By Dustin Pugel
The COVID-19 pandemic is causing business closures and a drop in consumer spending that is resulting in major, widespread layoffs across every Kentucky community. The state could lose 67,000 jobs by the summer, according to one estimate that may prove conservative. Especially hard hit industries like restaurants and retail make up 25% of all private sector jobs in the state.
As Kentuckians ride out the COVID-19 crisis, unemployment benefits will be absolutely crucial to families paying their bills and meeting their basic needs. When we emerge on the other side, these benefits will be essential to stimulating the economy and getting it back on its feet.
Yet too many workers who lose jobs and hours from the crisis are not eligible for unemployment benefits. There are simple improvements that can make a big difference, most of which have already been adopted by other states.
These changes are included in Senate Bill 150, bipartisan legislation that passed the House 84-0 and now awaits approval by the Senate when it returns next week.
SB 150 gives the governor the authority to modify unemployment benefits in this crisis, including in the following ways:
Adopt an “Alternative Base Period” (ABP) as 41 other states have done. This creates an additional method to determine if someone has earned enough to qualify for UI benefits and how much they will receive. By one estimate, not having an ABP in Kentucky leaves out 1 in 5 workers, who are likely to earn low wages and work part-time jobs. As restaurants and bars close, and as a stalled economy ends seasonal work like construction, adopting an ABP is a critical improvement to our UI program, and requires a change to the law.
Offer benefits for workers reduced to part-time through a work sharing program as 27 other states have done. Short-time compensation or work sharing reduces layoffs by giving employers the option of allowing full-time employees to have their hours reduced to part time rather than being laid off, and have the lost wages partially replaced through UI benefits. By keeping workers attached to their jobs, it helps employers retain their workforces and reduces family stress and instability.
Waive the charge to employers who experience high rates of layoffs because of coronavirus. Currently, UI benefits are paid for by a tax on employers which varies depending on how often and by how much they lay off workers. Waiving the related “experience rating” for employers directly impacted by COVID-19 due to an illness in the workforce or direction from a public health official to quarantine workers would help reduce further economic harm.
Broaden our “good cause” definition of leaving employment. Kentucky’s definition extends only to being laid off because the employer didn’t have work for the individual, but the state could broaden this definition to include an individual voluntarily leaving a job because of caretaking responsibilities for a sick or quarantined loved one or leaving because it is unsafe at their place of work – which will be especially pertinent as COVID-19 becomes more widespread.
Eliminate the “waiting week.” Currently, Kentuckians who qualify for UI benefits are not given the benefits for the first week of their eligibility, and although the Governor has signed an executive order to waive this on a short-term basis, the General Assembly should make its elimination law.
These measures will help workers and the economy, and open up the state for significant federal financial assistance. The bipartisan Families First Coronavirus Response Act that is now law makes millions of federal dollars contingent on some of the changes included above, and future stimulus bills will likely do the same. A federal boost will be critical to the long work of recovery.
Social distancing necessary to reduce the spread of COVID-19 are causing widespread unemployment as businesses close and people spend less in the economy. To weather the crisis and recover more quickly, we need to mitigate the resulting financial hit families will take. SB 150 makes changes that are right for Kentuckians and the economy.
Please call the legislative hotline at 1-800-372-7181 and tell your senator to vote yes for SB 150 as passed by the House.
Dustin Pugel is senior policy analyst with the Kentucky Center for Economic Policy.