Indiana's system of unemployment insurance moved into the mid national average category in 1995, when comparing benefits. This came about when labor and business worked together to improve the system for all parties involved.
The system still needs improvement, and we must make minor changes in 2000 so that we can maintain our current national benefit raking.
The ratio of the average weekly benefit payment ($207.62) of unemployed Hoosiers to the average weekly wage ($556.66) of employed Hoosiers, consistently declined even with minor benefit level adjustments. Nationwide the ratio of the average weekly benefit payment to average weekly wages is 34.6 percent. Average Weekly Benefits increased from 48th ranking in 1992 at $120.81 to 26th ranking in 1999 at $207.62. However, the employer tax rate on total wages has held steady at .40% since 1992, which is 33% BELOW THE NATIONAL AVERAGE, with the average employers tax rate being 0.6%. This is accompanied by a taxable wage base of $7000 which is 38% BELOW THE NATIONAL AVERAGE. This also means 54% of the employers only pay an annual unemployment tax of $14 per year, per employee. These changes, under normal economic rules, should have resulted in a decrease of the U.I. Trust Fund account balance. HOWEVER, the Trust Fund Balance increased in the years (1990 - $823.4 million;)( 1991 - $890.2 million;) and, (1992 - $923.5 million). The Trust Fund Balance as of (June 1999 was $1,485,673,000 B-I-L-L-I-O-N dollars) and is continuing to increase. Since the balance in the trust fund does not decrease, the U.I. System in Indiana is out of synchronization with the economy, apparently due to stringent eligibility rules.
Addressing an adequate benefit amount in Indiana, will require the state to address the financial underpinning of the system. From the inception of the Unemployment Insurance System, in 1937 in Indiana, the ratio of taxable wages to total wages has consistently and markedly declined to the present day. A system which allows a constant decline in the real taxable wage base is unable to support the increasing long term liabilities of the system. The liability grows with total wages. Dealing with this problem should not be deferred any longer.
The $7,000 taxable wage base has not been adjusted since 1983. Indiana is part of a dwindling minority of states who have not taken the initiative to preserve the financial integrity of its unemployment insurance system. Most states have adjusted the taxable wages to keep pace with the growth in total wages of the workers.
The Indiana State AFL-CIO supports legislation that will reform Indiana's system of unemployment insurance in the following manner:
- Eliminate the present requirement that eligible individuals be required to serve a waiting period of one week before they receive benefits.
- Eliminate the requirement that an employee who is discharged for violation of a no-fault attendance policy is considered to have been discharged for good cause.
- Provide that school employees who do not work in an instructional, a research, or an administrative capacity are eligible for unemployment compensation during the summer. (Federal Conformity Issue)
- Increase the maximum weekly benefit amount (MWBA) to no less than two thirds (2/3) of the average weekly wage (AWW).
- Appropriately adjust the taxable wage base to adequately cover any benefit increase.
Provide an emergency rate schedule to be added to the current tax rate table. For example, when the trust fund falls below one-half of one percent of the total of payroll of all employers, the special rate table would go into effect. This rate table would be considerably higher than the now highest schedule. The purpose would be to keep the trust fund from becoming insolvent and avoid the need to borrow to pay benefits. |
