SOUTH BEND, Ind. (AP) — The changes lawmakers will likely make to Indiana’s
insolvent unemployment system concern construction worker Finis Patterson
and business owner Judy Nagengast, though for different reasons.
Patterson worries he and other laborers who claim unemployment benefits
during the winter months when they don’t have work will see their checks
“I have a mortgage and a car note, said the 57-year-old Indianapolis
resident, who receives $226 a week. “I’m worried that if they cut my
unemployment I won’t be able to pay my bills.” Nagengast, who owns a
staffing company in Anderson, said businesses are already seeing their
unemployment insurance to go up, and they can’t afford to pay more.
“I’m trying to create jobs and my customers are trying to create jobs and
this makes it hard on the people who are trying to create jobs,” she said.
“The system the way it’s set up right now with the recession, it’s just
killing us, absolutely killing us.”
Indiana has been paying out hundreds of millions more for unemployment than
it has been bringing in for years. Since 2000, the state has gone from a
$1.6 billion surplus in its unemployment fund to borrowing $1.9 billion from
the federal government to keep making payments.
Gov. Mitch Daniels has said solving that problem will be a priority in the
upcoming legislative session. The problem, Daniels said, is that Indiana has
one of the nation’s most generous unemployment benefits but ranks 31st in
the nation in the premiums it charges businesses.
“If you’re going to have the highest benefits, you’re going to have to have
the highest premiums. If you want moderate premiums, you have to have
moderate benefits,” he said. “You’re going to have to bring those two
together somewhere in the middle.”
Daniels and Mark Everson, the Indiana Department of Workforce Development
commissioner, say businesses have already been asked to pay more and now
it’s workers’ turn. But they also said the plan isn’t to cut the payments
most workers receive but to fix inequities.
An example, Everson said, is that two people who earn $26,000 a year can
receive starkly different benefits.
A retail worker who made that much money and worked every week for a year
would receive a weekly unemployment check of $280. A construction worker
earning the same annual salary but working only 39 weeks because of winter
layoffs would receive $367 a week.
“We’re saying the calculation of the benefit ought to be comparable because
really what those people earn over the course of a year is the same,”
Everson said. “We think that should be consistent and fair treatment.”
Lawmakers also are looking at “sub pay,” where automakers and some other
industries supplement laid off workers’ unemployment benefits.
“It’s literally using the unemployment insurance system to subsidize a
collectively bargained benefit,” said state Sen. Brandt Hershman,
Union officials, though, argue that seasonal unemployment for certain
workers, such as those in construction, and sub pay negotiated through union
contracts are just part of those businesses’ operating costs. Indiana State
AFL-CIO president Nancy Guyott said it makes no sense to penalize workers
for negotiating sub pay.
“It’s like saying we’re going to completely deny you getting Social Security
benefits because you happen to have the foresight to put money in a 401K,”
The Legislature has been trying to fix the unemployment system since 2009.
Lawmakers voted to raise employers’ premiums in 2010, but then put off the
increase for a year because of the recession. Those changes go into effect
Nagengast said the increase means her company will pay $180,000 in
unemployment taxes next year, compared to $80,000 this year. Her premiums
cover about 200 workers at Continental Inc. The new system will be
particularly hard on staffing companies and other Indiana businesses with a
history of laying off employees, she said.
“It’s hurting the businesses that have struggled the most,” she said.
Supporters, though, argue that’s the way it should be: Businesses that have
a history of laying off workers should pay at higher rates.
fund should be back in the black by 2020 if the right changes are made,
Everson said. The state has no choice but to act, he said.
“The fund has got to be generating a surplus in the normal times so it can
pay out in the tough times,” Everson said.