Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/10/2018 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 301 ALCOHOL LICENSES:BEV DISP/RESTAUR./LODGE TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 142 UNEMPLOYMENT INSURANCE BENEFITS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
              HB 142-UNEMPLOYMENT INSURANCE BENEFITS                                                                        
                                                                                                                                
2:02:05 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration  of   HB  142.  [CSHB   142(FIN)  was   before  the                                                               
committee.]                                                                                                                     
                                                                                                                                
2:02:22 PM                                                                                                                    
REPRESENTATIVE  CHRIS  TUCK,  Alaska State  Legislature,  Juneau,                                                               
Alaska, sponsor of HB 142,  thanked the committee for hearing the                                                               
bill  that improves  unemployment  insurance. He  said his  staff                                                               
would  provide the  introduction  and sectional  analysis and  he                                                               
would follow up talking about the economic benefits.                                                                            
                                                                                                                                
2:02:42 PM                                                                                                                    
KENDRA KLOSTER,  Staff, Representative  Chris Tuck,  Alaska State                                                               
Legislature, Juneau,  Alaska, introduced  HB 142 speaking  to the                                                               
following sponsor statement:                                                                                                    
                                                                                                                                
     The   Alaska   Department   of   Labor's   Unemployment                                                                    
     Insurance (UI)  program provides  unemployment benefits                                                                    
     to eligible  workers who  become unemployed  through no                                                                    
     fault of  their own,  working less than  full-time, and                                                                    
     meet certain  other eligibility requirements.  With the                                                                    
     seasonal nature  of much of  the state's  workforce and                                                                    
     Alaska's vast  remoteness, UI  benefits serve  not only                                                                    
     to bridge  the economic gap for  the individual worker,                                                                    
     but   also  as   a  stabilizing   influence  on   local                                                                    
     economies.                                                                                                                 
                                                                                                                                
     The  current Maximum  Weekly Benefit  Amount (MWBA)  of                                                                    
     $370 only  replaces 36% of  the state's  average weekly                                                                    
     wage of $1,020. An MWBA  of $510 would provide 50% wage                                                                    
     replacement of  the average  weekly wage,  a nationally                                                                    
     recognized norm.                                                                                                           
                                                                                                                                
     To compare  to other western  states, the MWBA  rate in                                                                    
     Washington is  $681, Oregon is $590,  and California is                                                                    
     $450. In addition,  Alaska is one of  only three states                                                                    
     where the  cost of providing  UI benefits is  shared by                                                                    
     employers and employees.                                                                                                   
                                                                                                                                
     House  Bill  142  would  increase  the  maximum  weekly                                                                    
     benefit amount under  the UI Program in  two steps from                                                                    
     the current $370 to $458 in 2018 and to $510 in 2019.                                                                      
                                                                                                                                
     Among 50  states, the District of  Columbia, and Puerto                                                                    
     Rico, Alaska is:                                                                                                           
                                                                                                                                
        • 39th in Maximum Weekly Benefit Amount                                                                                 
        • 44th in Average Weekly Benefit Amount ($252)                                                                          
        • 52nd in Wage Replacement Ratio (.288)                                                                                 
        • 9th in Recipiency Rate (unemployed workers                                                                            
          receiving benefits - .37)                                                                                             
                                                                                                                                
     As a  claimant filing for UI  benefits, individuals are                                                                    
     responsible  for  actively  seeking  suitable  fulltime                                                                    
     employment   and   reporting   activity   for   seeking                                                                    
     employment each week to remain eligible.                                                                                   
                                                                                                                                
     The  federal poverty  level for  a family  of three  in                                                                    
     Alaska  for  2016 is  $25,200,  or  $2100 a  month.  An                                                                    
     unemployed  single parent  with two  dependent children                                                                    
     receiving  the MWBA  of $370  plus the  dependent child                                                                    
     allowance of  $24 per child  under 18 (up to  a maximum                                                                    
     of three) receives approximately  $1800 per month in UI                                                                    
     benefits.                                                                                                                  
                                                                                                                                
