Employees may have to pay into jobless-benefit fund

Bill tries to address solvency; employers would still pay 90%.

A proposal to COLUMBUS — shore up Ohio’s unemployment-compensation fund would draw millions of dol- lars from workers because they would be required for the first time to contribute to jobless benefits.

Under House Bill 382 intro- duced by state Rep. Kirk Schuring, R-Canton, new premiums charged to employees would begin in 2019, gener- ating $125 million that year. That would equal 10 percent of the unemployment taxes paid by employers, who also face a rate increase.

Total premiums paid by workers would increase to $140 million by 2030, remain- ing at 10 percent of employer contributions to the fund.

For a worker, the annual premium would range from $5.50 to $112.20 a year, or $0.46 to $9.35 a month, according to data provided by Schuring.

Rates were calculated based on employee earnings and how frequently their employer uses the unemployment-com- pensation system. Workers for employers that seldom impose layoffs — retailers are an example — would pay the lowest rates, while workers for employers such as construc- tion companies that frequently let employees go would pay the highest.

Schuring, who was tasked by the House GOP leadership with crafting an unemployment-fund fix, said his aim is to restore solvency to Ohio’s system with equal contributions from businesses and workers.

The rates are “not burdensome,” Schuring said, adding, “It’s common practice for benefit costs to be shared by employers and employees, like health care.”

An analysis by the non- partisan Legislative Service Commission found that from 2019 to 2030, employees on average would cover 50.5 percent of the cost of the bill, while employers would pick up the rest. If there is a recession during that time, employees would pick up an estimated 51.5 percent of the cost.

If the bill is passed into law, Ohio would become the fourth state to require employee contributions, following Alaska, New Jersey and Pennsylvania.

Although both business and labor groups say the bill needs work, advocates for workers say they generally support modest contribu- tions from employees as part of a broader fix.

“We favor an employee tax to avoid a benefits cut,” said Zach Schiller, research director at Policy Matters Ohio, a liberal research group in Cleveland that made such a proposal last year. “That said, we have concerns about ele- ments in the bill.”

While not endorsing the bill, Matt Szollosi, executive director of the Affiliated Construction Trades of Ohio, which represents construc- tion workers, said he also supports the idea of employee contributions to avoid deeper cuts in jobless benefits.

“Our workers rely on benefits, so this is appealing to us,” Szollosi said.

Still, Szollosi said, premiums charged to employers and employees might be overly complicated and place heavy administrative burdens on employers.

He also questioned whether the bill would meet its goal of restoring the fund to solvency.

The House recently began hearings on the bill and is certain to require changes before the bill could win passage in the Republican-controlled legislature. In addition to creating the premium for workers, the bill would reduce jobless benefits and increase employer taxes, drawing criticism from both sides.

Schuring, who earlier this year led meetings with business and labor that failed to produce a compromise, acknowledged that the bill needs changes but said the legislation is necessary. “It’s a starting point.”

In the aftermath of the Great Recession, Ohio’s fund went broke, and businesses paid years of higher federal unemployment taxes to pay off the state’s $3.4 billion debt to the federal government.

State officials have cautioned that under current law, the unemployment-compensation fund is projected to become insolvent in 2021 with no recession, and in 2020 with a moderate recession. The bill, if passed, would allow the fund to remain solvent through 2030 without a recession, and insolvent in 2021 with a moderate recession, although it would recover quickly.

Among other changes, the bill would raise the wage base on which employers pay tax from $9,500 to $11,000, freeze benefit levels for 10 years, and reduce the weeks of available benefits from 26 to 24 with some exceptions.