As the primary payers of the unemployment system, business owners like me have a vested interest in seeing that the program is an effective safety net that carries workers from one job to the next. But over the past two years, pandemic-related pressures have weighed heavy on the unemployment system, exacerbating and exposing some of the unemployment program’s flaws and weaknesses, and ultimately decreasing the program’s solvency.
From January 2020 to November 2021, alone, Alaska’s unemployment insurance trust fund decreased by 21%. Thousands of Alaskans enrolled in the unemployment system as businesses were forced to shut down, and because of the federal government’s unemployment bonuses — which gave individuals an additional $600 or $300 a week — many people remained on unemployment much longer than usual.
Both employers and workers deserve reforms to the unemployment system that shore up the program for the long term. We all want the unemployment program to exist for hardworking Alaskans that need a helping hand between jobs and thankfully, there has been a bill put forth that contains several proposals to accomplish that very goal.
Alaska’s current unemployment system doesn’t account for the availability of jobs when determining the duration of benefits. The proposed legislation, Senate Bill 159, would tie the actual job market to the duration of benefits, thus treating all Alaskans more fairly, even if they work a seasonal job. It would not change benefits amounts but instead would change the factor that determines the duration of benefits. Currently, a person’s past work is the determining factor; under the proposed bill, the duration of benefits will instead be indexed, by linking it to the unemployment rate.
The indexing of unemployment insurance benefits to the current state unemployment rate would ensure individuals receive the support they need when jobs are scarce, while also giving individuals the push they may need to get back to work when jobs are plentiful. Employers should not be forced to compete with the unemployment insurance program when jobs are available, nor should adults be encouraged to forego work and trade their independence.
States that have already indexed their unemployment benefits to economic conditions have a better turnaround time for individuals entering — and exiting — the unemployment program. And estimates suggest the average duration that beneficiaries would remain on unemployment in Alaska could decrease by more than four and half weeks if we, too, adopted an indexed system. Less time on unemployment means Alaskans remain more independent, the program incurs fewer costs, and taxes on employers could decrease, as well. A reform like this — one that can rebuild our unemployment trust fund, help more Alaskans get back to work, and reduce costs on Alaskan job creators — is a win-win-win in my book.
The bill would also require checking of suspicious activity, such as multiple filings for benefits through the same IP address or using the same bank account. These simple reforms would target fraudsters and help to ensure those who get benefits are truly eligible. Polling shows that 82 percent of Alaskan voters support reforms that improve the integrity of state unemployment insurance system.
It’s taken a bit of time to restore normalcy in Alaska’s unemployment system. Gov. Mike Dunleavy opted out of the federal unemployment bonuses in June 2021 and Alaska’s extended unemployment benefits just ended in December 2021. In many cases, we’re still feeling the effects of prolonged job vacancies. Now is the time to for policymakers to get to work to ensure our state’s unemployment system is poised for success in the future. And with these reforms on the table, I think there’s ample opportunity for them to get started.
Jeff Garness is the president and principal engineer of Garness Engineering Group, Ltd. Garness resides in Anchorage.