     By passing House Bill 142,  Alaska will be more in-line                                                                    
     with  the  average  weekly  benefits  and  provide  the                                                                    
     necessary  financial support  families need  to survive                                                                    
     while seeking employment.                                                                                                  
                                                                                                                                
2:04:24 PM                                                                                                                    
MS. KLOSTER delivered a sectional analysis of HB 142 speaking to                                                                
the following prepared document:                                                                                                
                                                                                                                                
            Sectional Analysis for HB 142 version R                                                                           
      Increase to Alaska's Unemployment Insurance Maximum                                                                       
                     Weekly Benefit Amount                                                                                      
                                                                                                                                
     Increases  the state's  maximum  weekly benefit  amount                                                                    
     (WBA) from  $370 to $510  and increases  the qualifying                                                                    
     wage scale  from $42,000 to $59,500.  After the initial                                                                    
     increase to $510, future benefit  increases are tied to                                                                    
     an  economic indicator  based  on  the state's  average                                                                    
     weekly  wage  (AWW). Increases  to  the  WBA shall  not                                                                    
     exceed 50% of  the states average weekly  wage from the                                                                    
     prior calendar year.                                                                                                       
                                                                                                                                
     Section  1:  AS  23.20.350(d)      Amends  the  benefit                                                                  
     schedule  by  increasing  the maximum  qualifying  wage                                                                    
     requirement  from $42,000  to  $59,500. The  qualifying                                                                    
     wage schedule  is extended in $250  increments to reach                                                                    
     the   new  maximum   qualifying  amount.   The  benefit                                                                    
     schedule  is   extended  in  $2  increments   for  each                                                                    
     additional  $250 of  qualifying  wages to  reach a  new                                                                    
     maximum weekly benefit amount of $510.                                                                                     
                                                                                                                                
     Section   2:  Amends   AS  23.20.350   by  adding   new                                                                  
     subsections:                                                                                                               
                                                                                                                                
          (h) Annually, after  December 31, 2020, authorizes                                                                    
          the  Department to  increase the  highest WBA  for                                                                    
          individuals earning at least  $59,750. The new WBA                                                                    
          calculation  shall amend  the highest  base period                                                                    
          wages in  $250 increments  and the highest  WBA in                                                                    
          $2 increments  if the state's average  weekly wage                                                                    
          increases. The  new maximum  WBA shall  not exceed                                                                    
          50% of the average weekly wage.                                                                                       
                                                                                                                                
          (i) Provides for public notice  of any new benefit                                                                    
          amounts  calculated under  (h)  by  December 1  of                                                                    
          each  year  by  posting  a notice  on  the  Alaska                                                                    
          Online Public Notice System  and allows for public                                                                    
          comment  on  the   accuracy  of  the  Department's                                                                    
          calculations.                                                                                                         
                                                                                                                                
          New   maximum   WBAs   apply  to   benefit   years                                                                    
          established  on January  1 of  each year  and does                                                                    
          not change existing claims.                                                                                           
                                                                                                                                
          Changes to  the WBA shall be  calculated only once                                                                    
          per year.                                                                                                             
                                                                                                                                
          (j)  Establishes  the  calculation  procedure  for                                                                    
          determining  Alaska's   average  weekly   wage  by                                                                    
          December 1  of each year. The  average weekly wage                                                                    
          is determined by dividing  the average annual wage                                                                    
          in  the state  for the  preceding 12-month  period                                                                    
          ending  June  30 by  52.  The  state must  include                                                                    
          wages  of all  employees in  the state  covered by                                                                    
          this  chapter, both  public  and  private. If  the                                                                    
          calculation does not result  in whole dollars, the                                                                    
          amount shall be rounded down.                                                                                         
                                                                                                                                
