The PBS program “Need to Know” took a look at Rhode Island’s work-sharing program in its latest episode. Unfortunately the video embed isn’t working, but you can watch the segment on PBS.org by clicking here.
In a long review of “The Escape Artists,” Noam Scheiber’s new book about the Obama administration’s economic strategy, The New Yorker’s John Cassidy argues that the original $787 billion stimulus law was not only too small but also too unimaginative to get the economy back to full employment after the financial crisis.
And who had the kind of idea Cassidy thinks Obama should have pushed for to make the stimulus more effective? None other than Rhode Island’s own U.S. Sen. Jack Reed, who finally got Congress to approve his cherished work-share program just last month.
In Germany, the government uses wage subsidies to encourage firms to hoard workers during recessions rather than shedding them. … To make this job-sharing system work and help out the affected employees, the government pays them about sixty per cent of their lost salary. Despite a global recession and a European debt crisis, the German unemployment rate is lower now than it was in January, 2009.
Germany’s labor-market institutions are a product of the country’s history; introducing them wholesale to the United States wouldn’t be easy. But until recently the Obama Administration barely moved in this direction. It was left to Senator Jack Reed, of Rhode Island, to champion a federal job-sharing scheme, which was based on financing local initiatives, such as one in his home state. The White House finally adopted the idea in its 2012 budget, and Congress, in a recent agreement to extend payroll-tax cuts and unemployment insurance, agreed to fund a version of it. If the scheme is still in effect when the next recession begins, perhaps it will make the situation less severe.
• Related: WSJ says RI’s work-sharing program could be national model (Nov. 21)
Politico reports on today’s first session of the conference committee negotiating an extension of the payroll tax cut and long-term unemployment benefits – a group that includes Rhode Island’s own Jack Reed:
Several Democrats indicated they would prefer unemployment insurance not be paid for, arguing that doing so would negate any stimulative effect of the benefits.
Offsetting jobless benefits “blunts the economic impact of this tool,” said Sen. Jack Reed (D-R.I.).
But Republicans disagree.
“I would be remiss if I did not point out that unless we find a way to pay for these programs, we will be forced to borrow even more money from places like China — creating an even larger debt dragging our economy down,” said House Ways and Means Committee Chairman Dave Camp (R-Mich.), who also chairs the conference committee.
U.S. Sen. Jack Reed, one of the senators tasked with reaching a compromise on continuing the payroll tax cut, says he wants Republicans to agree to pay for it with a tax hike on upper-income Americans.
The tax cut and extended unemployment benefits were extended for two months in late December so that a bipartisan committee of lawmakers from the House and Senate can have time to work out a deal. Senate Democrats tried unsuccessfully to pay for the measures by enacting a surcharge on annual incomes above $1 million.
Reed, one of four Senate Democrats named to the conference committee, said he continues to think the millionaires surtax is the best way to pay for the policies. The two-month extension was paid for by raising fees charged by Fannie Mae and Freddie Mac, but Reed said that won’t yield enough to cover a longer extension.
Asked by WPRI.com whether he thinks there’s any possibility Republicans will agree to back a tax increase, Reed replied: ”I think we have to try.”
U.S. Sen. Jack Reed has been given the unenviable task of helping to broker a long-term compromise on the payroll tax cut (and jobless benefits) after a two-month extension passed last week. Senate Majority Leader Harry Reid said Reed wasn’t an accidental choice (via the NYT):
Senator Jack Reed, Democrat of Rhode Island, will be a member of the House-Senate conference committee. In picking him, Mr. Reid noted that Rhode Island had high unemployment and said “no one in the Senate has been more protective of the unemployed.”
Rhode Island’s 20-year-old WorkShare program – which lets employers cut workers’ hours rather than lay them off and uses jobless benefits to boost their paychecks – gets some national attention in Monday’s Wall Street Journal. Reporter Justin Lahart visited Providence-based Pilgrim Screw Corp. and found the program working well:
The move meant nobody at the small manufacturer lost jobs, while those with fewer hours now get a check from Rhode Island representing one-fifth of what they would make under full-fledged unemployment insurance. It’s a pay cut for those workers, to be sure, but they prefer that to the alternative: joblessness. …
President Barack Obama has included a national work-sharing plan as part of his jobs package, now before Congress, as a way to address the nation’s 9% unemployment rate. …
Kevin Hassett of the conservative American Enterprise Institute also is a fan, and noted that he hasn’t encountered any hostility when he has raised the topic with fellow Republicans. “This thing could have a big impact on the labor market,” he added.
