AWB Is Very Disappointed the House Passed Legislation Rolling Back of Unemployment Insurance Reforms from 2003
Arpil 1, 2005
by Don Brunell
Association of Washington Business
OLYMPIA -The Association of Washington Business (AWB) is very disappointed that House Democrats passed SHB 2255 before allowing the 2003 unemployment insurance reforms a chance to work.
"The ink isn't even dry on the reforms and unions started the process to undo them," AWB President Don Brunell said. "Many of the reforms are beginning to phase in, and they ought to have a chance to work before they are changed."
Brunell was referring to the Friday vote on SHB 2255. The bill, pushed by House Speaker Frank Chopp (D-Seattle) and Commerce and Labor Chair, Rep. Steve Conway (D-Lakewood), passed the House, 56-41, basically along a party-line vote. Only Democrat Kelli Linville (Bellingham) and Republicans Tom Campbell (Spanaway) and Shirley Hankins (Richland) broke party ranks.
"It is jobkiller bill," Brunell added. "It is a step backwards!"
According to the Washington Alliance for a Competitive Economy's 2005 Competitiveness Redbook, Washington's $695 per employee cost for unemployment insurance is the highest in the nation. High-wage Alaska is second at $650, and South Carolina is 35th at $140.
Just two years ago, Democrats, Republicans, employers, Boeing and its machinists collectively agreed upon the 2003 reforms with the passage of Senate Bill 6097. It was the result of sincere compromises where some groups representing seasonal workers actually increased their costs to make the system more equitable. It is a delicate balance and SHB 2255, if passed by the Senate, would destroy that balance.
The core of the reforms, which some unions object to, is the benefit calculation central to controlling costs. The 2003 reforms changed the unemployment-benefit calculations from the two highest quarters to what someone earned all year. SHB 2255 would switch it back.
By the time SB 6097 passed, Washington's unemployment insurance costs were 317 percent higher than the national average. The immediate goal of the reforms was to cut this to 200 percent within a few years. In addition to the employment-benefit calculations, other components of the reform included the elimination of $65 million in benefits for people who voluntarily left their jobs, tightening of definitions for misconduct, refining job-search requirements, fraud prevention, and reducing the duration of the benefits from 30 weeks to 26 weeks.
Brunell points out that one of the key factors in landing the Boeing 787 assembly plant in Everett was the decision by then Gov. Gary Locke and the 2003 Legislature to reform the state's unemployment insurance system. Lawmakers in Olympia vividly remember Boeing's commercial airplane CEO Alan Mulally testifying that, of all the places the company operates, Washington had the highest unemployment insurance costs-bar none!
How many of those 1,200 Boeing jobs will be in Washington if the reforms are undone? "Now is not the time to retreat from the commitment we made in 2003 to a stronger economy and secure UI program," Brunell said.
It will be three years before Boeing's assembly jobs materialize in Washington. WashACE cautions state and local officials to be mindful that, in today's fast-paced global economy, three years is an eternity. Other states and countries are aggressively courting Washington companies and jobs, and it's still possible that those 1,200 assembly jobs could go elsewhere if Washington becomes unfriendly to business and piles on news taxes and fees.
For example, South Carolina recently announced $166 million in tax incentives to convince a Boeing subcontractor to site its $560 million aircraft complex at the Charleston International Airport. In contrast, some Washington state lawmakers want to increase taxes and fees on employers.
"Costs matter today," Brunell said. "This report is a stark reminder that if our state keeps adding to the costs of producing goods and services, employers and the jobs they create will move to places where they can be competitive."
To download a copy of the latest WashACE Competitiveness Brief go to www.awb.org, www.waroundtable.com or www.researchcouncil.org.
Those 41 legislators supporting AWB's Position by Opposing SHB 2255 include:
Ahern, Alexander, Anderson, Armstrong, Bailey, Buck, Buri, Chandler, Clements, Condotta, Cox, Crouse, Curtis, DeBolt, Dunn, Ericksen, Haler, Hinkle, Holmquist, Jarrett, Kretz, Kristiansen, Linville, McCune, McDonald, Newhouse, Nixon, Orcutt, Pearson, Priest, Roach, Rodne, Schindler, Serben, Sharbro, Strow, Sump, Talcott, Tom, Walsh and Woods.
Those 56 legislators opposing AWB's Position by Supporting SHB 2255 include:
Applenton, Blake, Campbell, Chase, Chopp, Clibborn, Cody, Conway , Darneille, Dickerson, Dunshee, Erickmeyer, Ericks, Flannigan, Fromhold, Grant, Green, Haigh, Hankins, Hasegawa, Hudgins, Hunt, Hunter, Kagi, Kenney, Kessler, Kilmer, Kirby, Lantz, Lovick , McCoy, McDermott, McIntire, Miloscia, Moeller, Morrell, Morris, Murray, O'Brien, Ormsby, Pettigrew, Quall, Roberts, Santos, Schaul-Berke, Sells, Simpson, Sommers, Springer, B. Sullivan, P. Sullivan, Takko, Upthegrove, Wallace, Williams and Woo.
Excused was Skinner.
The Association of Washington Business (AWB) is Washington's oldest and largest statewide business organization. It celebrated its 100th Anniversary last year and is Washington's Chamber of Commerce. AWB's 4,700 members employ more than 600,000 in the private sector of which 85 percent work in small businesses. More than 80 local chambers and 120 trade and professional associations affiliate with AWB.
Contact: Don Brunell (360) 870-2910