      Section 3: Provides for an effective date of January                                                                    
     1, 2019.                                                                                                                   
                                                                                                                                
MS. KLOSTER related  that the sponsor believes this  is the right                                                               
time  to increase  unemployment insurance  benefits. There  is an                                                               
economic downturn and Alaskans need  help to ensure that they can                                                               
pay the  mortgage and put food  on the table. Testimony  in other                                                               
committees  demonstrated that  it's  been hard  to  take care  of                                                               
families  when the  UI  benefits  are so  low.  She advised  that                                                               
individuals  from DOLWD  were available  to answer  any questions                                                               
the committee may have.                                                                                                         
                                                                                                                                
2:06:23 PM                                                                                                                    
REPRESENTATIVE   TUCK  provided   information  on   the  economic                                                               
benefits   of   always    having   unemployment   insurance   and                                                               
specifically when there is a downturn  in the economy. A study by                                                               
the   Columbia  Business   School  titled    The  Importance   of                                                               
Unemployment  Insurance as  an Automatic  Stabilizer  found  that                                                               
unemployment  insurance acts  as an  automatic stabilizer  to the                                                               
economy.  The  more generous the unemployment  insurance benefits                                                               
are, the better the region  fairs overall." The research explains                                                               
that  "as  demand  for  products  and  services  decline  due  to                                                               
unemployment,  unemployment insurance  allows for  continual cash                                                               
flow in the community." Further, the Congressional Budget Office                                                                
reports  that every  dollar that  is  invested into  unemployment                                                               
insurance nationwide,  contributes to  about 19,000 new  jobs. By                                                               
comparison, a  dollar in  tax cuts creates  just 10,700  jobs. He                                                               
explained that  unemployment insurance creates more  jobs because                                                               
people spend all the money  received from unemployment insurance,                                                               
whereas someone  who is  employed and  receives that  dollar from                                                               
tax  credits won't  spend the  whole  dollar. Just  part of  that                                                               
dollar goes into the economy; the  rest is to pay off a mortgage,                                                               
to  pay  down  debt,  put   in  savings  or  something  else.  He                                                               
reiterated  that a  benefit  of unemployment  insurance  is as  a                                                               
stimulus  to  the  economy. Research  indicates  the  return  per                                                               
dollar invested can be as high  as $2.15. The reason is that when                                                               
people purchase  groceries, it  keeps agriculture  workers, truck                                                               
drivers, grocery store workers, and others employed.                                                                            
                                                                                                                                
REPRESENTATIVE  TUCK argued  that paying  reasonable unemployment                                                               
insurance benefits  also helps to keep  skilled, seasonal workers                                                               
in  Alaska.  Alaska  is  among  the highest  in  the  nation  for                                                               
seasonal work and the cost of  living is very high. Once a worker                                                               
moves  out  of  the  state,  it's difficult  to  get  them  back,                                                               
particularly  when  the  Lower-48  economy  is  doing  well,  and                                                               
unemployment insurance  is higher.  A worker in  Washington state                                                               
who loses  his/her job will  receive almost 70 percent  more than                                                               
the UI benefits in Alaska.                                                                                                      
                                                                                                                                
He shared  that the Federal  Reserve commented  that unemployment                                                               
insurance  is the  best  economic stimulus  package  a state  can                                                               
offer.  It  is better  than  infrastructure  investment for  mass                                                               
transit  because the  money immediately  goes  into the  economy.                                                               
Former Federal  Reserve Chair Ben Bernanke  said the unemployment                                                               
insurance benefits program spurs growth and creates jobs.                                                                       
                                                                                                                                
CHAIR  COSTELLO noted  who  was available  from  DOLWD to  answer                                                               
questions.                                                                                                                      
                                                                                                                                
2:11:04 PM                                                                                                                    
SENATOR MEYER  asked what  the UI  benefits would  be today  if a                                                               
COLA  had been  in effect  in 2009  when the  benefits were  last                                                               
raised.                                                                                                                         
                                                                                                                                
