ClevelandStateUniversity

Policy Brief

Ohio’s Unemployment Insurance

Eligibility Determination

andLow Wage, Part-time Dislocated Workers

AMY L. SHIRLEY

May 4, 2009

SWK 300 SOCIAL WELFARE POLICY

PROF. MICHAEL A. DOVER

SPRING 2009

1. GOAL STATEMENT

Ohio’s Unemployment Insurance determination policies do not currently award benefits to low-wage, part-time dislocated workers although these members are a large number of Ohio’s labor force. Ohio’s Unemployment Insurance determination policies need to improve and catch up with the practices of most other states to include this population of the labor force.

2. SCOPE OF THE PROBLEM

The total percentage of part-time worker’s in the United States has held at approximately 17 percent for multiple decades (Maher, 2008). It is true that there are many workers who choose to work one or multiple part-time jobs but in recent years, due to the state of our country’s economy, many full-time workers have been forced into part-time hours by their employers in efforts of avoiding or delaying mass lay-offs, or hourly pay cuts. In 2008 our nation’s 3.7 million of our full-time labor force suffered job cuts to part-time status to avoid lay-offs which is the highest national figure in more than 50 years (Hanauer, 2008). As for those workers that work more than one part-time job the loss of one of those earned incomes greatly impacts their finances and budget. In fact, per Policy Matter’s Ohio, 13 percent of Ohio’s part-time labor force reports that they would rather have full-time employment but can only find part-time work (Hanauer, 2008).

The part-time labor force in Ohio is substantial at approximately 18.8 percent of all employed residents (Schiller, 2001). As in most of the country, most of Ohio’s part-time workers over the age of 16 are women totalingapproximately 70 percent of the total part-time labor force (Schiller, 2001). Currently part-time workers earning minimum wage, $7.35 per hour and working less than 28.5 hours per week would not qualify for Unemployment Insurance in Ohio if they lost their job through no fault of their own(Schiller, 2001). The average part-time employee works 22 to 26 hours per week (Schiller, 2001), and earns $8.00 per hour, $.70 above minimum wage, will not qualify for unemployment compensation benefits in the state of Ohio.

3. PAST POLICY

The Federal unemployment insurance system has been slow to change with today’s economy and on the state level Ohio is found to be one of the most restrictive states in determining unemployment insurance eligibility (Schiller, 2001). Although unemployment insurance is a federally mandated program each state, under guidelines can determine eligibility rules and limits much how state’s can determine a higher minimum wage than the federally mandated minimum wage.

In a report produced by Policy Matters Ohio,“State of WorkingOhio, 2003…In Brief”,Ohio was one of eight states that failed 4 of the 5 categories being reported on (eligibility requirements, employer taxes, solvency, preparedness for a recession, and benefits). Since this time many other failing states in the country have improved their unemployment insurance programs in efforts to determine part-time laborers eligible for benefits however Ohio remains one of six states where a minimum wage worker, working 20 hours per week, all year long would not qualify for unemployment compensation benefits.

In the beginning Ohio was a front runner in establishing the unemployment insurance system that emerged in the early 1930’s as a result of FDR’s New Deal and all states eventually adopted Ohio’s plan that called for pooled state fund of taxes paid by employers and employees to support the system (Schiller, 2001). At the time most states used only individual employer reserves. In 1939 the first benefits were paid to the unemployed worker (Schiller, 2001). Unfortunately the recessions of the late 1970’s and early 1980’s weighed on Ohio’s unemployment system, as well as many other states, and ever since low-wage workers had to earn more to qualify for benefits (Schiller, 2001).

4. CURRENT POLICY

Ohio’s unemployment insurance program enforces one of the strictest standards in the nation and bases not only how many hours a person has worked but also how much they earned before qualifying for unemployment insurance (Schiller, 2001). Ohio is among the top three states in the country (Michigan and Kansas being the other two) with the highest earnings requirement and also one of three states that bases eligibility on an average weekly earning over a period of time, as opposed to hours worked and total earnings in the quarter prior to filing for unemployment insurance (Schiller, 2007).

Currently in the State of Ohio, and based on information provided by the Ohio Department of Job and Family Services, a worker must earn an average weekly wage of $210.00 during the base period (20 concurrent weeks prior to filing for unemployment compensation benefits). A part-time worker that earns minimum wage, $7.30 per hour, and works 28.5 hours per week for a period of 20 consecutive weeks prior to filing for unemployment compensation benefits will not qualify for cash benefit in the state of Ohio.

5. PROPOSED SOLUTIONS

Every worker earning minimum wage and working at least 20 hours per week within the base period should qualify for Unemployment Insurance in the state of Ohio, or any state in our country for that matter. Unemployment Insurance has been slow to change to meet today’s labor force and economical demands. The current eligibility determination factors are systematically discriminating against part-time laborers, minimum wage workers and women who are a substantial portion of Ohio’s labor force as well as the country as a whole.

Policy Matter’s Ohio has made these following suggestionsbe made in order for low-wage part-time workers to become eligible for unemployment compensation and the suggestions are in line with other state’s best practice.

  • Determine eligibility based on hours of work, not earnings. If the state reduced it’s earnings requirements by allowing any minimum-wage earner working 20 hours a week for 20 weeks to qualify.
  • Permit unemployed part-time employees working at least 20 hours a week who are seeking similar part-time work to qualify.
  • Consider increasing benefits for low-wage workers to 60 percent of their previous weekly wages and revising the system for dependents’ allowances.
  • To finance these changes, index the taxable wage base to wage levels, as many other states do.