Read the rest here. WorkShare is a favorite of U.S. Sen. Jack Reed, who’s been advocating a national version of the program for a while now. He, U.S. Sen. Sheldon Whitehouse and Congressman Jim Langevin brought a deputy labor secretary to Pilgrim Screw to highlight the program back in September.
More recently, Department of Labor and Training Director Charlie Fogarty explained the secrets of WorkShare’s success to a congressional committee earlier this month [pdf]. Rhode Island has avoided 14,650 layoffs since 2007 thanks to the program, DLT says.
(photo: Pilgrim Screw Corp.)
Charles Fogarty, director of the R.I. Department of Labor and Training, is scheduled to testify before the Senate Finance Committee on Thursday at 10 a.m. The topic is “Unemployment Insurance: The Path Back to Work.”
While U.S. Sens. Jack Reed and Sheldon Whitehouse are not members of the finance committee, they have been active in the ongoing debate over extended jobless benefits. Reed introduced a bill last week that would continue federal programs to help the unemployed that are currently set to expire on Dec. 31.
Fogarty was Rhode Island’s lieutenant governor from 1999 to 2007 and narrowly lost the 2006 race for governor as the Democratic candidate against incumbent Don Carcieri. In an interview last month, Fogarty said taking the helm at DLT for Chafee had opened his eyes to the depths of Rhode Island’s jobs crisis.
“I was aware we had a problem, but when you’re in this job and it’s what you focus on every day, the problem becomes very personal in a way,” Fogarty told WPRI.com. “When you do that on a daily basis, you realize how tough it is.”
Under a program that expires at the end of this year, unemployed Rhode Islanders are eligible to collect jobless benefits for up to 99 weeks, with much of the cost picked up by the federal government.
In a normal economy, though, the standard length of time a worker can collect jobless benefits is capped at 26 weeks and paid for by the state through a tax on employers.
The Rhode Island Department of Labor and Training is among the most conscientious agencies in the country when it comes to making sure those who collect unemployment benefits are actually eligible to receive them.
That’s according to new federal data which shows Rhode Island paid $14.3 million worth of jobless benefits in error in 2010-11, out of $289.3 million paid out in total. The figures only include the base level of benefits – 26 weeks – provided by the state; federal programs can extend the duration to 99 weeks in Rhode Island.
While $14 million is a lot of money, Rhode Island’s share of benefits paid in error – 4.9% – was the fourth-lowest among the 50 states. The only states found to be more scrupulous were Hawaii (3.1% in error), Kansas (3.6%) and Massachusetts (4.3%).
The low error rate is the product of hard work, according to Raymond Filippone, the DLT’s assistant director of income support.
By Claire Peracchio
The face of unemployment in Rhode Island is male, working-age and high school-educated.
That’s according to a snapshot of Rhode Island’s unemployed population issued by the R.I. Department of Labor and Training. The report analyzed the roughly 35,000 unemployed workers collecting benefits as of last June. (Due to eligibility restrictions, they made up about half the 69,300 officially unemployed that month.)
While the report didn’t get much fanfare when it came out last November, it puts a human face on the state’s still painfully high jobless rate, which was 11.5% in December.
Almost 60% of people collecting benefits last June were classified as “long-term unemployed,” meaning they’d been out of work for at least 15 weeks. And 16% had been collecting benefits for more than a year. The maximum allowed is 99 weeks.
The vast majority of unemployment insurance recipients – more than two-thirds of the total – were part of the state’s 25- to 54-year-old working-age population.
And while men were more likely than women to be collecting – 54% of recipients were male – women were more likely than men to be unemployed long-term.
The report offers further evidence of how much the manufacturing sector has been hurt by the Great Recession in a state that has seen factories closing for years, as well.
Nearly one in five of those claiming unemployment insurance last June – 18% – had worked in manufacturing before they lost their jobs. That was significantly more than the next two categories: construction at 13% and retail at 12%.
Those with less education were also more likely to be collecting unemployment. Workers with only a high school degree, who represent 29% of the state’s total population, made up a much larger share of jobless benefit recipients: 42%.
The full report is available as a PDF on the DLT website.
Claire Peracchio is a student at Brown University and an intern at WPRI.com.
There has been some potentially confusing reporting this week about the impact of President Obama’s big tax deal with Congressional Republicans on unemployment benefits.
