This article first appeared in the St. Louis Beacon, April 14, 2011 - The Missouri Department of Labor says that the state's eligibility for future federal unemployment benefit extensions won't be jeopardized by a new state law, signed Wednesday by Gov. Jay Nixon, that cuts Missouri unemployment benefits for future recipients to 20 weeks, from the 26-week maximum in place for decades.
The state is the second in the nation to make the benefit cut, and the first to put it into effect.
A Missouri Labor Department spokeswoman said the reduction "will not have an impact on the eligibility to receive future federal benefits."
But the federal Department of Labor said in a statement late today that the state's benefit cut means that the affected unemployed workers will qualify for fewer weeks of additional federal help. The federal unemployment benefits are based on the worker's former wages and the extent of their state benefit, which is doled out first, the department said.
"The unemployment compensation program is a federal-state partnership," the federal agency said. "If state law provides that the maximum number of weeks an individual may receive (state) benefits is less than 26 weeks, the individual will receive fewer weeks'' of additional federal aid.
Missouri's benefit cut was part of a deal brokered by the Missouri Chamber of Commerce and Industry so the state could receive more than $105 million in extended federal benefits.
During Wednesday's bill-signing, Nixon said he was concerned about the future state benefit cut, but agreed to it in order to get the $105 million and restore extended federal benefits for about 10,000 currently unemployed Missouri workers who lost them earlier this month. The money had been blocked by a filibuster in the state Senate conducted by several state conservative Republicans who wanted to reject the money in order to make a statement about federal overspending.
As part of a deal to end the filibuster, the chamber successfully lobbied to insert in the same bill the provision that cuts state unemployment benefits for future recipients from 26 weeks to 20 weeks. The chamber says the reduction will save $124 million a year in unemployment insurance taxes levied on Missouri businesses.
Missouri's action comes just weeks after Michigan's legislators and the governor became the first in the country to opt to cut state unemployment benefits to 20 weeks; 26 weeks has been the standard nationwide for decades. But because Missouri's measure has an emergency clause, Missouri will be the first in the country to actually impose the cut.
At Wednesday's news conference, state labor officials said that anyone laid off in Missouri after Sunday would be affected by the cut in benefits. Michigan's benefit cut doesn't go into effect until 2012.
Missouri, like Michigan, has a Republican-controlled legislature. Michigan also has a Republican governor who sought the cut, although Michigan's unemployment rate is above 10 percent. In fact, a spokeswoman for Missouri Senate President Pro Tem Rob Mayer, R-Dexter, is quoted in the Huffington Postas saying that Senate leaders got interested in the 20-week limit after reading a New York Times story on Michigan's decision.
Florida's Republican-controlled legislature also is considering a benefit reduction, although its unemployment rate is in the double-digits.
In a statement, the Missouri chamber said the benefit change eases "some of the burden of the growing debt of Missouri's insolvent unemployment insurance trust fund.'' The chamber added that the benefits cut "was key in gaining support and passage of the bill in the Missouri Senate and House."
The chamber said the reduction "was made possible by the much-publicized filibuster" by four state senators, including Republicans Jim Lembke of Lemay and Brian Nieves of Washington, who opposed the state's acceptance of the $105 million in federal funds and wanted to take a public stand against government spending.
"To the observer, the tactic of filibustering an extension of unemployment payments may be difficult to understand when long-term unemployment remains high in Missouri," said Daniel P. Mehan, the Missouri Chamber's president and chief executive officer.
"But in the end, these lawmakers' principled stand against federal spending led to a monumental tax reform measure that, if signed into law, will reduce future debt by the state and reduce government imposed taxes on employers by as much as $124 million annually. The Missouri Chamber of Commerce and Industry is proud to have negotiated this historic tax cut."
Missouri employers could see a reduction in the costs of unemployment insurance by as much as 23 percent, Mehan said. "This tax cut can be used directly by businesses to create and retain jobs in Missouri. Moreover, this tax cut will not reduce the available funds for essential state services like education, transportation and law enforcement."
The $105 million in federal unemployment money will extend current federal unemployment benefits for people already unemployed from 79 to 99 weeks. The federal extensions have kicked in after unemployed people have maxed out their state benefits, which had been 26 weeks.
A spokeswoman for the Missouri AFL-CIO said late Wednesday that cutting unemployment benefits to 20 weeks "permanently damaged a vital component of the safety net in the process. ... putting future workers at a disadvantage in order to pacify the four senators" who led the filibuster.
The AFL-CIO also criticized the state Senate for agreeing to reject $250 million in other federal stimulus funding, which the state labor organization said was to be used for "funding for infrastructure that serves as the foundation of Missouri's economy as well as for a variety of programs that assist working Missourians."
At his news conference, Nixon did take issue with the comments of some legislators who had asserted during debate that some people who received unemployment benefits were "gaming the system,'' as one put it, and did not deserve help.
"In order to get unemployment benefits, you have to have been working,'' the governor said. He added that people who receive benefits -- especially the extended federal benefits -- "must check in and document'' that they are searching for work.
In any case, the chamber said the lower 20-week maximum "sets Missouri apart from the majority of states and could be used to lure new businesses and jobs to our state."
And for the moment, unless another state follows suit, Missouri apparently stands alone until 2012 with its 20-week limit on unemployment benefits.
"Businesses looking to take root or expand will see this tax cut as great news,:" said Mehan. "It will be a strong recruiting tool for courting new businesses to Missouri."
