Relates to increasing the maximum benefit rate for unemployment insurance.
BILL NUMBER: S2245B
TITLE OF BILL : An act to amend the labor law, in relation to the unemployment insurance law, increasing the maximum benefit rate for unemployment insurance
PURPOSE : The bill intends to increase the maximum weekly unemployment benefit rate and restore fiscal health to the state's Unemployment Insurance Trust Fund.
SUMMARY OF PROVISIONS : Section one of the bill amends section 518 of the labor law to gradually increase the taxable wage base for employer contributions to the Unemployment Insurance Trust fund until 2013, after which the Department of Labor would calculate the wage base needed to fund annua.l increases for the maximum weekly benefit.
Section two of the bill amends section 590 of the Labor Law to increase in the maximum weekly unemployment benefit rate to $475 as of July 2010, to $525 as of July 2011, to $600 as of July 2012, to $650 as of July 2013, after which the maximum weekly benefit would equal one-half of the state average weekly wage as annually calculated by the State Department of Labor.
Section three establishes the effective date.
JUSTIFICATION : New York State's unemployment rate reached 8.8% in January 2010 with more than 851,970 New Yorkers out of work. In the New York City metropolitan area, the rate is over 10%, and disproportionately higher for Hispanics at 23% and 38.7% for african-americans. The State's long-term unemployment rate, which tracks those who are unemployed for 27 weeks or more, was 34% in 2009 exceeding the national average of 31.5%.
The State's unemployment benefit rate and taxable wage base have not been raised since 1998. Due to the large number of persons filing for unemployment benefits, the Unemployment Insurance Trust Fund has become insolvent. The State has had to borrow from the federal government to pay benefits and will owe more than $3.5 billion by the end of the year. This deficit is expected to rise by an additional $1 billion during each of the next few years if nothing is done to address the problem.
The limited amount of stimulus funds provided under the American Recovery and Reinvestment Act of 2009 (ARRA) does not resolve this long-term crisis to the Trust Fund. Both employers and the State will face significant new costs if the Trust Fund is not restored to fiscal health. The continued insolvency of the Fund will result in higher federal unemployment taxes for employers. When the Fund is' solvent, employers may receive a federal credit reduction against the 6.2% federal tax they pay under the Federal Unemployment Trust Act (FUTA), which reduces their tax liability to .8%. When the Fund lacks sufficient contributions to repay borrowed money by the federal deadlines, the FUTA credit is reduced, which increases the net federal tax rate for employers. without this legislation, the increased tax cost to New York employers is projected to reach $6.4 billion during the period of 2009-2018.
The failure to increase the taxable wage base will also cost the State millions of dollars in interest on its federal loan. Although the ARRA waived some interest for a brief period, New York will owe more than $160 million in interest by 2011, which is projected to increase to $210 million in 2012 and to a total of $840 million over the following five years. Under the bill, however, the State's interest on the loan would continually decline until 2016, when the Trust Fund's solvency would be restored. New York's taxable wage base of $8500 is significantly lower than most other states, including New Jersey ($29,700), Connecticut ($15,000) and Massachusetts ($14,000).
The legislation would also increase the maximum weekly benefit rate of $405 which was enacted more than a decade ago. Since then, the spending power of $405 has declined by more than 20% to approximately $322. The current benefit rate is based on one-half of the state's average weekly wage in 1998. If this rate were adjusted to the current average weekly wage, the benefit would be closer to $575. The legislation proposes a more modest increase in the initial years following enactment in an effort to strike a balance between the need to increase benefits and raise employer contributions. New York's current benefit level places many unemployed workers and their families below the poverty threshold. The state's weekly benefit rate is much lower than that of nearby states including New Jersey ($600), Connecticut ($537), and Massachusetts ($628). In Oregon, which indexes unemployment benefits to keep pace with inflation, the benefit was increased to $493 last year.
