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Rep. McDermott Introduces Unemployment Insurance Reform and Stimulus Initiative

January 8, 2009

Rep. Jim McDermott today introduced legislation – the Unemployment Insurance Modernization Act (HR 290) – to promote comprehensive reforms to the nation’s unemployment insurance program that was created in 1935 to counter the economic crisis of the Great Depression and future recessions.  McDermott is the Chairman of the House Ways and Means Income Security and Family Support Subcommittee, which has jurisdiction over the nation’s unemployment insurance program.

“Today, millions of hard-working Americans who lost their job during this economic crisis face a second crisis when they try to obtain their unemployment insurance compensation and discover that they do not qualify because the system that was created in the economic reality of 1935 is unable to match the needs of the labor market of the 21^st century,” Rep. McDermott said.

McDermott explained that 1935’s America relied largely on full-time, male workers, yet America’s 21^st Century economy relies upon millions of part-time workers, which are disproportionately women.

McDermott said: “Low-wage and part-time workers often fall through the cracks of the UI system, and the impact is particularly hard on families that rely on the income of a low-wage worker or a mother’s part-time job.  Low-wage and part-time workers, who contribute to the unemployment insurance system, are a larger portion of the workforce than they used to be, yet they are half as likely to qualify for unemployment benefits as other workers.”

The Unemployment Insurance Modernization Act would make $7 billion available from the federal Unemployment Insurance Trust Fund to state governments in exchange for modest reforms to their unemployment insurance programs.  These reforms would enable more low-wage and part-time workers to qualify for the unemployment insurance compensation they earned.  The unemployment insurance program is a joint, federal-state program that is administered by state governments.

“We can’t adequately help the unemployed, and our economy, just by pumping resources into an unemployment program that is not designed for today’s crisis. When we enable more unemployed workers to qualify for the unemployment insurance program, we put cash into the pockets of struggling families who will spend this money in their communities, supporting local jobs and businesses.  Also, by providing this $7 billion to states in exchange for making modest reforms, we enable them to forestall tax increases or benefit cuts associated with their unemployment insurance programs.  This bill would be a huge benefit to the economy and to families hurt by layoffs, which is why it enjoys broad support.”

McDermott sponsored a second bill – the Unemployment Supplemental Assistance Act (HR 291) – that would provide a temporary, $50 boost to the weekly unemployment insurance benefit amount. 

“Nationwide, the average weekly UI benefit is about $300 dollars and in today’s world that amounts to a subsistence level,” declared McDermott, who added, “For too many Americans, the UI compensation level is simply not adequate to enable unemployed workers to survive this economic crisis while they search for a new job.  This boost will inject money directly into the economy, through the hands of struggling workers.  The Congressional Budget Office tells us that the provision of unemployment compensation is one of the best drivers for economic recovery.”

McDermott noted that President-elect Obama expressed strongsupport for UI modernization during the presidential campaign, and McDermott said he will advocate for his legislation to be incorporated into the economic recovery proposal.

“FDR’s New Deal rekindled the faith and hope of a nation by declaring that the economic security of the American people was vital to the nation’s freedom, and today we reaffirm FDR’s principle by addressing the needs of the modern workforce and the 21^st Century economy.”

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