Editorial missed point on new law
To the editor: I was disappointed to read the editorial that appeared in The News-Item on June 11 regarding Senate Bill 1310, the Unemployment Compensation bill that I authored, which was signed into law as Act 60.
While the editorial commended the borrowing and bonding component of the act, which will eliminate nearly $3.8 billion in debt to the Federal Unemployment Trust Fund, it criticized the long-term solvency part of the act by alleging that employers do not pay enough and "displaced workers" only will suffer the burden.
In 2011, $2.7 billion was collected by the Pennsylvania Unemployment Trust Fund. Of that amount, $2.5 billion was paid by employers and $200 million was collected from employees. I am surprised that you do not believe that $2.5 billion is a significant number.
In addition, every Pennsylvania employer - small, medium and large - saw a further increase in their unemployment compensation (UC) bill this year. Beginning Jan. 1, employers began paying an additional $244 million because of interest charges assessed by the federal fund on the monies borrowed. Also, because of a reduction in a federal tax credit due to the debt owed to the federal fund, all employers - small, medium and large - began paying another collective $110 million to the federal fund this year as well.
Therefore, according to your editorial, the additional employers' costs of $344 million beginning Jan. 1 is not enough sacrifice on their part on top of the $2.6 billion paid by employers into the UC Trust Fund.
So let us talk about the benefits and eligibility side of the ledger. Up until January, Pennsylvania paid out more in total benefit costs to displaced workers than any other state except California. Currently, we are third behind California and now New York.
Pennsylvania is the sixth most populous state in the country. Further, our unemployment rate has been below the national rate for more than 60 consecutive months. For example, for April, Pennsylvania's rate was 7.4 percent; the federal rate was 8.1 percent, and New York's rate was 8.5 percent.
Why then was our rank second, and now third, in regards to benefits paid out? Because we have a generous benefit and a generous eligibility system.
Act 60 made changes in the eligibility requirements that will not affect more than 90 percent of displaced workers. Further, it will not become effective until Jan. 1, 2013, to allow certain workers to plan ahead. Finally, the changes will ensure long-term solvency of the UC Fund for decades to come. I was pleased that Senate Bill 1310 received both Republican and Democratic votes in the House and Senate.
Very truly yours.
John R. Gordner
(Gordner is state senator for the 27th Senatorial District.)