REPRESENTATIVE TUCK  deferred the  question to Lennon  Weller and                                                               
advised that  HB 142  would increase  the maximum  weekly benefit                                                               
amount (WBA) to $510.                                                                                                           
                                                                                                                                
2:12:17 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:12:40 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
                                                                                                                                
SENATOR  MEYER asked  if  $510 was  a  reasonable weekly  benefit                                                               
compared  to a  cost of  living allowance  (COLA) applied  to the                                                               
2009 benefit.                                                                                                                   
                                                                                                                                
2:13:07 PM                                                                                                                    
LENNON  WELLER,  Economist  and   Actuary  for  the  Unemployment                                                               
Insurance System,  Research and  Analysis Section,  Department of                                                               
Labor  and Workforce  Development, Juneau,  Alaska, advised  that                                                               
the two amounts  are roughly aligned. The  calculation shows that                                                               
for calendar year 2018, the maximum benefit would be $506.                                                                      
                                                                                                                                
SENATOR MEYER asked the derivation of the $510 value.                                                                           
                                                                                                                                
MR. WELLER explained  that when the bill  was originally drafted,                                                               
it  was 50  percent of  the average  annual wage.  The basis  was                                                               
state fiscal year 2016 wages and employment.                                                                                    
                                                                                                                                
SENATOR MEYER  asked if  there was  a surplus  or deficit  in the                                                               
Unemployment Insurance Trust Fund.                                                                                              
                                                                                                                                
MR. WELLER said that as of  February, the fund balance was $442.7                                                               
million.  More importantly,  that corresponds  to a  3.64 percent                                                               
reserve ratio. The  goal is to have a reserve  ratio of between 3                                                               
percent  and  3.3  percent to  handle  increased  benefit  loads.                                                               
"Right now,  we have  what we would  consider full  solvency,  he                                                               
said.                                                                                                                           
                                                                                                                                
SENATOR MEYER  observed that Alaska  is one of just  three states                                                               
where   both   employers   and  employees   contribute   to   the                                                               
unemployment  insurance program.  He asked  if employers  are the                                                               
sole contributors in the other 47 states.                                                                                       
                                                                                                                                
MR. WELLER said yes.                                                                                                            
                                                                                                                                
SENATOR  MEYER  asked  if  the   sponsor  agrees  with  that  and                                                               
questioned whether the employer should be the sole payer.                                                                       
                                                                                                                                
2:16:53 PM                                                                                                                    
REPRESENTATIVE TUCK  said he  would like Alaska  to be  more like                                                               
the other  states, but it's  important to  put this money  in the                                                               
economy now rather  than getting bogged down with  too many fixes                                                               
at one  time. Right now,  the bill  increases the WBA  to DOLWD's                                                               
recommended level and implements an automatic mechanism.                                                                        
                                                                                                                                
2:18:06 PM                                                                                                                    
CHAIR  COSTELLO asked  for an  explanation of  the actual  weekly                                                               
payout.                                                                                                                         
                                                                                                                                
REPRESENTATIVE TUCK  directed attention  to the chart  of numbers                                                               
on  page   7.  He  explained   that  the  numbers   continue  the                                                               
calculation  in  existing statute.  For  every  $250 increase  in                                                               
annual  earnings for  an employee,  the weekly  benefit increases                                                               
$2. Under  the bill,  the maximum weekly  benefit is  $510. Under                                                               
current statute the calculation stops  at the maximum annual wage                                                               
of $42,000. That  benefit would be $370. Anyone  making more than                                                               
$42,500  would still  only  receive $370.  HB  142 increases  the                                                               
maximum base wage calculation to $59,500.                                                                                       
                                                                                                                                
CHAIR  COSTELLO asked  if he  had  run any  economic modeling  to                                                               
determine the impact the bill would have on the fund.                                                                           
                                                                                                                                
