March 28, 2011

Pennsylvania Will Have To Borrow To Meet Unemployment Benefits Thru 2018

Interim Labor and Industry Secretary, Patrick Beaty, told the Senate Appropriations Committee today, the state will be forced to borrow to meet its unemployment compensation benefit obligations for the foreseeable future, which means at least through 2018.
            As a result, Pennsylvania employers will see their costs for unemployment insurance per employee on the first $8,000 in wages increase by $56.20 for the coming year and up to an estimated $190 per employee by 2018, if there are not other changes in law.
            Beaty is the Interim Secretary because Gov. Corbett has not yet nominated an Acting Secretary for the agency.
            Here's a quick summary of some of the other issues discussed:
Loss Of Unemployment Benefits: Beaty said about 108,000 people in Pennsylvania have exhausted their unemployment benefits this past year and 150,000 more employees are expected to exhaust their benefits in the coming year.
            As a result of the unemployment rate in Pennsylvania dropping to just above 8 percent, the maximum number of weeks of unemployment benefits available in the state is now 93 instead of 99 weeks by action of federal law.
            Beaty anticipates the state unemployment rate will drop below 8 percent in the coming months and as a result, the total number of weeks of benefits available will be 73 weeks, again as a result of federal law.
Workforce Development: Beaty said the administration does not yet have a complete plan for how to reorganize the state's workforce development programs to save money and to make them more effective.  He noted community colleges will be an important part of the workforce programs under any scenario, but as an Interim Secretary, he is not privy to the Administration's future plans at this time.
Sprinkler Requirement: In response to questioning on the Uniform Construction Code and the sprinkler requirement, Sen. John Gordner (R-Columbia), Majority Chair Senate Labor and Industry Committee, said his Committee plans to take up the House Bill 377 (Everett-R-Lycoming) at a meeting in April to deal with the sprinkler and log home issues as well as the process issues of automatically adopting future updates to the Code.
Search For Work Requirement: Beaty said Pennsylvania is one of only a handful of states which do not have a requirement that those receiving unemployment compensation must also be actively looking for work to continue to receive those benefits, in response to a question from Sen. John Blake (D-Lackawanna).
Prevailing Wage: Sen. Lloyd Smucker (R-Lancaster) expressed concern about the impact prevailing wage requirements have in raising the cost of public projects at a time when public funds are scarce.  In some cases, Sen. Smucker said, the wages are significantly above local wages.  He noted there have been some proposals to put a moratorium on applying prevailing wages to save taxpayers money.
            Beaty said prevailing wages are determined based on sources of information in the law and if the law was changed other information could be used.