One part of the compromise has been described as “an extension of unemployment benefits for 13 months.” Just to be clear, that is not an extension of how long an individual can get unemployment benefits, but rather an extension of how long the entire extended unemployment program is authorized by Congress.
Put another way, if this deal passes, the maximum length of time a Rhode Islander can collect unemployment benefits would still be 99 weeks – not 155 weeks (99 weeks + 13 months).
Unemployment insurance benefits always last for 26 weeks under federal law, whether the economy is in rough shape or not. But during recessions, Congress usually votes to add additional weeks of eligibility because there are fewer jobs around and people are out of work for longer periods of time.
Because of its high unemployment rate, Rhode Island is one of 25 states where workers can receive up to 99 weeks of unemployment. This chart from the Center for Budget and Policy Priorities shows how the length of eligibility is determined through various programs – Rhode Island is in the last group:
What Obama’s deal with Republicans would do is keep the above structure for extended unemployment benefits in place for another 13 months - through the end of 2011, I believe, assuming it’s retroactive to the start of this month when the program expired. That would hold off the next one of these fights in Congress over whether and how to extend benefits until late next year.
Update: A few more details, while we’re on the subject.
Due to eligibility restrictions, not every out-of-work person gets jobless benefits. About 33,000 of Rhode Island’s 65,300 unemployed workers were receiving them in October, according to the Department of Labor and Training.
The amounts people get in their unemployment checks – which aren’t actually checks at all anymore but rather direct deposits – get calculated based on how much they were earning in the 15 months before they got laid off, and vary from state to state. Laura Hart, the DLT’s spokeswoman, provided these figures to put the benefits in context in Rhode Island.
- Minimum benefit: $68/week
- Average benefit: $391/week
- Maximum benefit with no dependents: $551/week
- Maximum benefit with 5 dependents: $700/week
For the record, that average weekly unemployment benefit figure was for the first quarter of 2010, the most recent one available.
Update #2: Workers also have to pay taxes on their jobless benefits; the figures above are pre-tax. Unemployment recipients can either get taxes withheld by DLT or receive the full amount and then deal with their tax bill the next year.
(h/t: Calculated Risk)
Neighboring U.S. Sens. Jack Reed, D-R.I., and Scott Brown, R-Mass., had an impassioned exchange on the Senate floor yesterday during the debate over continuing extended jobless benefits, which expired at midnight.
Reed, who has been working on the unemployment issue for a long time, took the floor and called on his G.O.P. colleagues to drop their filibuster of the extension. “I find it difficult to understand how some of my colleagues on the other side would object to an extension of unemployment benefits for a year that are not offset but at the same time insist that we provide tax cuts to the very richest Americans, without paying for them,” he said.
“In my State of Rhode Island, people are in a very serious situation,” Reed said. “They are struggling to stay in their homes, to educate their children, to deal with the challenges of everyday life. They have worked hard and long all of their lives, and now they are finding it difficult to find a job.”
As Reed finished his statement, Brown spoke up to take the floor. “I am not the new person here anymore. Somebody came in yesterday,” he began, before proceeding with a lengthy and apparently unscripted critique of Congress for its failure to act on various initiatives.
“I figured that when we came back, after the message was sent [in the election], we would get it loudly and clearly – big change over in the House,” he said. “Here we are. We are going to get right back to the economy. But what do we do? We do food safety. Are you kidding me? People deserve better. The people who are unemployed deserve better.”
Eventually, Brown proposed offsetting the cost of the extended benefits by using “unobligated discretionary funding” – basically, money that hasn’t been allocated yet – to cover it. Reed responded by pointing out that Republicans had filibustered earlier attempts to extend benefits and again pointed out that nobody wants to pay for extending the Bush tax cuts.
My favorite part, though, was when Brown – a Wrentham resident – said in an aside to Reed: “I know Rhode Island well; I eat in Federal Hill regularly.” I wonder which restaurant is his favorite? Anybody ever run into him?
Speaking of Scott Brown, two other items about him caught my attention recently. First, his recent bipartisan proposal for changes to health reform won plaudits from The Washington Post’s liberal policy blogger Ezra Klein; and second, U.S. Rep. Stephen Lynch gave an interview to WBZ-TV’s Jon Keller that seemed like an early roll-out of his message if he challenges Brown next year.
I’ve posted the two senators’ full back-and-forth – it’s long – after the jump, for those who want to dive in.