Restore Balance Solution

Reform Unemployment Compensation

Background:  A joint legislative interim committee (Judiciary subcommittee) has proposed increasing the base wage amount (subject to the state’s Unemployment Compensation tax) from the current $8,000 level to $12,000. 

Result: This would result in a 50 percent increase in this tax on state employers – large and small.

Issue

West Virginia ’s unemployment compensation laws and policies are “out of step” with nearly all other states.  West Virginia is only one of a very small number of states that provides unemployment compensation benefits to workers involved in work stoppages or strikes.  Estimates are that the state unemployment comp system has paid out millions a year in benefits to workers involved in a work stoppage. In addition, the program is unique in that it awards benefits to employees discharged, even for cause.  Outrageous examples involve instances where benefits have been awarded to terminated employees even in cases of gross misconduct, such as failing workplace drug tests for heroin, cocaine and other illegal substances. In another recent situation, employees of one major employer who took an early retirement financial package in early 2005, filed for and received unemployment compensation benefits. Why are people who elected voluntarily to take an early retirement package, eligible for these benefits? These are generally reserved for those who lose their jobs due to unfortunate business or economic conditions.

These situations drain and undermine unemployment compensation funds for legitimate claims – current and future.  The state’s unemployment compensation trust fund would be in a much better financial condition if it did not provide payments to striking workers or to those discharged for drug-related matters.

Talking Points:

• The state’s unemployment rate has dropped over the past two years from the highest in the nation to now being below the national average. 
• The state’s unemployment rate in December 2005 (4.2 percent) actually was the lowest on record.
• Job growth is on the upswing in the Mountain State .
• The amount of dollars in the state’s unemployment compensation trust fund has increased by nearly 50 percent in the past 18 months.
• This “tax hike” is unnecessary and will only hinder employment and wage growth.
• There is no crisis in the state’s unemployment compensation program.

Needed Reforms

If any legislation is to be considered at this time regarding West Virginia ’s unemployment compensation program, then reforms need to be enacted to modify the state’s unemployment compensation program to bring it in line with nearly all other states.  Needed changes include:

• eliminating “out of step” provisions that award benefits to striking workers;
• awarding of benefits to temporary workers who decline new assignments; and
• mandatory disqualification from unemployment comp benefits if a worker is terminated for failing a workplace drug or alcohol test.

News/Opinion:

Editorial: Strike This
W.Va. shouldn’t subsidize one side of a labor dispute
Charleston Daily Mail, March 26, 2005