Cuts taking toll on jobless compensation

Expert says more could be on way

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Taxes levied on Pennsylvania workers to pay for unemployment compensation are increasingly being used for overhead just to keep the system running, as the federal government cuts the money it pays to administer the program.

The first round of federal cuts in 2012 came in the aftermath of the Great Recession as the economy's sluggishness still weighed heavily on workers. "We took a $30 million haircut," said Sara Goulet, a spokesman for the state Department of Labor and Industry.

The state responded at first by cutting 322 workers in the unemployment compensation call centers, but wound up restoring 117 of those jobs after negative publicity detailed how the cutbacks were affecting the jobless by bogging down the system.

A report issued Tuesday by the New York City-based policy group National Employment Law Project listed problems that have beset the system that provides unemployment insurance nationwide.

Pennsylvania repaired some of the damage done by federal cuts by diverting money that employees pay into the system toward administrative costs. But some other states do not have unemployment insurance taxes on employees, so they cannot shift money to cover those costs, said Rebecca Dixon, an Albany, N.Y.-based policy analyst for the NELP.

Ms. Dixon said even as the economy has gotten better, unemployment has remained high and the system is at risk of being further undermined when the next round of cuts takes effect through the federal budget reductions known as "the sequester."

After the first round of sequester cuts from the federal government, Pennsylvania's unemployment compensation system became so hard to access that unemployed workers were standing in lines at local CareerLink offices to use the dedicated phones to the unemployment compensation call centers.

This year, even as the state's unemployment rate was 7.7 percent in August, the backlog was cut down and the call centers brought back up to speed with $40 million Gov. Tom Corbett and the state Legislature redirected from the existing 0.08 percent tax on wages used to cover unemployment compensation.

That redirection is slated to continue, with $30 million dedicated to administrative expenses in 2014. The state also allotted up to $190 million to be spent over 2015 and 2016, which would be available to cover further cuts in federal support.

Ann Belser: abelser@post-gazette.com or 412-263-1699.


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