MR. WELLER said the economic modeling  on the cost impact of this                                                               
increase goes through 2024.                                                                                                     
                                                                                                                                
CHAIR  COSTELLO asked  him  to share  that  information with  the                                                               
committee.                                                                                                                      
                                                                                                                                
MR. WELLER  advised that HB  142 brings  costs back to  the long-                                                               
term  goals  where financing  of  the  system  tends to  be  more                                                               
reactive and functional. Increases won't  begin to go into effect                                                               
for the average rate class until  2021. At that point the maximum                                                               
cost per  employee is projected to  increase from $70 to  $139 in                                                               
2022 and to  $222 in 2023 before falling back  to a difference of                                                               
$185  over the  baseline  cost expectations  at  the average  tax                                                               
rates for tax classes 10 and 11.                                                                                                
                                                                                                                                
MS. KLOSTER  added that the  packets have some charts  that would                                                               
help with the explanation.                                                                                                      
                                                                                                                                
CHAIR COSTELLO asked, if the bill  were to pass as written, would                                                               
the highest change  be to the $510 per week  or would that amount                                                               
go up over time.                                                                                                                
                                                                                                                                
MR. WELLER  advised that  very little change  is expected  in the                                                               
average  annual  wage through  2024.  As  a result,  the  maximum                                                               
weekly benefit amount is not expected to change through 2024.                                                                   
                                                                                                                                
CHAIR  COSTELLO  asked for  an  explanation  of the  language  in                                                               
subsection (h) on page 9, lines 13-17.                                                                                          
                                                                                                                                
2:26:06 PM                                                                                                                    
REPRESENTATIVE  TUCK replied  that  is  the automatic  adjustment                                                               
factor that  is based  on the average  annual wages  of Alaskans.                                                               
What Mr.  Weller was relating is  that DOLWD expects wages  to be                                                               
stagnant for a while, so  unemployment insurance benefits are not                                                               
going to  increase either.  If there  was a  sudden spike  in the                                                               
economy and wages went  up proportionally, unemployment insurance                                                               
would  also go  up because  it's factored  on 50  percent of  the                                                               
average  annual  wage. That  is  the  calculation in  Section  2.                                                               
Thirty-six  other states  use that  same  calculation, one  state                                                               
uses  less than  50 percent  and some  states use  as high  as 60                                                               
percent of the average annual wage.                                                                                             
                                                                                                                                
2:27:33 PM                                                                                                                    
CHAIR COSTELLO  observed that Section  2 has new  subsections and                                                               
asked if this is a new adjustment.                                                                                              
                                                                                                                                
REPRESENTATIVE TUCK confirmed that was correct.                                                                                 
                                                                                                                                
CHAIR COSTELLO observed that the system is currently static.                                                                    
                                                                                                                                
MS. KLOSTER agreed.                                                                                                             
                                                                                                                                
2:27:58 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 142.                                                                               
                                                                                                                                
2:28:14 PM                                                                                                                    
RYAN  ANDREW,  International  Brotherhood of  Electrical  Workers                                                               
(IBEW) Local 1547,  Anchorage, Alaska, stated he  was speaking in                                                               
support  of HB  142. He  pointed out  that there  hasn't been  an                                                               
increase  in the  unemployment benefit  since  2009, that  Alaska                                                               
        th                                                                                                                      
ranks 37  in  the nation for maximum weekly benefit, and it ranks                                                               
dead last on the wage  replacement ratio. He said Alaskan workers                                                               
employed  in industries  like construction  rely on  unemployment                                                               
benefits to carry them through  the winter when construction work                                                               
isn't readily  available. The  cost of living  is high  in Alaska                                                               
and  $370  a  week  isn't enough.  The  proposed  increase  would                                                               
benefit  both  employees and  employers.  It  would be  a  direct                                                               
benefit  to employees  and an  indirect benefit  to employers  by                                                               
retaining a skilled  workforce. The economy on the  West Coast is                                                               
booming and there  is no economic reason for a  skilled worker to                                                               
return  to  Alaska  once  they've   made  the  decision  to  seek                                                               
employment  elsewhere. He  said the  IBEW apprenticeship  program                                                               
invests 4-5  years and  between $20,000 and  $30,000 to  train an                                                               
apprentice and  it's a blow to  lose those workers to  the Lower-                                                               
48. Increasing the  benefit would encourage workers  to remain in                                                               
Alaska,  even  when  the  economy  is slow.  He  said  it's  also                                                               
important to point  out that paying for  unemployment benefits is                                                               
a shared burden.                                                                                                                
                                                                                                                                
