Senate passes amended unemployment legislation

Sen. Mike Caputo, D-Marion, questions Sen. Eric Nelson, R-Kanawha, about an amended version of an unemployment bill that senators passed Wednesday, Feb. 28, 2024. (Will Price | West Virginia Legislative Photography)

In a change from a previous version of the legislation, West Virginia Senators on Wednesday advanced a bill that changes the structure of unemployment benefits in the state.

The Senate finance committee on Saturday approved Senate Bill 840, which would tie the duration of unemployment benefits to the state’s unemployment rate, an approach known as indexing, and Senate Bill 841, which would reduce the amount of weekly unemployment benefits a worker gets to a maximum of $550 per week.

The proposed legislation drew criticism from labor organization West Virginia AFL-CIO and its affiliates and the West Virginia Center on Budget and Policy , which noted that the legislation would especially harm small, rural counties in West Virginia. Opponents pointed to recent layoffs after Allegheny Wood Products said it would close and within two weeks of Cleveland-Cliffs laying off about 900 workers in the Northern Panhandle.

On Wednesday, senators effectively killed Senate Bill 840, moving it to the Rules committee, which did not take it up during its afternoon meeting.

In its place, the Senate passed an amended version of Senate bill 840 presented by Sen. Eric Nelson, R-Kanawha.

In the amended version, the duration of unemployment benefits would be reduced from 26 weeks to 24 weeks with no tie to the state’s unemployment rate.

For the first four weeks of unemployment, a person would receive 70% of their average weekly  wage. The amount would be reduced by 5 % each four-week period after that, through the sixth four-week period, when workers would receive 45% of their average weekly wage.

Nelson said the average time an unemployment recipient uses the benefits is 14 weeks, according to Workforce West Virginia.

“The average person under this plan will receive more,” Nelson said.

Under the legislation, benefits for higher wage earners — those making over $53,000 — would still be based on a $53,000 per year salary.

Explaining the amended version to lawmakers Wednesday, Nelson said the bill would stabilize the state’s unemployment compensation system.

“It will make sure that West Virginians that lose their jobs have a safety net while they get back on their feet,” Nelson said. The bill would also provide stability and predictability to employers, he added.

Nelson explained that the reason the changes are needed goes back to 2009, the last time that lawmakers had issues with the unemployment compensation fund. In 2009, lawmakers put in triggers for when the fund reached $220 million that changed the employer contribution and the employee benefit.

“We’d never been even close to that $220 million,” Nelson said. “What happened then in [2021] with the COVID and the big unemployment that hit, $600 million went in, we went over that $220 million.”

The trigger increased the employer contributions and the benefit that recipients receive. Unemployment benefits were stuck at $424 per month from 2009 to 2021, he said. Now they’re at $662 and on a path to go to more than $800, which would have “put our fund in a very negative position in three to four years,” Nelson said.

The bill would also allow recipients to work a part-time job up to the amount of their unemployment benefits, Nelson said.

Sean O’Leary, senior policy analyst for the Center on Budget and Policy, said lowering the benefit amount as time goes on is problematic for the people who do stay on the benefits longer than the average amount of time. According to the federal Department of Labor, about a quarter of unemployed workers use all 26 weeks of unemployment, he said.

“The longer you’re unemployed, you’re spending down your savings. … The financial pressures are greater the longer you’re unemployed, at the same time that these bills are reducing benefits,” he said. “So that becomes a problem for workers who are unemployed.”

People who receive the maximum benefit would receive around $3,100 less over the duration of 26 weeks, he said.

O’Leary said having workers work part time to make up for lowered benefits is not a good solution.

“You want workers to be matched up to the jobs where their skills are applicable,” he said. “And  when you’re taking away their benefits and forcing them into part time jobs or jobs that [don’t] necessarily match their skill level, that’s not good for the economy. You want construction workers working construction, you want manufacturing workers working manufacturing, you want retail workers working retail, that’s where your skills are applicable. That’s where that’s what’s best for the economy.”

Businesses don’t want to hire workers who don’t have the right skillset and those who are going to leave at the first opportunity, he said.

O’Leary said the unemployment compensation fund is in “good shape,” and referenced a report from John Deskins, director of the Bureau of Business and Economic Research at West Virginia University, that indicated that under its current structure the fund would last for two years even in a severe recession with 10 percent unemployment.

“The trust fund is in really good shape,” he said. “I don’t think this bill will do much in the way of helping or harming the trust fund just because of the way the benefits are structured and because the employer contribution is frozen.”

O’Leary noted that the people most affected by the changes would be those who stay on unemployment for the longest.

“We know … the long-term unemployed are Black West Virginians, are the disabled, are low skilled, low educational attainment workers,” he said. “So those are the workers that would be most affected, that don’t have the high skill sets, that don’t have many job opportunities, particularly in these rural counties. And then Black West Virginians who are facing historical discrimination.”

In a statement Thursday, Josh Sword, president of the West Virginia AFL-CIO, noted that the bill makes “unprecedented” changes to the state’s unemployment insurance fund, which is “healthy as it has ever been” at a time when the state has historically low unemployment. Sword said early analysis of the bill found “multiple flaws,” which happens with bills written at the 11th hour.

“We also know through early analysis of the bill, workers would be shorted $4,000 if they need to utilize the entire duration of benefits,” Sword said. “I don’t think politicians in Charleston should be stealing up to $4,000 in earned benefits from any worker, much less workers who have just received the devastating news that they lost their jobs through no fault of their own.

“We’re going to continue to review the legislation and will likely find more problems,” he said. “This is too big of an issue, and too important to every West Virginia worker to get this wrong. There’s not enough time in this legislative session to get it right.”

Senators passed the bill with a 24 to 7 vote.

Speaking against the legislation, Sen. Mike Caputo, D-Marion, called on lawmakers to slow down, saying that the amendment was just put in the system at 5:36 p.m., around the same time the Senate reconvened.

“I think we need to slow this train down, Mr. President,” Caputo said. “I think this train needs to slow down. This is very important. It is very, very, very important. And we can’t get this wrong.”

He suggested taking up the legislation at a potential upcoming special legislative session.

“We can work on this,” Caputo said. “We can bring all the stakeholders together for some good formal discussion and make sure we’re doing the right thing.”

Sen. Laura Chapman, R-Ohio, also voted against the bill. Chapman said she voted to protect her constituents, some of which will be out of a job after the Cleveland-Cliffs plan idled, laying off about 900 workers.

“I can’t in good conscience vote for an unemployment bill that could reduce their benefits,” she said.

Officials have pointed out that proposed legislation would not go into effect until Jan. 1, 2025.

Chapman said people are looking at the bill now to see if the numbers could be changed slightly before it becomes law.

“I would like to be able to make it so that even if the time as far as weeks gets reduced, at least the benefits should remain the same for those weeks,” she said. “Because unemployment is still not a substitute for a job. And we don’t want people to not be able to put food on their table or pay their mortgage or the rent.”

Chapman said in her district, there are other jobs available at companies like Form Energy and Pure Watercraft, but not enough to accommodate all the displaced workers.

“So we’re still going to have the problem of people not being able to find a job in those numbers,” Chapman said. “And the last thing I want is for hardworking families to leave the state because they can’t find employment. So to me, I just cannot support that bill yesterday.”

The bill will now go to the House of Delegates for consideration.

This story has been updated.

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