Legislative Memo

Lev Ginsburg
Director of Government Afairs
T 518.465.7511 x207


A.4920-A (John) / S.4053-A (Monserrate)



Increases unemployment benefit rates; increases unemployment insurance taxable wage base



June 1, 2009


The Business Council opposes this bill which increases the maximum weekly unemployment benefit rate in each of the next four years to $625 in 2012; raises the taxable wage base which funds unemployment benefits in each of the next four years to a level of $13,000 in 2012; and, commencing in 2013, gives authority to the Commissioner of Labor to set the taxable wage base at a level sufficient to fund unemployment benefits for which the maximum benefit rate each year will be set at one-half the state's average weekly wage.  Additionally, the bill increases the maximum benefit for those who earn less than $8,000 in their high calendar quarter base period to approximately 54% of their weekly wage; imposes new unemployment cost burdens on public and private institutions of higher education; requires all agricultural employers, including small family farms, to provide unemployment insurance coverage; broadens the definition and standards to collect unemployment benefits for domestic violence survivors; and adds new language for those collecting unemployment benefits while in training (“599 program”).

This bill seeks to 'reform' the unemployment insurance system — a system whose benefits and administration are  100% funded by employer taxes to the Unemployment Insurance Trust Fund  — little regard to the burden these expanded benefit rates and claimant eligibility categories will have on the cost and integrity of the system. The unemployment insurance system since its inception has been an experience-rated system, establishing an individual employer's tax rate to a level commensurate with that employer's use of the system.  This legislation would alter the system shifting the current experience-rated model to a model which socializes the benefit and system costs across all employers, disproportionately placing a burden on higher wage employers. Additionally, this bill would increase costs significantly for stable employers, regardless of their use of the system.  The bill moves from an eligibility-driven model toward an entitlement-driven model, a significant policy shift which changes the foundation upon which the unemployment system was built.

The legislation would increase the maximum benefit rate by 54% and increase the taxable wage base by 58% through 2012, with unknown rate increases in subsequent years.   And for lower-wage workers, this bill creates a new benefit rate model which provide a maximum UI benefit of 54% of their average weekly wage, creating an even greater financial incentive to stay out of work. New York's approximately 500,000 taxable employers paid over $2.3 billion in unemployment insurance taxes in 2008.  If this bill were enacted, taxes on just those tax-rated employers for unemployment insurance would increase 14.7% in year one alone.

The “benefit reforms” in this bill do not stop at New York's tax rated employers. The bill proposes change current law to presume certain instructional and paraprofessional staff of colleges and universities are "unemployed" unless provided reasonable assurance of employment by the employer through sufficient documentation determined on a case-by-case basis.  As institutions of higher education are not tax rated but reimburse the unemployment system for benefits charged against their account, this change in law would have place new and significant cost and administrative burdens on these colleges; our publicly-funded SUNY and CUNY systems would need to recover these costs through increased state support, tuition increases, or in the case of community colleges increased costs to the component counties in the regions they serve.

The bill also makes changes to the “599 program” by adding language which indicates the training taken by a claimant must achieve "wage preservation" or make “progress toward a family-sustaining wage”; and increases by over 100% the funding from the UI Trust Fund for the extended unemployment benefits provided while an individual is in approved training.  For a 100% employer-tax subsidized program which has been in existence for over 20 years, there is no publicly available data that the program achieves its objectives, nor is the best of use UI trust fund resources to improve skill development and lessen the likelihood of an individual cycling back onto unemployment.  Rather than increasing funding for the program with no demonstrated outcomes, The Business Council believes the program should be evaluated for its effectiveness and impact and reforms to the model considered after that information is available to all stakeholders.  Many states use a portion of their UI Trust Funds to support a form of incumbent worker training, or layoff aversion skill development.  Whether the 599 Program in its current format should be retained is a viable question that is not answered through the modifications proposed in this bill.

Similarly, this bill adds a new title to the Labor Law “Unemployment Insurance for Domestic Violence Survivors.”  Eligibility for benefits for victims of domestic violence has been statutorily authorized by a number of years.  Minor modifications to the eligibility for domestic violence victors were included as part of Chapter 35 of the Laws of 2009.  The bill memo provides no context or justification for this overly broad language, and no data is publicly available to indicate the extent to which this claimant eligibility category presents a problem.  Additionally the bill provides that for a claimant making a successful eligibility claim under this section, the pursuit of suitable work must "reasonable accommodate the claimant's need to address the physical, psychological, legal and other effects of the domestic violence."  Receipt of unemployment benefits is predicated on an individuals availability for work.  If, in fact, a domestic violence victim is unable to pursue work related to the trauma suffered, that individual should be pursuing benefits under New York's disability law, not through the unemployment insurance system.

Finally, the bill proposes to change long standing public policy by requiring the entire scope of New York's agricultural sector to provide unemployment insurance coverage.  New York  — along with 46 other states — adopted  the federal unemployment insurance threshold for agricultural workers.  Currently those agricultural employers whose quarterly payrolls exceed $20,000 or employ 10 or more workers, must provide unemployment insurance coverage.  This proposed change would impact those smaller farms across New York State adding to already increased costs for production and getting their products to market.  For those farms in the lower Hudson Valley and Long Island, this new tax will come on top of the recently enacted MTA payroll tax. 

The Business Council believes a system which is fully funded by employers, benefits from a stakeholder review process on benefit levels, stability of the unemployment insurance trust fund, and issues related to process and eligibility.  This bill does not represent reform but rather expanded coverage and expanded benefits, with no meaningful reforms to the overall system.

For these reasons, The Business Council is opposed to Assembly Bill 4920-A/S. 4053-A.