Any Alaskan who has been laid off or experienced the loss of a job would likely tell you it is one of the most stressful, disruptive times of their lives. To weather periods of unemployment, Alaska workers rely on the Unemployment Insurance (UI) program. Unfortunately, UI benefits have been stagnant for a decade and don’t provide adequate wage replacement to help workers stay on their feet while they search for new employment.
From a worker’s point of view, UI benefits are critical to meeting basic needs while looking for a new job. From an employer’s perspective, UI benefits maintain access to a skilled Alaskan workforce, despite the seasonal nature of employment in some industries or fluctuations in our economy. Instead of packing up and heading south to look for work, UI benefits allow workers to stay in Alaska, survive gaps in employment, and maintain employer access to an experienced, valuable workforce.
Many Alaskans are surprised to find their wages don’t come close to being replaced by UI benefits. The maximum weekly benefit has been increased once in the last 22 years, and has not kept up with inflation. After paying into UI, workers might expect the program will sustain them while they search for new employment, but too often find the payments don’t cover basic monthly expenses. This can be devastating to Alaskan workers and their families faced with seasonal layoffs or impacted by business reductions or closures.
It’s clearly time for Alaska to address this issue again. House Bill 142, by Rep. Chris Tuck, D-Anchorage, would raise the maximum weekly UI benefit from $370 to $510. Currently, 36 states have a higher maximum weekly benefit than Alaska; in Washington it is $681, and in Oregon $590. In terms of wage replacement ratio — the percentage of our state’s average weekly wage that Alaska’s average weekly UI benefit replaces — we rank 52nd in the nation. House Bill 142 would raise Alaska to 46th — not a big jump, but better than dead last.
The U.S. Department of Labor recommends UI programs provide wage replacement of 50 percent. While not reaching that level for most workers, HB 142 would provide a maximum weekly benefit equal to 50 percent of the state average weekly wage for 2017. This will make it a little easier for high-wage workers, such as those who work in oil, gas and construction industries, to remain in Alaska rather than take their valuable skills to other states. Many employers have made it clear that keeping high-skilled workers in Alaska is good for business, and adequate UI benefits are critical to doing so.
It’s worth noting that Alaska is one of only three states where workers share with their employers the costs of providing UI benefits. Our workers pay 27 percent of the cost of providing UI benefits. It may be surprising to some that UI tax rates are at historic lows in this period of economic distress and relatively high unemployment. This is a result of the way rates are calculated, which generally produce lower rates in downturns and increases as economic conditions improve. Additional costs to employers as a result of HB 142 will not be seen until 2021, and the increases will be modest.
Alaska workers want to work — but our seasonal and resource-based economy makes UI particularly important for many working families. Let’s make sure unemployed Alaskans have a fighting chance to keep their heads above water while looking for new work in Alaska.
• Jim Sampson lives in Fairbanks and is a former two-term mayor of the Fairbanks North Star Borough and a former president of the Alaska AFL-CIO. He served as commissioner of the Alaska Department of Labor from 1986 to 1992. Tom Cashen lives in Juneau and is a former assistant business manager for the International Brotherhood of Electrical Workers Local 1547. He served as commissioner of the Alaska Department of Labor from 1995 to 1999.
