Legislature(1995 - 1996)

02/28/1996 03:20 PM L&C

Audio Topic
* first hearing in first committee of referral
+ 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               
      "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                     
      "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             
 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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