Rep. Len Turcotte: Let’s Improve our unemployment system

IT’S THE BEGINNING of a new year and families across New Hampshire are setting goals, and establishing new — and better — budgets. But what about our New Hampshire state government? Where can our government improve and increase efficiency? And how can we as legislators better steward taxpayer dollars?

While there are many reforms that could go on that list, I have one significant suggestion. Let’s improve our state unemployment compensation system (HB 1337).

It’s no secret that our nation’s unemployment system went haywire over the past two years. In the blink of an eye — and thanks to heavy-handed federal interventions — safety net programs designed to carry down-and-out workers from one job to the next were transformed into seemingly never-ending cash streams for workers displaced by the COVID-19 pandemic. Millions of Americans collected unemployment insurance (UI) benefits and received additional UI bonuses that made welfare more profitable than work. At one point, unemployed Granite Staters were eligible to receive a whopping $3,687 per month in cash or cash-equivalent benefits — meaning a job would have needed to pay more than $21 an hour in order to compete with staying home.

To make matters worse, the influx of benefits and beneficiaries, without any increased integrity measures, made the UI program ripe for fraud and abuse across the nation. And now that federal UI bonuses have ended and communities are slowly recovering their workforce, many states have found that their UI trust funds have become completely insolvent.

While not insolvent, New Hampshire’s UI trust fund dropped by 38 percent from January 2020 to November 2021 — an unsustainable loss in resources that are meant to support hardworking Granite Staters.

The easiest and typical solution for replenishing the trust fund is to raise taxes, but there is a better way. By indexing our unemployment system to the health of our economy, we can begin to rebuild the trust fund and help more individuals return to work without raising taxes on small businesses.

Tying the length of time individuals can receive unemployment to the unemployment rate will ensure that benefits are available for out-of-work Granite Staters when there aren’t enough jobs to go around. But when jobs are plentiful, an indexed unemployment system will incentivize individuals to return to work quickly and avoid becoming chronically dependent on welfare.

States that have already indexed their unemployment programs to their state’s unemployment rate see average UI enrollees moving off unemployment in under 10 weeks, more than 25% faster than those on unemployment in states without indexed UI benefits. And research from the Foundation for Government Accountability has found that if all states adopted an indexed unemployment system, state unemployment trust funds would be replenished to a total of nearly $30 billion within just three years.

In New Hampshire alone, our trust fund could grow by an estimated $217 million, and estimates suggest that unemployed Granite Staters could get back on their feet nearly five weeks faster. This kind of solvency could free states up to reduce UI tax rates on employers by a whopping 20% on average, with some states able to reduce their rates even further.

While we can’t go back in time and undo the federal bureaucracy’s ill-advised pandemic policies, we certainly can adjust course.

This term, I and others in our Republican leadership team have introduced legislation to index our state’s unemployment system to our state’s economic conditions. Doing so will allow New Hampshire to rebuild our state unemployment trust fund, put New Hampshire back on a path of sustainability without raising taxes, and eventually UI taxes will be reduced for each and every employer.

HB 1337 is a reform that can save taxpayer dollars, lessen the risk of tax increases, and help promote personal independence and a strong work ethic. What a great resolution for the coming year.

Representative Len Turcotte (R-Barrington) is a senior advisor in the New Hampshire House Majority Office.

Link to this article in the Union Leader:

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