The need to raise unemployment benefits and the taxable wage base grows more urgent each year. Because benefits have not been increased, workers who have recently received extended unemployment benefits from the federal government have been deprived of additional income they and their families need at this difficult time. The failure to act also hurts local economies. Studies show that every dollar provided to workers returns approximately $1.64 through local purchases for rent, food and other basics, which in turn helps local businesses and generates tax revenues.
The unemployment system was established to help New Yorkers support themselves after they lose their jobs through no fault of their own until they can find new work. This legislation will protect New York's unemployment system by ensuring the fiscal health of the Trust Fund, and in so doing, help avoid new costs for employers and the State if solvency of the Fund is not restored.
LEGISLATIVE HISTORY : 2009: S.2245 - Advanced to 3rd Reading A.4921 - Advanced to Ways & Means 2008: S.8742 - Referred to Rules A.11642 - Advanced to Ways & Means
EFFECTIVE DATE : This bill will take effect immediately, provided that section one will take effect 30 days after it becomes law.
STATE OF NEW YORK ________________________________________________________________________ 2245--B 2009-2010 Regular Sessions IN SENATE February 13, 2009 ___________Introduced by Sens. ONORATO, ADAMS, ADDABBO, AUBERTINE, BRESLIN, DIAZ, DILAN, HASSELL-THOMPSON, HUNTLEY, KRUEGER, LANZA, OPPENHEIMER, PARKER, PERKINS, SAVINO, SCHNEIDERMAN, SERRANO, SQUADRON, STACHOWSKI, STAVI- SKY, STEWART-COUSINS, THOMPSON -- read twice and ordered printed, and when printed to be committed to the Committee on Labor -- recommitted to the Committee on Labor in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the labor law, in relation to the unemployment insurance law, increasing the maximum benefit rate for unemployment insurance THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph (a) of subdivision 1 of section 518 of the labor law, as amended by chapter 589 of the laws of 1998, is amended to read as follows: (a) "Wages" means all remuneration paid, except that such term does not include remuneration paid to an employee by an employer after
[eight thousand five hundred]NINE THOUSAND SEVEN HUNDRED FIFTY dollars have been paid to such employee by such employer with respect to employment during any calendar year PRECEDING THE FIRST DAY OF JANUARY, TWO THOU- SAND ELEVEN, NOR TO INCLUDE REMUNERATION PAID TO AN EMPLOYEE BY AN EMPLOYER AFTER TWELVE THOUSAND FIVE HUNDRED DOLLARS HAVE BEEN PAID TO SUCH EMPLOYEE BY SUCH EMPLOYER WITH RESPECT TO EMPLOYMENT DURING ANY CALENDAR YEAR PRECEDING THE FIRST DAY OF JANUARY, TWO THOUSAND TWELVE, NOR TO INCLUDE REMUNERATION PAID TO AN EMPLOYEE BY AN EMPLOYER AFTER THIRTEEN THOUSAND FIVE HUNDRED DOLLARS HAVE BEEN PAID TO SUCH EMPLOYEE BY SUCH EMPLOYER WITH RESPECT TO EMPLOYMENT DURING ANY CALENDAR YEAR PRECEDING THE FIRST DAY OF JANUARY, TWO THOUSAND THIRTEEN. IN EACH SUCCEEDING CALENDAR YEAR, THE DEPARTMENT SHALL CALCULATE THE BASE AMOUNT OF REMUNERATION NECESSARY FROM WHICH TO PRODUCE SUFFICIENT PREMIUM TOEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD07363-08-0 S. 2245--B 2
