A bill that ties the amount of weekly jobless benefits Louisianans can receive to the state’s overall unemployment rate could upend the state’s unemployment insurance system, according to the secretary of the Louisiana Workforce Commission.
House Bill 340, authored by Rep. Troy Romero (R-Jennings), passed the state House of Representatives earlier this month on a 66-37 vote. Under the terms of the bill, when the state’s jobless rate is below 5%, as it is today, the number of weeks of insurance benefits a laid-off worker could claim would be 12. Under current law, laid-off workers can claim up to 26 weeks of jobless benefits.
The number of weeks an unemployed worker could claim under the bill, however, would be indexed based on the state jobless rate. If the average unemployment in the state were to rise to 8.5% or more, laid-off workers could collect 20 weeks of unemployment benefits.
“This would hurt a whole lot of people trying to get back on their feet after losing a job,” Ava Cates, secretary of the Louisiana Workforce Commission, told the Louisiana Record.
Supporters of indexing unemployment benefits to jobless rates, however, say that it helps reduce program costs and ends the disincentive which keeps people from returning to the workforce when they have lengthy benefits.
But Cates said the bill is problematic because Louisiana accepted funding from the American Rescue Plan Act to replenish the state’s unemployment insurance trust fund during the COVID-19 pandemic. Though the trust fund now has about $900 million, a large portion of that money might be at risk if the state reduces its jobless benefits, which currently amount to $275 per week.
“$500 million of that could be in jeopardy,” Cates said. “There’s a big question about that … if the state takes this action.”
She also pointed out that more than 2 million Louisianans are employed, more than at any time in the state’s history. Though HB 340 aims to fill the 50,000 to 100,000 current job openings in the state, in any given week only 8,000 state residents are receiving jobless benefits, Cates said, so the bill would not bridge the gap between job openings and available workers.
In addition, many laid-off workers need time to retrain before re-entering the workforce, so more limited insurance benefits could hinder efforts to update people’s skills so they can return to the labor market, she said.
To fund the unemployment insurance program, Louisiana employers only pay taxes on employees’ first $7,700 in wages – one of the lowest thresholds in the nation, according to Cates.