2:31:32 PM                                                                                                                    
SERGIO  ACUNA, representing  self, Anchorage,  Alaska, said  he's                                                               
been a construction  worker for over 22 years and  is speaking in                                                               
support  of   HB  142.  This   much-needed  increase   will  help                                                               
unemployed  workers  and  their  families  while  they  look  for                                                               
another job.                                                                                                                    
                                                                                                                                
2:33:46 PM                                                                                                                    
DOUG   TANSY,  President,   Fairbanks   Central  Labor   Council,                                                               
Fairbanks,  Alaska,  stated support  for  HB  142 and  asked  the                                                               
committee  to consider  the social  factors that  come into  play                                                               
when workers and their families  are stretched beyond their means                                                               
to extend debt. He emphasized  that hard-working Alaskans deserve                                                               
a bill like HB 142.                                                                                                             
                                                                                                                                
2:34:43 PM                                                                                                                    
LAKE WILLIAMS, President, Fairbanks  Building Trades and district                                                               
representative   for  the   International   Union  of   Operating                                                               
Engineers (IUOE), Local 302, Fairbanks,  Alaska, advised that the                                                               
resolution  he introduced  on behalf  of  the Fairbanks  Building                                                               
Trades in  support of HB  142 should  be in members'  packets. He                                                               
said his  members are relying on  unemployment insurance benefits                                                               
more than  ever to  make payments and  feed their  families until                                                               
the next job  is available. This year between 300  and 400 people                                                               
were on the out-of-work list hoping  to go to the North Slope but                                                               
the  jobs were  not available.  He said  another problem  is that                                                               
competition  from  the  Lower-48  is  causing  some  of  Alaska's                                                               
skilled workforce to relocate out  of state. They generally don't                                                               
come back, but some become transient  workers who return to get a                                                               
paycheck then go  back to their new state of  residence and spend                                                               
their  money there.  He opined  that increasing  the UI  benefits                                                               
will help curb this situation. He  urged the committee to pass HB
142 and send it to the governor.                                                                                                
                                                                                                                                
2:37:04 PM                                                                                                                    
DON ETHERIDGE,  Lobbyist, Alaska  AFL-CIO, Juneau  Alaska, stated                                                               
strong support  for HB  142 and requested  the committee  move it                                                               
on. He related  that during the last economic  downturn the local                                                               
labor  union   lost  over  50   percent  of  its   membership  to                                                               
Washington, Oregon,  and Nevada.  Once the economy  recovered the                                                               
union spent  millions of dollars retraining  a workforce. Passing                                                               
HB 142 will help prevent that situation from recurring.                                                                         
                                                                                                                                
2:38:23 PM                                                                                                                    
BARBARA  HUFF-TUCKNESS, Director  of  Government and  Legislative                                                               
Affairs, Teamsters  Local 959, Anchorage, Alaska,  said she would                                                               
not reiterate  the excellent testimony  on HB 142, but  she would                                                               
remind  members that  the  unemployment  insurance, like  health,                                                               
fire, and  home insurance,  provides a cushion  when there  is an                                                               
unexpected economic  situation that folks either  aren't prepared                                                               
for or their  savings can't cover. Without that  cushion many are                                                               
forced  to leave  their community  and/or  state. She  referenced                                                               
Senator Meyer's  comment and advised  that she has never  heard a                                                               
member  complain about  the contribution  they  make towards  the                                                               
unemployment insurance fund. She  said she supports employees and                                                               
employers  both contributing  to this  important insurance  fund.                                                               
She urged support for the passage of HB 142.                                                                                    
                                                                                                                                