PROVIDE FOR THE ANNUAL INCREASES IN MAXIMUM WEEKLY BENEFIT PROVIDED FOR IN THIS ARTICLE, AND OTHER FUNDING FOR THE UNEMPLOYMENT INSURANCE TRUST FUND PURSUANT TO SECTION FIVE HUNDRED FIFTY OF THIS ARTICLE, AS MAY BE NECESSARY. The term "employment" includes for the purposes of this subdivision services constituting employment under any unemployment compensation law of another state or the United States. S 2. Subdivision 5 of section 590 of the labor law, as amended by chapter 413 of the laws of 2003, is amended to read as follows: 5. Benefit rate. A claimant's weekly benefit amount shall be one twen- ty-sixth of the remuneration paid during the highest calendar quarter of the base period by employers, liable for contributions or payments in lieu of contributions under this article. However, for claimants whose high calendar quarter remuneration during the base period is three thou- sand five hundred seventy-five dollars or less, the benefit amount shall be one twenty-fifth of the remuneration paid during the highest calendar quarter of the base period by employers liable for contributions or payments in lieu of contributions under this article. Any claimant whose high calendar quarter remuneration during the base period is more than three thousand five hundred seventy-five dollars shall not have a weekly benefit amount less than one hundred forty-three dollars. The weekly benefit amount, so computed, that is not a multiple of one dollar shall be
[lowered to]the next multiple of one dollar. On the first Monday of September, nineteen hundred ninety-eight the weekly benefit amount shall not exceed three hundred sixty-five dollars nor be less than forty dollars, until the first Monday of September, two thousand, at which time the maximum benefit payable pursuant to this subdivision shall equal one-half of the state average weekly wage for covered employment as calculated by the department no sooner than July first, two thousand and no later than August first, two thousand, rounded [down]to the [lowest]NEXT dollar. ON THE FIRST MONDAY OF JULY, TWO THOUSAND TEN, THE WEEKLY BENEFIT SHALL NOT EXCEED FOUR HUNDRED SEVENTY- FIVE DOLLARS NOR LESS THAN SEVENTY-FIVE DOLLARS, UNTIL THE FIRST MONDAY OF JULY, TWO THOUSAND ELEVEN AT WHICH TIME THE WEEKLY BENEFIT SHALL NOT EXCEED FIVE HUNDRED TWENTY-FIVE DOLLARS, UNTIL THE FIRST MONDAY OF JULY, TWO THOUSAND TWELVE AT WHICH TIME THE MAXIMUM WEEKLY BENEFIT SHALL NOT EXCEED SIX HUNDRED DOLLARS UNTIL THE FIRST MONDAY OF JULY, TWO THOUSAND THIRTEEN, AT WHICH TIME THE MAXIMUM WEEKLY BENEFIT SHALL NOT EXCEED SIX HUNDRED FIFTY DOLLARS UNTIL THE FIRST MONDAY OF JULY, TWO THOUSAND FOUR- TEEN AT WHICH TIME THE MAXIMUM BENEFIT PURSUANT TO THIS SUBDIVISION SHALL EQUAL ONE-HALF OF THE STATE AVERAGE WEEKLY WAGE AS CALCULATED BY THE DEPARTMENT NO SOONER THAN JULY FIRST, TWO THOUSAND FOURTEEN AND NOT LATER THAN AUGUST FIRST, TWO THOUSAND FOURTEEN AND ON JULY FIRST OF EACH SUCCEEDING YEAR THE MAXIMUM BENEFIT SHALL EQUAL ONE-HALF OF THE STATE AVERAGE WEEKLY WAGE AS CALCULATED BY THE DEPARTMENT ANNUALLY PURSUANT TO THE MANNER DESCRIBED IN THIS SUBDIVISION. FOR PURPOSES OF THIS SUBDIVI- SION, THE TERM "STATE AVERAGE WEEKLY WAGE" SHALL MEAN THE AVERAGE WEEKLY WAGE OF THE STATE OF NEW YORK FOR THE PREVIOUS CALENDAR YEAR AS REPORTED BY THE COMMISSIONER TO THE SUPERINTENDENT OF INSURANCE ON MARCH THIRTY- FIRST. S 3. This act shall take effect immediately and shall apply to all claims filed on and after the effective date of this act; provided, however, that section one of this act shall take effect on the thirtieth day after it shall have become a law.