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In advance of Senate consideration of an unemployment compensation benefit extension bill, the PA Chamber issued a memo reminding lawmakers that the state’s UC system has morphed beyond its original safety net intent.

Senate Bill 1375 is necessary to allow Pennsylvanians currently receiving unemployment compensation to maintain eligibility for federally-funded extended benefits. The PA Chamber does not oppose the extension, based on its support of a UC system that provides assistance to workers with a clear attachment to the workforce who are out of work due to no fault of their own. The legislation passed the full Senate on Tuesday, Jan. 23 and now awaits consideration by the House Labor and Industry Committee.

However, UC eligibility in Pennsylvania has been increasingly liberalized over the years, which, combined with the recent recession, has resulted in the state borrowing more from the federal government for UC payouts than almost any other state in the nation. In its memo, the PA Chamber stressed that in light of the state’s $4 billion UC Trust Fund debt, it is unwise to allow tens of millions of additional dollars into the system without first helping to direct those benefits in a fiscally responsible way toward those who have truly earned them.   

Rather, PA Chamber members support proposals that would tighten UC eligibility guidelines and begin to address the UC Trust Fund’s insolvency. Some of these reforms were realized through Act 6 of 2011, which began to slow the UC Trust Fund’s steady growth. The law also requires claimants to prove they are actively looking for work, and includes a 40 percent offset to prevent recipients from collecting severance pay and UC benefits at the same time.

Accompanying pending reforms, such as Senate Bill 1310, which awaits a final Senate vote, would address the UC Trust Fund debt crisis by permitting bonds to be issued in an amount that would pay off the federal debt in full and improve the fund’s cash flow. The bill also would establish a temporary amnesty program allowing delinquent businesses to waive 50 percent of their interest payments if they pay the principal debt in full; and would authorize the Department of Labor and Industry to target businesses evading UC taxes and recoup illegitimate overpayments to claimants. These and other provisions in S.B. 1310 would save Pennsylvania businesses between $160 million and $256 million – a welcome relief to job creators still struggling in an uncertain economy.

The PA Chamber applauds elected officials for engaging in UC reform discussions, and stresses the importance of policies that take the UC Trust Fund’s insolvency into account and restore the UC system to its intended purpose – providing a temporary financial safety net for the involuntary unemployed. While Senate Bill 1375 is well intended because it preserves UC benefits for many individuals who truly need it, amendments need to be adopted to ensure that the bill will work to improve and strengthen the UC system, guaranteeing its future viability.  

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.