Astonishingly callous blow to jobless Iowans
Posted on February 11, 2021 at 3:00 PM by Colin Gordon
The decision by Governor Reynolds to lift both the state’s partial face mask mandate and any remaining social distancing restrictions has been met with national ridicule and local condemnation, with The Des Moines Register calling it an “inexplicable and irresponsible move.”
Not to be outdone, Republicans in the state Legislature are following Reynolds’ lead with an equally ‘inexplicable and irresponsible” attack on Iowa workers — even as the pandemic’s recession tightens its grip.
In a week when nearly 6,200 more Iowans filed for unemployment insurance, Senate Study Bill 1172 proposes to cut benefits (by removing an allowance for dependents), add a one-week waiting period, and strike a 13-week extension for those thrown out of work by a business closure.
This is an astonishingly callous proposal, at a moment when the economic security of Iowa’s working families is fragile and uncertain. Through the first 54 weeks of the COVID recession, 585,378 initial unemployment claims have been filed by Iowans. In addition, 130,000 Iowans left the labor force entirely, as other work supports — child care and schools — closed their doors. In the midst of a national debate over the next round of COVID relief and stimulus, Iowa legislators are dusting off the old anti-worker playbook as if the pandemic never happened.
This is a retread of a similar set of proposals floated in 2019. At that time, the argument was that the state’s low unemployment rate justified cutting benefits in order to remove “disincentives” to entering the labor market. The reasoning was ludicrous then and it is just as ludicrous now. Prior to the pandemic, Iowa’s unemployment insurance system replaced just over half of lost wages — a rate a bit better than the national average, but still dismally insufficient to sustain household expenses while unemployed.
Even the CARES Act bump in benefits had no impact on the choices made by workers — who continued to enter the unemployment system reluctantly and leave it as soon as possible. Indeed, far from acting as a drag on recovery, the expanded and extended benefits propped up the economy — and state tax revenues — through much of last spring and summer.
There is, of course, one glimmer of truth to SSB 1172. Our unemployment insurance system is broken — just not in the ways that SSB 1172 assumes. Before the temporary expansion under the CARES Act, only 41 percent of unemployed Iowans even qualified for benefits. The extra $600/week provided by the CARES Act’s PUC program, and the extension of benefits (under the PUA) to workers not normally covered were a necessary response to the pandemic. But they were also a necessary response to the fundamental weakness of a social insurance program that — at its best — offers half a paycheck to less than half of those out work.
In turn, Iowa’s workers have been battered by the collision between temporarily generous federal programs and persistently tight-fisted state policy. Since mid-summer, Iowa Workforce Development — whose guidelines and administration have been woefully inconsistent — has been forcing repayments of benefits from workers due to the agency's own errors that led those workers to seek benefits under the wrong program.
That confusion is part of a larger challenge. States were woefully unprepared for the avalanche of claims last spring, both because they lacked the resources to meet the demand and because they lacked the technical capacity to process claims. Iowa’s unemployment system runs on a computer mainframe that was installed when Richard Nixon was president. Only half of unemployment claims are processed inside of 15 days (making the proposed “waiting period” especially cruel), and only 3 percent of non-monetary eligibility questions are resolved within 50 days — a snail’s pace that ranks Iowa dead last among states reporting this data.
The lesson here, completely lost in SSB 1172, is that unemployment compensation is a crucial form of protection against involuntary job loss. There is not a shred of credible research to support the notion — embedded in this legislation — that it dampens labor force participation, or that it is too generous. Indeed, the pandemic (and the political response to it) underscored how important it is to modernize the system so that it reaches more workers more quickly and efficiently, so that expanded or extended benefits are “triggered” on and off by economic conditions and not by political whims, and so that benefits are calibrated to sustain working families through hard times.
In this respect, SSB 1172 goes hand-in-hand with the Governor’s reckless retreat from even the most basic public health measures. That decision endangers essential workers who are putting in long hours and risking their health on a daily basis. SSB 1172 extends the same callous disregard to those who’ve lost their jobs through no fault of their own.
Colin Gordon is a senior research consultant for Common Good Iowa. He is a professor of history at the University of Iowa and longtime analyst on issues affecting Iowa workers and their families.