Tenn. House GOP targets jobless benefits
Senate resists cutting duration to 12 weeks
Tennessee House Republicans want to slash the length of time a person can collect unemployment checks by as much as half, a measure they argue would save tens of millions of dollars in a state that already has one of the lowest jobless benefit rates in the nation.
The idea, championed by House Speaker Cameron Sexton and other members of the chamber’s GOP leadership, is to reduce the maximum number of weeks a Tennessean can collect the benefit — which could drop to 12 weeks from the current 26, depending on the state’s unemployment rate.
It has stalled in the Senate, however, where the current bill sponsor said he has no intention to move the bill forward, while Lt. Gov. Randy Mcnally said more work needs to be done on the legislation.
Rep. Kevin Vaughan, a Collierville Republican carrying the bill, said the proposed change would help replenish the state’s unemployment trust fund balance, which has remained below the federally recommended level for years.
Maximum payment period tied to unemployment rate
As of February, Tennesseans who claim unemployment benefits received an average weekly benefit of $217, federal data shows. They are eligible for up to 26 weeks of regular benefits.
The proposed House amendment would increase the weekly payments by $5 for all qualifying applicants. But under the formula floated by Vaughan and Sexton, benefits could max out at 12 weeks beginning in July 2023 — the lowest length of time in the nation.
The formula would tie the maximum payment period to the state’s average unemployment rate. Under the bill, the rate would be calculated biannually.
If the unemployment rate sits at 5.5% or below, the benefits would be capped at 12 weeks. The payments are extended one week for every 0.5% the rate grows. At an unemployment rate of 9% or above, the benefits would max out at 20 weeks.
Tennessee’s annual average unemployment rate seldom rose above 9%, according to a Tennessean analysis based on data from the Department of Labor. The average unemployment rate from 1967 through 2020 stands at 6.3%, which means Tennesseans would be more likely to see their payments capped at 13 to 14 weeks.
Tennessee’s unemployment rate averaged 7.5% in 2020 amid the pandemic, which is twice as high as the average figures in pre-pandemic 2018 and 2019.
Budget information filed with the amendment projects a savings of as much as $27 million annually, if the proposal is enacted.
Senate pushes back on House effort to drastically cut jobless benefits
Sen. Art Swann, who is the sponsor of Senate Bill 1402, said Thursday the legislation was a “caption bill,” meaning it was a placeholder at the time it was filed and intended to be changed later.
“It was not a bill that I drafted,” said Swann, R-maryville.
While the Senate bill was scheduled to be taken up in the commerce and labor committee Wednesday, Swann said that was because of a miscommunication and he never intended to present the bill or add the House amendment.
He said in an interview he was OK with Tennessee’s current unemployment benefits, including both the rate and the 26-week period they are offered.
Adam Kleinheider, a spokesperson for Mcnally, R-oak Ridge, said Thursday the final bill would not be what is currently proposed in the House.
“It is Lt. Governor Mcnally’s understanding that the bill is not in its final form,” Kleinheider said. “He intends to work with the House and Senate sponsors to find the proper balance of benefits so Tennessee workers have a reasonable safety net as well as an incentive to return to work as soon as possible.”
Sexton, R-crossville, said Thursday the amount of the weekly payment increase could be changed again from the currently proposed $5 bump.
House Republican Caucus Leader Jeremy Faison of Cosby said some business owners in East Tennessee, like himself, have struggled to find workers. He said they are “excited about us quitting with the government subsidies right now.”
“The notion of us just continuing week in and week out of paying unemployment when there are jobs readily available from one end of this state to another is really bad government,” Faison said. “And we’re encouraging people to just sit still instead of be productive.”
“If we want to grow the trust fund, there’s only so many levers that we can pull. And one of those is shorten the period of benefits.” Rep. Kevin Vaughan R-collierville
Vaughan: Shortened payment period a way to replenish trust fund balance
In an interview, Vaughan pointed to the state’s unemployment trust fund balance as a reason to adjust the benefit structure.
The state’s fund balance has remained below the federally recommended solvency level since 2014, according to Department of Labor statistics. One analysis by the Tax Foundation, a Washington, D.c.-based think tank, estimated in June that Tennessee would deplete its trust fund in 12 weeks.
Tying the unemployment rate to the maximum payment period, Vaughan said, allows the state to keep money in the trust fund when the economy is strong.
“If we want to grow the trust fund, there’s only so many levers that we can pull,” he said. “And one of those is shorten the period of benefits.”
Vaughan said he believes 26 weeks of benefits is excessive. He said the status quo seems to have encouraged people to rely on unemployment benefits instead of actively seeking employment.
“(The unemployment benefit) shouldn’t be meant to supplement or change someone’s lifestyle,” he said. “It’s meant to get them from one job into the next.”
Reach Natalie Allison at nallison @tennessean.com.
Reach Yue Stella Yu at yyu@tennessean.com.