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Letter: An update on unemployment insurance reform

To the editor:

While the exact end-date is uncertain, the Vermont Legislature is entering its final weeks of the 2021 session. I want to give an update on S.10, a bill on which the House Commerce and Economic Development Committee has spent a great deal of time.

This bill addresses issues facing Vermont’s Unemployment Insurance (UI) system due to the pandemic. As the state faced an unprecedented spike in job-loss due to COVID-19, a number of federal and state actions were taken to protect workers and businesses.

For workers, additional federal and state bonus payments were provided, the work-search requirement was suspended, and a program was created to provide unemployment to the self-employed and independent contractors. For employers, their unemployment taxes did not increase due to layoffs occurring during the pandemic and programs provided loans and grants to help keep workers employed.

As the legislature decides the best path forward for the UI system, the Commerce and Economic Development Committee has suggested some significant changes to the Senate’s bill. The committee proposes that 2020 be removed from the tax calculation that determines the rate employers pay into UI. This calculation typically adjusts these tax schedules to ensure that the UI fund has enough in reserve to cover periods of high unemployment.

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However, the 2020 unemployment numbers are so unusual that employers’ taxes would increase to the maximum bracket and the fund would be replenished to over $1 billion (there is wide agreement that this is approximately $400 million more than the fund needs). Removing 2020 from the tax calculation will keep $400 million working within Vermont’s economy.

The committee also recommends removing a new $50-per-week benefit for UI recipients with dependents (the Senate’s version sought to add this benefit for five years). While all agree that no child should suffer due to a parent’s loss of income, there are other supports within the state that are better able to provide additional assistance to those in need (and through other state agencies, Federal relief dollars may be available for this purpose). The addition of these UI benefits would represent a significant and long-lasting change to the system, the impacts of which are not clearly understood.

The House will soon vote on these recommendations. As our economy continues to recover, the Commerce and Economic Development Committee’s work on S.10 would transition the UI system back to its normal function, ensure the UI fund is rebuilt for the next recession, and help businesses and Vermonters return to work.

Michael Nigro

Bennington

The author represents the Bennington 2-2 district in the Vermont House of Representatives.


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