Not working: State response to the unemployed

VARIOUS ECONOMIC indicators are sending "mixed messages" about whether this monstrous recession is finally over.

But to millions of Americans, the message isn't mixed at all. It's NO, pure and simple.

The recession may have ended according to some technical definition used by economists who are presumably still collecting paychecks. It continues to rage for some 900,000 Pennsylvanians who are unemployed or under-employed.

So Pennsylvania has no excuse for failing to claim $270 million in federal stimulus funds for unemployment benefits for 10 months now, meaning an estimated 29,000 Pennsylvania workers who ought to be getting unemployment compensation are going without an average $320 a week.

There's no excuse but there is a reason: politics.

As part of the American Recovery and Reinvestment Act, the federal government offered the states $7 billion for unemployment benefits in exchange for updating their eligibility rules for getting unemployment. Pennsylvania's take would be $270 million, but only if it does what 36 other states already do: Count the previous four full quarters in calculating an applicant's time worked and wages earned. Right now, Pennsylvania doesn't count either the quarter in which the worker lost his or her job or the previous full quarter. This means thousands of people are diqualified from getting benefits right after they lose their jobs, even though they and their employers have paid into the system. It's unfair.

The rule hits hardest the very people who need the benefits the most: those with shorter work histories or less-steady employment - for example, construction workers, seasonal workers and new workers like recent high school and college graduates. These are, of course, the people most likely to put the money in circulation, thereby aiding the state's economy as a whole. They also are the people most likely to be in danger of losing their homes or defaulting on other bills, which hurts the state's economy as a whole. The change in eligibility would cost $69 million a year, so the $270 million would cover the benefit payments completely for four years - and do it now when it's most needed. But as we have witnessed throughout the past year, some Pennsylvania legislators want to increase benefits to nobody no-how, especially if it looks like President Obama might get any of the credit, and even though there's no rule that they would have to continue the benefits after four years. But there's another agenda - you should pardon the expression - at work here. The debate over the stimulus money is being tied - unnecessarily in our view - to a larger issue over flaws in Pennsylvania's Unemployment Compensation Trust Fund. The fund is broke and paying out benefits with money borrowed from the federal government. One likely reason: Pennsylvania employers pay a tax on only the first $8,000 of an employee's income, a base that hasn't changed since 1984, even though salaries and unemployment benefits have gone up substantially since then. An advisory council of legislators, business leaders and representatives of organized labor has been meeting for a year to figure out a way to make the system solvent. There's no recommendation yet, but the fix could involve increased employer payments into the fund. Holding up the stimulus funds could provide excellent leverage in these negotiations.

But people aren't leverage, at least they shouldn't be. Changing eligibility rules should be the subject of legislation apart from the negotiations over the Trust Fund. Legislators who oppose it should be forced to explain why they want to deny their constituents this money. *