PHOENIX — The state Senate voted 25-4 Thursday for the first increase in unemployment benefits since 2004.
Senate Bill 1411 would move the cap next year to $320 a week. That’s $80 more than the maximum anyone laid off or fired through no fault of their own can now collect.
But there are trade-offs.
Right now someone who qualifies for benefits can collect checks from the state for up to 26 weeks. As approved, the measure says that would drop to 22 weeks any time the unemployment rate was 6% or less.
“We know that people will get back to work in that time in times of good economic development,” said Senate President Karen Fann, R-Prescott, who wrote the bill.
Federal Reserve chairman Jerome Powell expressed optimism about a rebound for the U.S. economy once the pandemic is over.
She originally wanted that to drop back to 20 weeks at the 6%-or-lower unemployment rate, but agreed to a compromise to pick up support from Democrats. That was crucial as several Republicans refused to support the plan.
The last time the state jobless rate was below 6% was August 2020.
Fann did get part of what she sought: The cap would, in fact, drop to 20 weeks whenever the jobless rate was less than 4.25%, a figure the state hasn’t seen since January 2008.
The measure now goes to the House, which already approved a similar but competing measure sponsored by Rep. David Cook, R-Globe. The most significant difference is that his House Bill 2805 would increase the benefits to $300 a week but would not cut the eligibility to less than 26 weeks regardless of the state unemployment rate.
Cost to companies
To finance all this, employers would have to pay more.
Companies pay a tax based on the first $7,000 of each worker’s salary.
The actual tax rate is based on each firm’s history: Those that tend to keep their workers are paying less than 1%; companies with higher turnover can end up with an 11.6% tax.
Right now, the average tax rate is 2.28%, or about $160 a year, says the Arizona Department of Economic Security.
Fann’s bill would increase the base next year to $8,000, adding about another $23 a year per worker.
She said the move is not only good for the health of the trust fund that finances the benefits, but is long overdue, as are increases in the benefits themselves.
“The $7,000 base on employee wages, that has not been increased for 36 years, either,” she said.
Here, too, there was another compromise.
Her original plan would have boosted that to $9,000 in 2023 to ensure there is enough money in the trust fund, but that raised some concerns among business owners. She said it also proved unnecessary.
“We got updated numbers from the Joint Legislative Budget Committee,” she said. “We will be fine just going to the $8,000 next year.”
One change aimed at helping part-timers
The legislation also contains another significant change.
Under current law, once someone earns $30 a week, the jobless benefits end. SB 1411 would raise that to $160.
Fann said that benefits not just workers who lose full-time jobs, but also employers if they now need part-time employees.
She said it would allow a firm to convince workers to come back part-time, a couple of days a week, as the employees would know they won’t lose their benefits.
The package has other items designed to attract legislative votes.
On one side, it would set up an automatic increase in benefits to $400 a week. But that wouldn’t happen unless and until the trust fund, now effectively broke, is restored to its full strength of more than $1 billion.
But Fann, seeking to appeal to business concerns, also agreed to put in statute a series of provisions she said are designed to prevent fraud.
She said there were some “major fraud problems” last year at the Department of Economic Security, which administers the benefits, much of that due to a flood of applications as the state’s unemployment rate went up and the federal government began offering additional benefits.
The new requirements, Fann said, would “make sure that we’re paying exactly who needs to be paid and not people — and I’m not kidding — from Russia.”
Business support cited by Chamber
The plan has the blessing of key elements of the business community, said Garrick Taylor, acting president of the Arizona Chamber of Commerce and Industry.
He said there is a coalition that sees this as a way to update the state’s unemployment insurance system “in a way that helps Arizonans get back to work while also preventing fraudulent claims and minimizing the potential negative impacts on employers.”
That, however, did not convince some Senate Republicans.
Sen. J.D. Mesnard, R-Chandler, said this should have been part of a broader plan to deal with overall unemployment and the economy, rather than just something that will increase the cost of the program on businesses.
For Sen. Sine Kerr, R-Buckeye, what’s in SB 1411 — and the cost to employers — is a little premature. “I still have businesses in my district that are still hurting and trying to recover,” she said.
Sen. Kelly Townsend, R-Mesa, said the measure lacks one thing: accountability by the DES.
“I think that we’re forgetting a very important aspect of unemployment and how everyone suffered this last year due to an outdated and archaic system,” she said.
Townsend also said people who were due benefits could not get anyone at the DES to answer their phone calls or return emails and that the department clearly was unable to handle the volume of applications.
“That needs to be fixed first before we continue to put more money into the system,” she said.
