State Unemployment Insurance needs a jumpstart
Tuesday, July 15th, 2008 By James Nesbitt
A study recently completed for the State of Ohio by the Urban Institute calls for higher taxes and changes to benefits to ensure the solvency of Ohio’s unemployment insurance fund, according to a report (subscription only) by Gongwer News Service:
The Institute suggests the tax base be increased in 2009 and weekly benefits frozen from 2009-2011. The report recommends that Ohio raise UI taxes rates and peg them to wage growth.
The Institute also recommends ways the state should change access to benefits. Those are: reduce the restrictiveness of monetary eligibility requirements; eliminate dependents’ benefits; and broaden the beneficiary base by adopting short-time compensation (STC or worksharing) and self-employment assistance (SEA) programs.
Indeed, the state should change access to benefits. But access to benefits is only part of the problem. The bigger problem is how efficiently beneficiaries use those funds once they obtain access, which is determined by the incentives the unemployed face in choosing to use their benefits. George Leef of the Mackinac Center came up with a promising way to change both the source of unemployment benefits and the incentives that drive their use well over a decade ago, but his recommendations are still just as potent today.
