Legislature(1995 - 1996)
02/28/1996 03:20 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 483 - CALCULATION OF UNEMPLOYMT INS BENEFITS Number 2335 CHAIRMAN KOTT announced the committee would address HB 483, "An Act relating to the calculation of unemployment insurance benefits; and providing for an effective date." DWIGHT PERKINS, Special Assistant, Office of the Commissioner Department of Labor, read the following statement into the record: "For years, the unemployment insurance system has enabled Alaskan workers, their families, and their communities to weather periods of unemployment with their economic well-being and dignity intact. Recent events in Sitka and Wrangell, as well as in other areas of the state affected by plant closures or layoffs, have demonstrated all too well the importance of this safety net for our working men and women. "The schedule of benefits for unemployment insurance has not been adjusted to increase the maximum weekly benefit amount since 1990. Alaska currently ranks forty-ninth in the nation in unemployment insurance wage replacement, with the average weekly benefit amount only slightly more than 27 percent of the average weekly wage for the state. In terms of the maximum weekly benefit amount, Alaska ranks thirty-fifth in the nation, notwithstanding the higher cost of living here. "The current benefit schedule uses a worker's yearly wage to determine the weekly benefit amount. The minimum qualifying wage amount is $1,000, which provides a weekly unemployment insurance benefit amount of $44. For each $250 a worker earns over $1,000, $2 is added to the benefit amount. Weekly benefits are new capped at $212, based on maximum wages of $22,250. "This bill would keep the current benefit schedule in place but would replace the current fixed cap with a flexible cap. The new cap on wages would be 75 percent of the average annual Alaska wage, exactly the same as the wage base on which employers and workers are taxed to support the system. Bringing the maximum qualifying wages up to the wage base would raise the maximum benefit amount from $212 to $238 in 1997. The average cost to employers in the year 2000 will be approximately one dollar per employee per week. "Thirty-five states use a flexible benefits standard driven by changes in the average weekly wage. The advantage of such a system is that it integrates the benefit standard into the self-adjusting unemployment trust fund formula, which is directly tied to the performance of the state's economy. As average wages rise, the standard for unemployment insurance benefits keeps pace in terms of income replacement. If wages fall, as they did during the 1986-1987 recession, the maximum weekly benefit decreases and the employer tax burden decreases. "I want to emphasize that this is a modest proposal. The bill would raise Alaska's wage replacement less than 1 percent, to a little over 28 percent. TAPE 96-15, SIDE B Number 001 MR. PERKINS continued to read his statement. "While not enough to change our wage replacement ranking among the states, this small change would provide a measure of additional security to Alaska's average wage earners and help slow the erosion of purchasing power during hard times. As we work together to strengthen Alaska's economy to provide quality jobs for Alaska's families and to move certain low- income people from welfare to work, we must ensure that there is an adequate safety net in place to allow unemployed workers sufficient finances to remain in their homes, in their communities, and in Alaska until they are reemployed." MR. PERKINS pointed out that in the committee files there are three tables that shows the average weekly wage check of $620.11. Alaska ranks fifth in the nation. Table two is the average weekly benefit amount of the check written for unemployment insurance in which Alaska ranks twenty-sixth at $169.99. The average amount that is replace of that $620 in the 50 states, Alaska ranks forty-ninth of the average wage replacement. Number 064 WILLIE LEWIS was next to come forward to testify. He informed the committee he has been a resident of Fairbanks for 22 years and has also represented the Laborers Union, which has approximate 1,300, for about the same length of time. He noted he served on the Employment Security Advisory Board for 12 years and was appointed by Governor Sheffield in 1984. He referred to the previous increase of benefits and said it actually saved homes, etc., as most of the contracts for Alaskan residents were terminated on the North Slope. He informed the committee that members of his union usually work during the summer months and they have to make as much as they possibly can. Those wages have to last until the next season. Unemployment benefits helps people to survive over the winter months. He said he thinks HB 483 is a good bill and urged passage. Number 172 WILLIE CREECH, President, Vulcan Towing and Recovery, testified via teleconference from Anchorage. He informed the committee he recently received a letter from the Department of Labor where they tried to explain why they wanted to raise unemployment insurance taxes. He informed the committee he doesn't have a problem with HB 483, but asked the committee to not move it forward until they have had some reform done unemployment benefits. There is currently no requirement to look for a job. There is no requirement to accept a job or to bring proof to the unemployment office that you're actively seeking employment. He said we have people who work the required amount of time, get on unemployment and stay on it until the benefits run out and then start the whole