reality
for many individual businesses. However, he could not speak
to how many, how common, or across what sectors it applied.
No one had done the research. Some of the economists were
talking about how they would like to see more of a sector
breakdown. There might be more of an effect on one industry
versus another. He did not think there was enough data to
be able to look at it. He brought up another issue
regarding the pandemic. The current pandemic employment
benefits were an extra $300 per week. Whereas, it had been
$600 per week at the beginning of the pandemic under the
CARES Act. If there was a disincentive effect, he thought
the $300 amount would have less of a disincentive than
$600. He relayed that it was an area where there was a
shortage of data.
11:08:47 AM
MEGAN HOLLAND, STAFF, REPRESENTATIVE IVY SPOHNHOLZ, noted
that one of the national studies that Mr. Klouda had
brought to her attention was in the data and sampling. Half
of the business owners were in the hospitality and food and
drink industry. The finding was that the additional
unemployment benefits did not disincentivize work. The
conclusion was if there was any moral hazard (a temptation
not to go back to work because of exceptionally high
benefits), it would be in this group. The study found that
it was not the case.
Representative Rasmussen reported speaking to several
business owners in Anchorage to get a better understanding
about the need for employees. She reviewed a list of
businesses and individuals she had spoken with. She talked
to Alaska Mill and Feed, a local garden and pet supply
store. She talked with the Anchorage School District who
was having a difficult time filling teacher's assistant,
kitchen staff, and noon duty positions. Bread and Brew, a
local restaurant in Anchorage, was offering a $300 signing
bonus and a $22 per hour wage. They had not been able to
fill their positions. Other restaurants having problems
filing positions included La Mex and the Little Dipper
Diner. Pivot Maintenance was looking for a handyman and a
bookkeeper. A local cleaning crew small business started
employees out at $22 per hour with a $5 increase after 6
months and could not find anyone to go to work. She
continued to list several other businesses that were having
trouble hiring employees.
Representative Rasmussen reported that other small
businesses had reached out to her reporting that in prior
years they would see upwards of 100 applications for
positions open at their companies. Currently, they were
lucky to receive 5 applications. It was evident that there
was a lack of employment opportunities for more skilled
workers such as architects and engineers.
Representative Rasmussen had an additional concern. She
received an email that had been forwarded to her from an
individual. She read a portion of the email:
"The decision regarding eligibility for unemployment
insurance is based on the following facts, laws, and
regulations. You've quit your job with blank on
10/15/20 because you were concerned about contracting
Covid-19 and possibly spreading it to your family.
Under Alaska Statute 23.20.379 an individual is
disqualified for waiting week credit or benefits for
the first week in which the individual is unemployed
and for the next 5 weeks that the individual last left
a suitable work voluntarily without good cause. The
maximum potential benefit will be reduced by 3 times
the weekly benefit amount.
Conclusion of facts: You voluntarily left your work.
The circumstances involved in your leaving established
good cause for voluntarily leaving work. Benefits are,
therefore, allowed beginning 10/18/2020 if you are
otherwise eligible."
Representative Rasmussen was concerned because she thought
the state had a fine balance ahead with medical necessity.
She did not want somebody being forced into a workforce and
possibly being exposed to Covid-19. However, the way the
program currently worked, somebody could say they were
afraid of contracting Covid whether or not they had any
medical conditions or cause for greater concern for
contracting the virus. She questioned whether it was enough
for a person to leave their job and qualify for
unemployment. She referred back to the national study that
was mentioned. She asked how much information for the study
came from Alaska specifically. She believed it was possible
Anchorage might be an anomaly. She found it alarming that
so many small businesses were struggling to find employees
and looking at having to close their doors as a result.
11:13:43 AM
REPRESENTATIVE IVY SPOHNHOLZ, CHAIR OF THE HOUSE LABOR AND
COMMERCE COMMITTEE, SPONSOR, deferred to Patsy Westcott
regarding Representative Rasmussen's first question and to
Megan Holland to answer her second question.
PATSY WESTCOTT, DIRECTOR, EMPLOYMENT AND TRAINING SERVICES,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT (via
teleconference), explained that a general fear of
contracting COVID was not a sufficient reason to refuse an
offer of work, not return to work, or to quit a job. It was
unfortunate that the determination that Representative
Rasmussen read was very brief in its description of why
benefits were being allowed. She indicated that the program
conducted a very thorough investigation looking at all of
the mitigation factors related to an individual prior to
making a determination of whether or not to allow benefits.
Some of those factors included an individual's personal
health circumstances and the protections in place at the
workplace to ensure workers' safety. She reiterated that a
general fear of contracting Covid was not considered good
cause.
Ms. Holland had not seen any studies that spoke to
Alaska-specific data. She was working with the information
that was available. She thought the bill sponsor would be
interested in continuing the outreach with members of the
tourism industry small businesses digging into the topic
further. She thought Representative Rasmussen was asking
why there were so many unfiled jobs and why businesses were
having such a difficult time finding workers. She wondered
if there was a correlation between increased unemployment
benefits and the issue of businesses not being able to fill
positions. She indicated that with the information that was
currently available, she was not seeing the correlation
even though it potentially deserved additional outreach.
Representative Rasmussen thought it was good to see what
was happening at the national level. However, Alaska and
its economy could be very unique. It seemed Alaska lagged
behind the lower 48 sometimes with certain trends. She
thought it was very important for legislators to fully
understand the impacts of the policies they were putting
into place before making certain decisions, especially ones
specific to Alaska small businesses. She did not want a
snowball effect to occur where businesses begin to close
their doors due to a lack of personnel.