As of March 2009 Ohio’s unemployment reached 9.5 percent however it is likely much

higher considering the part-time labor force that is too loosing employment through no fault of their own.

6. KEY ORGANIZATIONS

Policy Matters Ohio

Zach Schiller, Senior Researcher

Amy Hanauer, Director

3631 Perkins Avenue, Suite 4C

East Cleveland, Ohio44114

216-361-9801

1372 Grandview Ave, Suite 242

Columbus, Ohio43212

614-486-4601

United Labor Agency

David Megenhardt, Executive Director

3328 Carnegie Avenue

Cleveland, OH44115

216-391-0900

OhioAlliance for Retired Americans
David Friesner, President

Norman Wernet, State Director

395 E. Broad St., Suite 300

Columbus, OH43215
614-224-8271 x1004

Ohio Department of Job and Family Services

Douglas E. Lumpkin, Director

30 East Broad Street, 32nd Floor

Columbus, OH43215

614-466-6283

Ohio Office of Budget & Management

J. Pari Sabety, Director

30 East Broad Street, 34th Floor

Columbus, OH43215

Governor’s Office

Ted Strickland, Governor

RiffeCenter, 30th Floor

77 South High Street

Columbus, OH43215

614-466-3555

U.S. Department of Labor

Hilda Solis, Secretary of Labor

Suey Howe, Deputy Assistant Secretary for Policy

Douglas F. Small, Deputy Assistant Secretary for Employment and Training

200 Constitution Avenue, NW

Washington, DC20210

202-693-6000

7. GLOSSARY

Unemployment Compensation Benefit: A federal cash benefit paid by the state to a dislocated worker whom looses their job through no fault of their own.

Dislocated Worker: A member of the labor force whom looses their job through no fault of their own.

Low Wage Worker: A member of the labor force whom earns less than the poverty line determined by the federal government.

Part-time Worker: A member of the labor force whom works less than full-time annually (less than the average 40 hours per week or 2080 hours per year).

Full-time Worker: A member of the labor force whom usually works an average of 2080 hours per year (full-time employment can vary based on the organization determining their full-time workers hours).

Underemployed: A member of the labor force whose hours are cut to less than full-time and/or a dislocated worker that returns to the labor force earning less than 80% of their former wage.

Federal Minimum Wage: A minimum hourly wage that an employer can pay their employee mandated by the federal government. The current federal minimum wage is $6.55 per hour (increasing to $7.25 per hour in July of 2009).

State Minimum Wage: Although the federal government mandates a minimum hourly wage employers must pay their employees states have the right to mandate an hourly rate higher than the federal minimum hour wage. The state of Ohio’s current minimum hourly wage is $7.35 as of January 2009.

8. BIBLIOGRAPHY

Becker, J. (1980). Unemployment benefits: Should there be a compulsory federal standard, 84. American Enterprise Institute for Public Policy Research.

Glans, M. (September 2008). Research & Commentary.Modernizing unemployment insurance for a 21st century economy, 34. The Heartland Institute.

Schiller, Z. (September 2001). Unemployment isn’t working: A proposal to better insure Ohio’s workers, 1-26. Policy Matters Ohio.

Schiller, Z. (September 2001). Unemployment isn’t working: A proposal to better insure Ohio’s workers, 1-26. Policy Matters Ohio.

Schiller, Z. (December 2007).Ohio still excludes many from unemployment compensation, 1. Press Release. Policy Matters Ohio.

Hanauer, A. (September 2008). The state of working Ohio 2008, 1-32. Policy Matters Ohio.

Maher, K. (March 2008). The Wall Street Journal. More people pushed into part-time work force.

O’Leary, C. & Wendner, S. (1997).Unemployment insurance in the U.S.: Analysis of policy issues, 766. Upjohn Institute for Employment Research.

Hartmann, H. (2006). Journal of women, politics and policy. Women, work, and poverty: Women centered research for policy change, 27(3/4), 1-4.

Hanauer, A. (September 2008). The state of working Ohio 2008, 1-32. Policy Matters Ohio.

Mccmurer, D. & Chasanov, A. (1995). Monthly Labor Review. Trends in unemployment insurance benefits,118.

Hartmann, H. (2006). Journal of women, politics and policy. Women, work, and poverty: Women centered research for policy change, 27(3/4), 1-4.

Ohio Department of Job and Family Services. (2009). Worker’s guide to unemployment compensation, 1-34.

Schiller, Z. (September 2001). Unemployment isn’t working: A proposal to better insure Ohio’s workers, 1-26. Policy Matters Ohio.

Schiller, Z. December 2007). Ohio still excludes many from unemployment compensation, 1. Press Release. Policy Matters Ohio.

Hanauer, A. (September 2008). The state of working Ohio 2008, 1-32. Policy Matters Ohio.

Schiller, Z. (September 2001). Unemployment isn’t working: A proposal to better insure Ohio’s workers, 1-26. Policy Matters Ohio

Honeck, J., PhD. (February 2008). Meeting the challenge: Improving dislocated worker services in Ohio, 1-43. Policy Matters Ohio.

Schiller, Z. (December 2007). Ohio still excludes many from unemployment compensation, 1.

Press Release. Policy Matters Ohio.

Maher, K. (March 2008). More people pushed into part-time work force. The Wall Street

Journal.