State Faces Massive Unemployment Debt
Ohio legislators are trying to figure out how to pay down almost $1.4 billion in debt to the federal government for the state's unemployment fund. Ohio's Unemployment Compensation Study Committee held a hearing in Clark County Tuesday to address concerns about the fund.
The state borrowed lots of money from the federal government during the Great Recession to make up for shortfalls in its unemployment fund.
"We went broke mostly because we didn't fund the system as we should have," says Zach Schiller, the research director of non-profit think tank Policy Matters Ohio. "Even now, Ohio employers pay relatively low unemployment taxes. It's a tiny share—less than a penny of wages—it's lower than in the rest of the country and it's not as high as it was in Ohio for many years."
Ohio employers pay unemployment taxes only on the first $9,000 of an employee's salary. Schiller testified that the average wage is four times that amount in the state, so companies should pay taxes on a higher amount. That would contribute to a rainy-day fund to avoid going into debt during times when lots of people are out of work.
"We oughtta be taxing a larger share of wages which is what most states do and would be something that would produce more revenue and allow us to have a system that is solvent," Schiller says.
Representative Gary Scherer (R-92nd), the unemployment study committee’s vice chairman, isn't sure the answer to the deficit is to just make companies pay higher taxes.
"It's going to have to be a bi-partisan and compromised plan between the business community, the employers, and the employees. That includes largely the labor unions," Scherer says.
Tanja Resch-Jillson is a volunteer with a group called Working America. She told the committee that being able to receive unemployment benefits after she lost her job helped save her home.
"I would not have been able to make my mortgage payment without it. So it kept me from falling into the cycle of losing my home of my home being unoccupied of being another statistic to the housing crisis," she says. "It helped by neighbors—they don't have an empty house next to them—it is all interconnected to lifting everything up."
Logan Martinez of the Miami Valley Full Employment Council, a group formed by unemployed workers in the Dayton area, addressed the committee and indicated that thousands of people in the region need benefits.
"It's a major life line and enables people to survive for a period while they are unemployed. The fact that extended unemployment benefits has ended and there has been a surge of evictions," Martinez said. "But, we've been in almost five years of the Great Recession, and 45,000 people in the mid-Miami Valley are officially unemployed and need work today.
The unemployment compensation study committee hearing in Clark County was the third out of five planned for around the state.