2:40:02 PM                                                                                                                    
ANTHONY LADD,  Iron Workers Local 751,  Anchorage, Alaska, stated                                                               
support for  HB 142. He said  it's an understatement to  say that                                                               
an iron  worker's job in  Alaska is  seasonal. He shared  that in                                                               
earlier years he was forced to  fly south to look for work during                                                               
the off season to be able  to support his four kids. He currently                                                               
trains apprentices  and sees  the work and  money that  goes into                                                               
training the  workforce in Alaska.  He opined that when  they are                                                               
laid  off in  the winter  they'll do  nothing but  leave and  get                                                               
their unemployment somewhere else.                                                                                              
                                                                                                                                
2:41:45 PM                                                                                                                    
RODNEY  HESSON President,  Juneau  Building  and Trades  Council,                                                               
Juneau, Alaska,  said the skilled  trades workforce in  Alaska is                                                               
particularly  hard   hit  now  because   members  are   not  only                                                               
relocating  to  find  work  but  many are  also  retiring  at  an                                                               
accelerated rate.  He said it takes  five years to train  an IBEW                                                               
apprentice  and for  them to  leave the  state as  journeymen and                                                               
possibly never  return is expensive  and problematic. We  need to                                                               
keep our workers here in the state, he said.                                                                                    
                                                                                                                                
2:43:05 PM                                                                                                                    
CHAIR COSTELLO closed public testimony on HB 142.                                                                               
                                                                                                                                
SENATOR GARDNER  commented that  she's come  to realize  that the                                                               
bill has  a broader impact  than just protecting the  families of                                                               
people who are temporarily unemployed.  It also addresses keeping                                                               
seasonally or  temporarily unemployed  workers in Alaska  as part                                                               
of a skilled workforce.                                                                                                         
                                                                                                                                
SENATOR MEYER asked for an  explanation of how a worker qualifies                                                               
for unemployment insurance benefits.                                                                                            
                                                                                                                                
2:44:40 PM                                                                                                                    
MR. WELLER explained that to qualify  for UI benefits a worker is                                                               
required  to work  in multiple  quarters and  must earn  at least                                                               
$100 in  a quarter outside  the primary quarter of  earnings. The                                                               
size of  the benefit  is assessed  according to  the individual's                                                               
base period  wages. That  is the  first four  of the  most recent                                                               
five  completed  calendar  quarters.  Seasonality  of  the  wages                                                               
impacts the duration of the benefit.                                                                                            
                                                                                                                                
SENATOR MEYER asked if individuals who  come to Alaska to work in                                                               
seafood  processing plants  would qualify  for benefits  once the                                                               
work ends and they leave Alaska.                                                                                                
                                                                                                                                
MR. WELLER  said yes if  they meet the strict  requirements. They                                                               
must earn at least  $2,500 in wages and at least  $100 must be in                                                               
a  quarter outside  the primary  quarter of  earnings. They  must                                                               
also meet the requirements of being able and available for work.                                                                
                                                                                                                                
SENATOR MEYER  noted the  letters in the  bill packet  from small                                                               
businesses  that  are  opposed  to  HB  142.  He  questioned  the                                                               
opposition if the UI increases would be healthy for the economy.                                                                
                                                                                                                                
MR.  WELLER  replied  it's   understandable  that  employers  are                                                               
concerned about the  increased costs and payroll  taxes, but it's                                                               
important to  keep in  mind that  employers that  have relatively                                                               
stable payrolls  will receive a  tax rate  that is much  lower on                                                               
average. He said it's also  important to understand that there is                                                               
parity  established within  the unemployment  insurance financing                                                               
system.                                                                                                                         
                                                                                                                                
