WARNING: Unless state lawmakers act, Pennsylvania could lose out on hundreds of millions of stimulus dollars earmarked for helping the unemployed.
The money, about $273 million, is part of the $787 billion recovery package signed into law by President Obama in February. In order to qualify for the funding, Harrisburg will need to change our unemployment law to make it easier for people to qualify for benefits.
Here is how unemployment insurance works: Every employer is required to pay into an unemployment trust fund that provides weekly benefits for people who lose their jobs. The amount of the payments depends on how long someone was employed and how much they earned, but the average in Pennsylvania is $320 per week.
But Pennsylvania's rules are outdated and will need to change if we're going to get our share of federal funds. Work done in the present and previous quarter does not count towards benefit calculations. That's because the entire system used to be run by pencil and paper, making data collection too complicated to include the most recent information. New computer technology has made this outdated.
State officials estimate that changing the rules would make about 29,000 additional people eligible to collect unemployment. That would cost about $69 million per year, but it would be covered by federal funds for at least four years. Those payments wouldn't just be good for people who have lost their jobs. It would mean additional dollars being pumped into our economy, generating business activity and tax revenue.
Opponents of changing the rules argue that making it easier for people to qualify for benefits will cost too much. They point out that as soon as the stimulus funds run out, Pennsylvania will have to pick up the tab. There are two problems with this argument. First, it assumes that unemployment will stay at the same rate indefinitely. If the recession lasts that long, we'll have a lot more problems than unemployment compensation. Second, if the price does become too high, the state can always change the rules back to make fewer people eligible.