procedure again. He asked that the unemployment office requires anyone on unemployment to bring proof that they are currently looking for work and will accept a job if offered. He said he called the unemployment office to find out if people are required to bring proof that they are out looking for a job and the answer was "no." He said he isn't against HB 483 and doesn't mind giving an extra dollar per week for an employee, but he wants to make sure that people who don't require unemployment benefits are out there trying to find a job. Number 329 RON TORGERSON, Chief of Appeals, ESD Appeals, Department of Labor, came before the committee to testify. He informed the committee he has worked as an analyst in Unemployment Insurance Program for a good many years and also worked on the drafting of HB 483. Mr. Torgerson said the department does have a work search requirement. It is a selective focused work search requirement which is written in their regulations, AAC 85.350. Mr. Torgerson said, "It allows the department - the local office, at its discretion, to impose a work search if an individual is in an occupation where employers are hiring so that it would be fruitful for the person to knock on doors and try to find work, and if making these kinds of personal contacts is the way that people get work in those occupations and as long as the individuals have been given a certain amount of time to find work through the employment office. The problem that the department is seeing in this, just for information, with a blanket work search requirement in Alaska is that so much of the employment in this states is just seasonably unavailable, and where isn't any discretion to ask -- to take into account labor market conditions, we'd have people knocking on the door of the two or three employers in town at a time when work was seasonally unavailable, and our experience has been that employers don't appreciate this. We've gotten feedback from employers time and again that they don't want to be involved in a pro forma work search effort that is being imposed on claimants. For example, when they're drawing extended benefits. Extended benefits is a program that imposes a work search automatically. It's a federal requirement. We certainly understand the concern. We just hope that we take into account the labor market conditions and the fact that we do have the authority to require a work search where it is appropriate." MR. TORGERSON said the department also instituted an eligibility review program where an individual who remains unemployed in a favorable labor market, their claim is reviewed periodically and they can be required to make personal efforts to get back to work. Number 448 REPRESENTATIVE PORTER asked if there is a requirement or provision that a person can only be required to take employment that somewhat mirrors the employment he lost. MR. TORGERSON stated that is correct. He said under the provision of Section 385 of the Employment Security Act, which is a federally imposed requirement, they have to take into account the worker's past training experience earnings. The worker can't be required to accept a job that is substantially less favorable than the prevailing work in the locality, but as their unemployment lengthens they can be required to take work outside their regular occupation. It just has got to compare favorably with the average conditions in the labor market. He pointed out that at the first part of their unemployment, a person is basically expected to take work similar to the work that they lost. They're not being asked to downgrade their skills or take a job that pays half the wages of the job they lost. He said that period varies depending on the labor market and what's reasonable. Number 527 REPRESENTATIVE ROKEBERG said he would like more information about the program. REPRESENTATIVE PORTER asked what would be in it for the employer. MR. FLANAGAN explained a lot of the communities in Alaska are dependent on unemployment insurance benefits. There are some employers that support it because they know if they're selling the basics of life that people spend this money on such as fuel, housing, food, etc., they're not going to survive and their community isn't going to survive. He noted Alaska is one of four states where the employee pays a share. Of total benefit costs over time, the employee pays 18 percent, the employers pay 82 percent. In 46 states, the employers pay the whole bill for the unemployment insurance system. MR. LEWIS said one thing that he has seen while being on the Employment Security Advisory Board is what Employment Security has did over the years when people are on unemployment, they have an opportunity to get (indisc.), look at the job market. Everybody is well trained. He noted is very proud to serve on that board. MR. CREED pointed out there is a $212 maximum benefit and you could go to work at McDonalds and make more than $200 per week. He questioned why these people don't have to take a job where they could make more than $212 per week. He said the department is saying if a person was making $700 per week, if they're not going to get another job that they're making equal to that amount, they don't have to take it. Mr. Creed said if they got a job making over $212 per week take home, they are doing better for themselves that way than they are if they just collect the unemployment. There was continued general discussion regarding the unemployment program and seasonal workers in Alaska. CHAIRMAN KOTT announced the bill would be back before the committee at a later date.
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