Joining Mesnard, Kerr and Townsend in voting against the bill was Sen. Michelle Ugenti-Rita, R-Scottsdale.
Out of Work in America: Following Americans who found themselves out of work
Americans have endured economic crises before but none quite like this. To capture the depths of the suffering, The New York Times teamed up with 12 news organizations from across the country — including the Arizona Daily Star — to document the lives of a dozen Americans who found themselves out of work.
For months, we followed them as they dialed unemployment hotlines, applied for hundreds of jobs and counted every dollar in their bank accounts for rent and food. All of it while trying to survive a pandemic.
A conference call in which everyone on the line was told they were laid off.
An email declaring that a restaurant had served its last meal.
A phone call from the boss before work one morning saying to come in — and pack up all your things.
In March and April, as the coronavirus began tearing through the country, Americans lost as many jobs as they did during the Great Depression and the Great Recession combined – 22 million jobs that were there one minute and gone the next.
A job is a paycheck, an identity, a civic stabilizer, a future builder. During a pandemic, a job loss erases all that, when it is needed the most.
In Kentucky, Kalyn Fiorella Burns, 35, told The Owensboro Messenger-Inquirer about spending nine hours a day on hold, just to get her first unemployment check.
The Arizona Daily Star spoke with Oscar Elijo Saenz, a 26-year-old sommelier in Tucson, who by week seven of unemployment was considering working at a funeral parlor out of desperation.
For months, journalists at The Times and 11 other news outlets, including the Arizona Daily Star, catalogued how the dual blows of joblessness and the pandemic were changing the lives of a dozen Americans.
We give economic downturns names and dates to tame and box in their upheaval. And so the namelessness of this crisis both heightens its chaos and masks the scale of its devastation.
The effects of the Great Depression were plain to see as it unfolded 90 years ago: soup lines formed beneath storefront signs advertising free meals for the unemployed. The impact of millions of lost jobs today is less visible when so many are staying home. Social distancing has helped financial suffering hide.
Stephanie Fitzgerald, 36, was laid off in June. She was a software engineer with two master’s degrees making roughly $100,000 a year and raising three children in rural Frenchtown, Mont.
By early October, she was still without a full-time job, and the waiting was taking a deep toll.
She was scraping by on unemployment benefits and the $220 a week she made delivering groceries. The bundles she delivered to strangers were more substantial than the bundles she brought home to her children.
“I’m probably the most educated grocery-delivery person, and I always thought, ‘What would they say if they knew an engineer is delivering their groceries?’ ” Fitzgerald said.
In recent days, Fitzgerald and her family were on the verge of homelessness. It had been four months since she was laid off. She broke down in tears at one point.
And then the next day, she got the call.
She ran up the stairs to shout the news.
Tucson certified sommelier Oscar Saenz lost both his jobs to COVID-19 and watched as his chosen field dissolved around him. Star reporter Andi Berlin followed his quest to survive and chart a new course.
After being laid off via group Zoom meeting, Evetta Applewhite decided she never wanted to experience that again and launched one entrepreneurial venture after another.
Because she made too much last year to qualify for Medicaid, Stephanie Fitzgerald resorts to delaying, skipping doses of her heart medication.
'I don’t feel like the pandemic is over, because nothing is like it used to be. I’m reminded everywhere I go, every time I listen to the news. I’m reminded every time I see people wearing masks.'
To keep money coming in, Al Ernst tries his hand at sanitizing carts at a grocery store and selling Mary Kay cosmetics.
As President Trump ends a program that let families fleeing El Salvador and other countries temporarily live and work here, Nery Martinez worries about having to leave his adult children behind.
'A lot of people are staying home all the time. And that's good. But when you're in the food and beverage business, you need people coming out and enjoying themselves.'
'I’ve submitted over 100 applications since April. I could say maybe 20 of those called because they at least let you know where you stand. Not knowing is frustrating.'
'This is all so hard. I had my security, working 30 years without stopping. This is the first time I ever applied for unemployment. I’ve never, ever lived off the government — always off my own hard work.'
'As far as the job market goes in the future, it’s hard to say. People are finding new and different ways to work around the pandemic. And some people are stuck.'
Marina Moya, 24, was a team lead at Caterpillar, a construction machinery and equipment company in South Texas. With production declining, Ms. Moya was let go in early May.
With a few sources of income, Barbara Eckes, 61, thought she was doing pretty well financially when 2020 started. But once the pandemic started, she was down to her $327 monthly pension from service in the U.S. Army.
As COVID-19 cases rise again in Arizona and Pima County, hospitals could become overburdened once more, leading to another crisis point.