2:49:44 PM                                                                                                                    
REPRESENTATIVE TUCK quoted the Federal  Reserve Bank of Minnesota                                                               
that said,                                                                                                                      
                                                                                                                                
     Despite  years of  research,  the  economic effects  of                                                                    
     unemployment  benefits  are  poorly  understood.  While                                                                    
     intuition  might suggest  that providing  financial aid                                                                    
     to  people who  lose their  jobs would  discourage them                                                                    
     from seeking  new jobs, recent research  has found that                                                                    
     extending benefits has little  effect at the individual                                                                    
     level.                                                                                                                     
                                                                                                                                
One of the reasons is that  the opportunity cost is low. When one                                                               
goes from  unemployed to  employed, they are  willing to  give up                                                               
unemployment  insurance to  get full  employment. This  is unlike                                                               
someone  who  is  considering  opening  a  restaurant  where  the                                                               
opportunity  cost is  high. Those  high  opportunity costs  might                                                               
prevent someone from making the investment.                                                                                     
                                                                                                                                
He said  the solution to  unemployment is creating new  jobs. The                                                               
federal reserve also says that UI  adds to the overall demand and                                                               
overall employment over  what otherwise would have  been if there                                                               
had  been no  unemployment insurance  at all.  It's during  those                                                               
periods of economic  weakness that UI keeps  money circulating in                                                               
the economy. He said some business  groups oppose the bill due to                                                               
the  misunderstanding  of  how  unemployment  insurance  benefits                                                               
affect the  economy. Some people look  at it as paying  people to                                                               
sit at home but that hasn't been the case.                                                                                      
                                                                                                                                
SENATOR MEYER  questioned how raising the  unemployment insurance                                                               
benefits would help the oil industry be more profitable.                                                                        
                                                                                                                                
REPRESENTATIVE  TUCK  agreed  it  would not  help  that  industry                                                               
unless it maintained its workforce in Alaska.                                                                                   
                                                                                                                                
SENATOR  MEYER  commented  on the  importance  of  maintaining  a                                                               
skilled workforce in Alaska.                                                                                                    
                                                                                                                                
2:53:02 PM                                                                                                                    
CHAIR COSTELLO thanked  the sponsor and stated she  would hold HB
142 in committee.                                                                                                               

Document Name Date/Time Subjects
CSHB301(HFIN) ver L 3.2.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
CSHB301(HFIN) Sponsor Statement 1.24.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
CSHB301(HFIN) Explanation of Changes ver D to ver L 3.2.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
CSHB301(HFIN) Supporting Documents ABC Memo Tourism BDL 1.23.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
HB301-DCCED-AMCO-01-25-18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
CSHB301(HFIN) Support Letters 2.12.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 301
CSHB142(FIN) ver R.PDF SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) ver R Sponsor Statement 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN)Sectional Analysis ver R 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Bullet Points One Page 2.9.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Additional Document - Updated facts from DOL 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Additional Document - MWBA Charts from DOL 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Additional Document-Letters Ed Flanagan 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Additional Document-UI Information 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
HB142-DOLWD-UI-01-26-18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
HB142-OOG-OMB-01-31-18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Memo of Changes 3.19.18.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Letter Associated General Contractors of Alaska.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Opposition Letter Midnight Sun Home Care.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Letter of Support Laborers Local 942 (2).pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Letter of Support Laborers Local 942.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Support Letter IBEW.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Support Letter KC General Contractors.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN)Support Letter LU1959.pdf SL&C 4/10/2018 1:30:00 PM
HB 142
CSHB142(FIN) Letter of Support Alaska District Council of Laborers.pdf SL&C 4/10/2018 1:30:00 PM
HB 142