OKPOLICY.ORG
Update, 4/26/22: HB 1933 was approved by the Senate.
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Oklahoma’s lawmakers should recognize the importance of a well-designed unemployment insurance program and strengthen this necessary program rather than undermine it. Unfortunately, a piece of legislation recently passed by the state Senate threatens the efficacy of our state’s unemployment insurance program. House Bill 1933 — which would drastically reduce the length of time laid-off workers may draw unemployment benefits — would weaken our economy, threaten families’ financial security, and fail to get more Oklahomans back to work. The legislature should reject HB 1933 and any other bills that would inhibit the ability of the unemployment insurance program to provide the support our workers and our economy need.
HB 1933 would seriously impair the ability of Oklahoma’s unemployment insurance program to stabilize our economy and our families
HB 1933 would tie the duration of unemployment insurance benefits to Oklahoma’s average weekly unemployment insurance claims over a period of thirteen weeks. This would shorten the duration of benefits when unemployment is low and lengthen it when unemployment is high. While making our unemployment insurance system adaptable to current economic conditions can be a wise decision, the benefit durations laid out in HB 1933 are too meager to properly support Oklahoma’s workforce, whether in good economic times or bad ones.
By significantly cutting the maximum duration of unemployment benefits, HB 1933 would remove a source of stability in our economy and shortchange workers who lose their jobs through no fault of their own. Currently, Oklahoma’s unemployment insurance program offers laid off workers a maximum of 26 weeks of benefits. Under HB 1933, this amount of time would be reduced to 16 weeks if average weekly unemployment insurance claims drop below 5,000. Since the turn of the 21st century, Oklahoma has averaged 24,209 unemployment insurance claims per week. With HB 1933 in effect, this would result in a maximum benefits duration of 18 weeks.
Even in poor economic conditions, HB 1933 would reduce unemployment insurance benefits. While the maximum number of weeks offered under the program would increase by two for every increase of 15,000 in Oklahoma’s average unemployment insurance claims, it would only increase up to a maximum of 20 weeks — six weeks shy of the current maximum — unless the average claims reach 40,000. For perspective, weekly unemployment insurance claims have only exceeded 40,000 three times since the 1980s, with each incidence lasting less than a year.
If HB 1933 had been in place for the Great Recession, the maximum 26 weeks of benefits would not have kicked in until March of 2009 — approximately a year and a half after the start of the recession. If HB 1933 were in effect throughout the COVID-19 pandemic, the 26-week maximum benefit duration would have expired by February 2021 while more than 89,000 Oklahomans were still out of work. The COVID-19 pandemic highlighted how crucial unemployment insurance is during sharp economic downturns. Instead of addressing the real problems present in our state and national unemployment insurance policies, HB 1933 would exacerbate them.
Even during economic booms, a strong unemployment insurance system is necessary to support workers
A robust unemployment insurance system is crucial because Oklahoma’s unemployment rate will never be zero — which is not a bad thing. In any economy, no matter how strong, there will always be people who are unemployed through no fault of their own. As businesses (especially new businesses) fail or corporate mergers lead to downsizing, even the most brilliant, hardworking employees can be laid off. Because of this, full employment (the maximum amount of employment an economy can sustain without causing excess inflation) will never mean a zero percent unemployment rate. The natural unemployment rate (the minimum unemployment rate in an economy at full employment) is estimated to be four to five percent. This means there will always be a need for the stability that unemployment insurance provides, no matter how rosy the economic outlook may be.
Unemployment insurance helps to stabilize our economy
Unemployment insurance serves as an indispensable support for the economy by helping to maintain consumer spending. Understandably, people tend to spend less money upon becoming unemployed. Having access to adequate unemployment insurance benefits families, who can feel more secure in their ability to keep food on the table while searching for work. These benefits also support local economies, which are strengthened through families’ spending their benefits with the businesses in their communities.
Despite claims that generous unemployment benefits stop people from going back to work, unemployment insurance likely increases our state’s labor force participation rate. In order to receive unemployment benefits, recipients must prove that they are actively searching for work by contacting at least two employers each week. This requirement helps provide a financial incentive to actively search for a new job and prevents them from dropping out of the labor force entirely. Effectively, unemployment insurance forces people to remain in the labor force in order to receive benefits, making them more likely to find a new position.
Unemployment insurance provides stability to workers
In addition to providing financial stability to unemployed workers and their families, unemployment insurance gives workers more flexibility to look for better paying jobs for which they are better suited. Without unemployment insurance, workers may be pressured to take the first job they are offered, which may not be a good fit.
For instance, a computer programmer who is laid off may be unable to quickly find a new position in their field. While they would very likely be able to find a decent programming job if they searched for long enough, they might not have enough savings to last that long. This could potentially cause them to take the first job they are offered, even if it pays lower, has worse benefits, or is in a field unrelated to their expertise. This is why the presence of robust unemployment insurance increases private sector earnings by giving workers the security they need to find the best quality, best paying jobs for them. Additionally, by maintaining a worker’s financial security during their search, unemployment insurance has been shown to provide long-lasting health benefits for workers. Cutting unemployment benefits would threaten Oklahomans’ financial security, future job quality, and even health.
A weak unemployment insurance system may incentivize companies to offer lower quality jobs
It’s no secret that the economy unfairly favors those who already have power and wealth, and our country has watched levels of inequality rise rapidly. For decades, workers in the U.S. have been becoming increasingly disempowered through declining union power and membership, inadequate minimum wage laws, economic globalization, and diminished worker protections. Greatly reducing unemployment benefits will only further the disempowerment of working Oklahomans.
When workers are unable to leverage unemployment insurance to support them through their job search, they effectively have less bargaining power when it comes to accepting or refusing job offers that might not match their skills or maximize their economic productivity. In places with comparatively short unemployment benefits, companies know that workers are less likely to be able to refuse the terms of an employer’s job offer. Because of this power asymmetry between pressured workers and savvy employers, companies can offer lower quality jobs with worse pay, benefits, or hours because they know workers can’t refuse.
Oklahoma’s legislature should not attack unemployment insurance’s ability to support our workers and economy
Adequate unemployment insurance benefits are crucial to the stability of Oklahoma’s workers and our economy as a whole. Even in strong economic conditions, unemployment insurance helps Oklahomans stay afloat and find good-paying jobs that are right for them. While encouraging Oklahomans to reenter the workforce is an important goal, this would be better accomplished through strengthening the support systems available to our workers. Bills like HB 1933 seek to push Oklahomans into reentering the job market quickly, but such measures may cause unintentional harm to Oklahoma families and our local economies.
