NH Senate bill would extend emergency jobless enhancements amid shrinking trust fund
Panel told that unemployment taxes are going to rise, but expanded benefits would speed up process
Unemployment taxes paid by New Hampshire businesses are likely to more than double and the unemployment trust fund will be depleted by the end of the year if claims continue at their current level, and a New Hampshire Senate bill to continue some emergency benefit enhancements would make matters worse, Deputy Employment Security Commissioner testified Richard Lavers told a Senate committee on Thursday.
It also appears that unemployment claims, which have been falling, may be starting to level off, according to data released on Thursday.
Initial claims declined for the ninth straight week, but only slightly. For the week ending June 6, some 6,055 initial claims were filed, way down from the nearly 40,000 weekly claims filed in the wake of the shutdown. But last week’s total was only 72 behind revised new claims from the previous week, and still about 10 times the number filed before mid-March when the Covid-19 pandemic hit the economy. Nationally, initial claims went down 5% from a week earlier.
As for continued claims, which lag a week behind, there were just over 102,000 for the week ending May 30, a little over 1,000 more than the previous week’s revised total.
This is what is draining the trust fund and will cause business taxes to rise, Lavers told members of the Senate Commerce Committee.
All told, the department has dispensed $714 million in benefits in benefits. Most of that is being paid by the federal government under existing arrangements and the federal CARES Act, but over $100 million has come out of the trust fund. As that fund depletes, the unemployment goes up.
Lavers was testifying about the effect of the Senate Democratic leadership’s amendment to House Bill 1166 that would increase state benefits by $100 a week, as well as attempt to codify into law some emergency measures that expand benefits.
The amended bill would “give New Hampshire workers the peace of mind that even after the state of emergency is lifted, these protections will not be,” said Senate President Donna Soucy, D-Manchester.
The bill is designed to soften the blow once the federal weekly enhancement of $600 ends at the end of July, testified Sen. Dan Feltes, D-Concord.
Feltes said that in April, the state unemployment rate of 16.3 percent in April was one of the highest in the country and that state unemployment benefits have not gone up across the board in 18 years
“We still have a number of people crushed by unemployment,” said Feltes, who is running for Democratic nomination for governor. “If we are going to keep people afloat, and spending money in our economy, we need to increase this.”
The bill also would continue Covid-related unemployment benefits for self-employed individuals and those who leave work to take care of themselves or family “or leaves employment due to a reasonable risk of exposure or infection, including self-quarantine.”
The bill doesn’t have an expiration because “we don’t know the end date of Covid-19,” Feltes said, adding that most are expecting a second wave of the virus.
The amendment would also do away with the waiting list to collect benefits because “bills don’t wait” and would also expand unpaid Family and Medical Leave job protections – now guaranteed under federal law for businesses with over 50 employees – to those with less than 15 for Covid-related reasons. Feltes called it a “public health matter.”
The tab for the current $600 enhancement is paid entirely by the federal government, but if the state ups it $100 on its own that would cost the state unemployment trust fund about $53 million a week, Lavers said.
“That would not deplete our trust fund,” he said. “The pandemic is doing that. This would do it two months earlier.”
At this rate, the trust fund would be gone in November, and the state would be forced to borrow from the federal government, which businesses would have to eventually pay back in higher taxes. Even without that increase, the tax – whose current base rate is 1.7% of payroll – is expected to go up to 2.7% next quarter and to 3.7% in the fourth quarter, Lavers said.
But that actually would cost less than other provisions of the bill, he said. The emergency order is in compliance with federal orders on a temporary basis, but if the state tried to make these changes permanent, then it could be deemed out of compliance according to Lavers. If so, the federal contribution to unemployment insurance would almost disappear, and that would cost New Hampshire businesses $200 million a year. There would also be costs for some of the other measures because the federal government would stop paying for benefits enhancement once the states start messing with federal rules.
Business groups opposed the bill for other reasons as well.
The Business & Industry Association of New Hampshire was particularly opposed to the self-quarantine measures because it would it let those who “just decide they don’t want to work to collect unemployment,” said David Juvet, BIA senior vice president of public policy.
“I can tell you this bill has more input from members than any other,” said Joshua Reap, president of Associated Builders and Contractors of New Hampshire & Vermont. Reap said that he heard from members that some workers and independent contractors are not going to work because they can nearly make as much on unemployment.
“It’s a little insulting to offer someone a job, and they say, ‘I don’t want to go back to work.’ I don’t think that is a culture we want to encourage.”