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Don't Tap Unemployment Fund to Train Jobless Workers

Posted by John Regan on May 31, 2013 1:13:00 PM

A proposal by a Beacon Hill lawmaker to tap the Massachusetts Unemployment Insurance Trust Fund to train jobless workers is a non-starter for Bay State employers.

Workforce TrainingSenator Daniel Wolf, D-Harwich, House Chair of the Legislature’s Labor and Workforce Development, suggested during a hearing this week that using UI funds to prepare unemployed people for skilled jobs in the private sector would relieve financial pressure on the UI system.

“There are those in the Legislature, myself included, who look at this as an opportunity to talk about  unemployment insurance and the gap between skilled workers and the needs of employers. We would love to continue that dialogue so that as we reform the UI, not only do we look for ways perhaps to lower the rates or freeze them, but to actually build into those rates some kind of a commitment to workforce training,” Wolf said.

“If what we’re doing is using that fund, whatever fund it goes into, to enhance the skills of workers for the benefit not only of themselves but for the employers of Massachusetts, then this would be the logical place to look for that capacity.”

Associated Industries of Massachusetts has long been committed to improving the skills of workers – our President, Rick Lord, chairs the Workforce Training Fund Program Advisory Board – but we are equally committed to preserving the integrity of the Unemployment Insurance system to pay benefits to people who have lost their jobs.

Massachusetts employers already pay among the highest UI costs in the nation, driven by the commonwealth’s high wages, relatively lenient qualification requirements and overly generous benefit structure. The average UI tax in Massachusetts is $769 per employee per year versus the national average of $361.

Lawmakers and Governor Deval Patrick have been forced to freeze unemployment rates in each of the past five years to head off automatic increases of 30 percent or more, even though the Massachusetts UI system has been more solvent than those in other states. The freeze approved for 2013 will still leave the UI system with an estimated surplus of $600 million at the end of the year.

A portion of employer Unemployment Insurance taxes is already diverted to provide money to the Workforce Training Fund Program, which pays a portion of the cost to upgrade the skills of people who are already working. AIM opposes initiatives to divert any more money from the fund, however laudable the objective.

The stability of the Unemployment Insurance Trust Fund and worker training may be related, but are ultimately separate issues that should be addressed as such.

Topics: Massachusetts Legislature, Unemployment insurance, Issues, Training

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