11:17:33 AM
Representative Spohnholz thought it was important to note
that the bill did not substantially change wage replacement
value in the State of Alaska. Alaska's wage replacement
value as a percentage of income was the lowest in the
entire country. The cost of living was very high in Alaska.
The minimum benefit an Alaskan could receive was $56 per
week. If $56 and $300 was added together it would not be
enough for Alaskans to avoid going to work. She emphasized
the importance of knowing what the bill did and did not do.
The American Rescue Plan Act wage replacement that would
supplement the State of Alaska's expired in September 2021.
All she was attempting to do was to give the department
some continued flexibility and allow people who had
children an extension of the modest increase while the
state did a deeper dive into what unemployment updates
should be made over the longer-term.
Representative Wool did not think the benefits offered in
the bill would substantially change people's incentives. He
thought the bill did good things. The wage increase that
Representative Rasmussen mentioned that some of the
businesses offered reminded him of a friend who owned a
restaurant in Anchorage. Shortly after the pandemic he was
desperate to hire people and had to offer at least more
than a person was receiving on unemployment. He imagined
that some of the job numbers that might have shown
non-stagnation or improvement might have correlated with a
higher wage. He brought up that he believed there was a
wage disparity but admitted it was not the time to discuss
the topic. However, he asked if wage changes had been
considered with some of the studies.
Ms. Holland did not recall but was happy to share the
studies that Mr. Klouda had shared with her office with
members of the finance committee.
11:20:36 AM
Representative Josephson was surprised to hear Ms. Westcott
report that COVID-19 was not enough of an excuse to claim
unemployment. He wondered if the department would have had
the flexibility to qualify a person for benefits if they
were more vulnerable to Covid.
Ms. Westcott responded that the department would have
flexibility to determine whether someone was at a higher
risk. The department would consider individual mitigating
circumstances to determine a person's eligibility. For
example, a person would be given special consideration if
they had a preexisting condition that would put them at a
higher risk of contracting Covid-19.
Co-Chair Merrick thanked Mr. Klouda for his testimony.
Representative Spohnholz asked for time for Mr. Klouda to
respond to a question from Representative Wool.
Mr. Klouda responded to the question about different wage
replacement rates. For instance, for some people the
unemployment benefits replaced more than 100 percent of
their wage. For others, the amount was less than they were
making before. The studies that he mentioned accounted for
that factor. They found that it did not influences people's
decision to go back to work in the data that they reviewed.
The higher wage replacement rate did not deter people to
return to work when they had the opportunity. He pointed
out there was also the issue of childcare when it came to
someone getting back into the workforce. He reported that
41 percent of unemployed parents who wanted to return to
the workforce during 2020 were unable or uncertain they
could because of childcare availability.
Representative Spohnholz appreciated all of the great
questions and the robust discussion about the bill. She
thought it was important to consider all of the details
about extending unemployment benefits. Moving forward the
state continued to have record unemployment. She wanted to
ensure that the legislature was eliminating unnecessary
bureaucracy. She hoped to provide some flexibility in
waving work search requirements if they deemed it
appropriate on a case-by-case basis. She had stated in the
previous day that potentially eliminating the work search
requirement was something she would consider. Ms. Westcott
had made a comment that they were not universally applying
that measure. However, in the future it might be waived on
a case-by-case basis. She noted that sometimes there were
reasons that might mitigate someone's ability to go back to
work including an underlying health condition and certain
work environments that would place them at higher risk of
contracting Covid.
Representative Spohnholz indicated that Mr. Klouda also
referenced childcare issues. She thought it was important
the department was given a little flexibility to administer
unemployment benefits presently while the state continued
to be in a sticky situation despite the fact the economy
was reopening. She hoped it would continue to do so and
that everyone could get back to work. She would not support
the waiver of the work search requirement, as she wanted to
give the department some flexibility.
11:25:27 AM
Representative Edgmon would like to hear from the
department to demonstrate the benefits of the bill.
Anecdotally, he knew of people benefiting from the bill
such as the single mother living in a motor home in
Muldoon. He asked the department to argue why the bill was
not necessary. He commented that the state was down 22,000
jobs, many of which were tied to the unemployment rate. He
would like to know why the bill would not benefit Alaskans.
In other sectors of the economy were getting benefits via
legislation this committee was going to pass with federal
funds. He wanted a clear explanation from the department.
HB 151 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the agenda for the afternoon
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 80 Amendment 1 Ortiz 041721.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 80 |
| SB22 Amendment 1 Josephson 041721.pdf |
HFIN 4/20/2021 9:00:00 AM |
SB 22 |
| HB 79 Amendment 1 Carpenter 041921.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 79 |
| HB 80 Amendment 2 Carpenter 041921.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 80 |
| HB 79 Amendment 2 Wool 041921.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 79 |
| HB 100 Response to Co Chair Merrick 041921.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 100 |
| HB 80 KRSMA Letter 4-19-2021.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 80 |
| HB 80 Conceptual Amendment 1 to Amendment 1 Ortiz 042021.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 80 |
| HB 151 Supporting Document - Employment Effects of Unemployment Insurance Generosity During the Pandemic, 7.14.20.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 151 |
| HB 151 Supporting Document - NBER Paper, 2021.pdf |
HFIN 4/20/2021 9:00:00 AM |
HB 151 |