Everybody who follows the news makes the logical connection between job layoffs and state unemployment benefits. But it may come as a surprise that the current system allows “furloughed” workers to collect, too, as well as those who are only off the job for a day.
It’s a routine practice employed by seasonal Vermont businesses, says State Rep. Warren Kitzmiller, chair of the House committee with jurisdiction over the unemployment insurance system. And because Vermont has so many seasonal workers, the state has by far the highest “negative balance” in unemployment benefits per employer among the 50 states, he notes.
The term refers to the difference between the amount of money an employer pays into the unemployment insurance fund through taxes and the amount of benefits that firm’s workers draw from it. Nationally, companies with a negative balance are in the red by an average of $204 per unemployed worker. In Vermont, the average is $9401 — or more than 40 times the national figure, Kitzmiller says.
This whopping negative balance helps explain why Vermont’s unemployment fund is expected to be fully depleted by early next year. Labor Commissioner Patricia Moulton Powden said last week that the fund is on track to pay out $160 million this year but will take in only about $55 million in payments from employers. Taxes levied on businesses and nonprofits constitute the sole source of revenues for the state’s unemployment insurance fund.
About half of the 19,600 Vermonters currently collecting unemployment benefits have been given specific return-to-work dates by their employers, notes Deputy Labor Commissioner Tom Douse. These workers on unpaid leave — including those employed by ski resorts, construction companies, school-bus services and the state’s largest newspaper — are using the unemployment system as a way of sustaining themselves until they resume their jobs.
It’s entirely legal. Indeed, one of the stated purposes of the unemployment insurance system, Douse notes, is to help ensure that experienced employees will return to their places of employment when temporary layoffs come to an end.
Weekly payments in Vermont currently amount to a maximum of $450, with $25 of that sum coming from a federal fund. The state’s payment formula is generally designed to provide 57 percent of what laid-off workers had been earning on a weekly basis, Douse says.
The owner of the Burlington Free Press, the Virginia-based Gannett Corp., mandated all of its 41,500 employees to take one week-long furlough during the first quarter of this year and another in the second quarter, which ends June 30. A Free Press source who did not want to be quoted says that a large number of the paper’s roughly 50 newsroom workers have collected unemployment pay during their weeks off the job.
Veteran Free Press newswoman Candy Page says the paper “has been very good in giving us full information on applying for benefits.” Page herself did not apply for unemployment payments during her first furlough because she was in Florida during that week for a family reunion, and “just forgot to file.” She says she will “probably” apply for benefits during her second furlough.
Page says she feels justified in collecting unemployment because “the Free Press has been paying into the fund for years and years.” During furlough weeks, the daily’s employees are not supposed to check their company email or phone messages.
The state’s unemployment insurance law taxes employers at a variable rate on the first $8000 earned by covered employees. Companies with a large number of workers who collect unemployment payments see their state tax rates increase, to a maximum of 8.4 percent. Companies that don’t lay off workers pay a rate as low as 0.4 percent. Employers also pay an unemployment insurance tax to the federal government of, generally, 0.8 percent on the first $7000 of an employee’s wage.
Labor unions and their allies are calling for an increase in employers’ taxable per-worker wage of $8000 as a way of keeping the state unemployment fund solvent. The $8000 base has not been adjusted since 1983; since then, the unemployment insurance taxes paid by Vermont employers have declined significantly as a percentage of their payrolls. Business groups may be willing to accept some increase in that taxable sum, but they also want benefits to be reduced.
Rep. Kitzmiller will join two colleagues this summer in a legislative study group intended to generate proposals for reforming the state’s unemployment insurance system.
“Everything will be on the table,” Kitzmiller says. That includes the practice of allowing furloughed workers to collect unemployment benefits, he says. The group will also consider the possibility of returning Vermont to a former filing schedule that prevented workers from receiving benefits during their first week of unemployment. Such a change would prevent Free Press employees and other workers from collecting benefits during an initial furlough week.
Kitzmiller says he has not yet formed opinions on these various issues. But he sees nothing wrong with Gannett helping its workers to tap the unemployment insurance fund during their furloughs. “You can’t blame Gannett for doing what it needs to do to save itself,” the legislator comments. “Furloughing people is also a lot better than eliminating their jobs permanently.”