Let's fix unemployment-insurance problems first creating new ones
Last updated 2/11/2021 at 11am
The meltdown at the state Department of Employment Security ought to teach us a lesson. It’s easy for government to create problems, not so easy for the Legislature to come back in and clean up the mess.
We ought to keep this in mind as the Legislature debates some of the big, bold ideas our liberal colleagues are bringing to the table this year — for an income tax, big increases in gas prices, greater government control of industry, and many, many more. Many of these policies are so big and so sweeping we can be sure they would open a Pandora’s box of unintended consequences.
When hundreds of thousands of Washington residents were thrown out of work last year by the edicts from the governor’s office that shut down the state economy, the assumption was that ESD would be able to handle the crisis effectively, distributing unemployment-insurance benefits to everyone who needed them.
Instead we saw fumble after fumble. In one of the most mind-boggling failures in Washington-state history, the agency paid out $600 million to Nigerian fraudsters. Legitimate applicants waited weeks and even months for benefits. Last week we learned the personal information of 1.6 million applicants was hacked and now no doubt is being used to commit even more financial fraud.
Incompetence is one thing. A bigger problem has to do with the way our unemployment-insurance system works. The governor’s emergency orders put so many people out of work that we drained our unemployment-insurance trust fund. Business owners across the state faced massive payroll-tax increases, even those who didn’t lay off a soul. Those who did were hammered even harder.
Without action by the Legislature, 81 percent of Washington small businesses faced at least a doubling of their UI taxes, according to a survey by the National Federation of Independent Business. Some 55 percent faced increases of more than 400 percent. We’ve heard about one business that got hit with a 1,500 percent increase. At a time when businesses across the state are closing their doors permanently, a hit of tens of thousands of dollars certainly would do many more of them in.
I wish I could report that we’ve solved that problem, but we really haven’t. Two weeks ago, the Legislature passed Senate Bill 5061, a complicated measure that spreads the hit out over the next four years. Unemployment taxes still will go up, but they won’t go up as much this year – and business still has to pick up the tab for a problem it didn’t create.
This was a challenging vote for me, but after much consideration I recognized we needed to start somewhere. Some of my Republican colleagues voted no, arguing that what we really need is an overhaul of the unemployment insurance system. I second that. Not only do we need to make sure our system works, we also need to make sure business is held harmless.
We can do that. We can tap our state’s “Rainy Day fund” to help restore the UI trust fund. We can commit that federal funds, if they come, will be earmarked for mitigation of this problem. So far majority Democrats in the Legislature have told us they’re willing to consider solutions like these. On my side of the aisle, we’re determined to make sure that promise is fulfilled.
The Legislature should learn from this experience. Our majority urban colleagues are convinced they can fix all the problems their big new proposals would create. Until we start seeing some genuine leadership to solve the problems now upon us, the Legislature should think twice before creating new ones.
Sen. Perry Dozier represents the 16th Legislative District.