Many workers ineligible for extended unemployment benefits

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Posted 8:01AM on Monday, March 18, 2002

WASHINGTON - As many as 4 million people could receive extended unemployment benefits under economic recovery legislation signed into law by President Bush. But Anthony Walker, who was laid off in January from a parking garage, will not be one of them. Walker is among the 43 percent of unemployed workers ineligible for even regular benefits because of what some experts say is a Depression-era system that fails to meet the needs of today's work force. "In most states, unemployment insurance isn't a true safety net, but a series of gaping holes loosely strung together," said Jeffrey Wenger, a labor economist at the Economic Policy Institute in Washington. The unemployment insurance program is a federal and state partnership that pays benefits to unemployed workers who have lost jobs through no fault of their own. Benefits are collected from employers through payroll taxes, and provide partial, temporary replacement of lost wages. States set their own eligibility and benefit levels with federal guidelines. Only two states directly tax workers. Walker mistakenly thought he would get financial help when he was let go. "I didn't ask to be laid off," said Walker. He held a $7.15 an hour job at a Silver Spring, Md., parking garage. But he did not qualify under the formula most states use to determine eligibility and benefit levels. The first four of the last five completed calendar quarters are counted, and a worker must be employed for at least two quarters during that time and wages must meet a certain level. The unemployment office says Walker was not employed at the garage for two full quarters during the eligibility period. "Why am I being penalized?" he said. "I did not quit. I did not get fired." Although the yearlong recession appears to be over and companies started adding employees again last month for the first time in seven months, people looking for work should not count on immediate relief. Even with the unemployment rate dropping to 5.5 percent last month, jobs are not plentiful yet. Economists say companies will remain skittish about hiring back workers until a full economic recovery is under way. "This isn't just a recession problem," said Jeff Faux of the Economic Policy Institute, a think tank financed partly by labor. "The new economy is characterized by widespread job insecurities. Working life has changed dramatically." Today's work force has more part-time workers, temporary workers, contingent workers, contract workers and seasonal workers than ever before, yet the unemployment insurance system has not changed. It was created in 1935 as part of the Social Security Act to help unemployed workers and to stabilize the economy by giving them money to buy food, clothing and other essentials. The payments only cover a portion of lost wages to encourage workers to quickly find replacement jobs. Nationally, the program replaces about 47 percent of a worker's lost wages. The average weekly benefit is $237.78. In most states, the maximum time a worker can receive benefits is 26 weeks. Washington and Massachusetts offer 30 weeks. The economic recovery package signed by Bush provides an additional 13 weeks of unemployment assistance, with a trigger allowing automatic renewal in states where the jobless rate exceeds 4 percent. The Bush administration has proposed changing the system by shifting administrative costs to the states while cutting the federal payroll taxes that businesses pay - now 0.8 percent of the first $7,000 a worker earns, or a maximum of $56 per worker. States have complained that the federal government keeps too much of the money in a trust fund and fails to send enough to the states for administrative costs. But no changes would be made to encourage states to increase eligibility or benefit levels. "We continue to maintain that states are best positioned to make those determinations," said Mason Bishop of the Labor Department's Employment and Training Administration. The Employment Policy Foundation, a business-supported think tank, says the number of unemployed who do not qualify for benefits is being overblown. The system was not meant to cover people who leave their jobs voluntarily or new entrants to the labor force, who are counted as unemployed, the foundation said. Walker and others without a continuous work history do not qualify. Some experts say the system particularly hurts women, lower-wage workers who often are the first to be laid off in a downturn, and former welfare recipients required by law to work and are just now joining the labor force. Wendell Primus, director of income security at the liberal Center on Budget and Policy Priorities, says that recent work experience, such as the current quarter and previous quarter, should be counted in determining eligibility. Under the current system, a welfare recipient who joined the work force in June and was laid off this month would qualify for benefits in only 12 states, he said. In 31 states, to receive benefits a recipient must be available for full-time work, even if that person was working only part-time previously. That limitation hits single working mothers who may not be able to work 40 hours a week because of child care concerns, experts say.