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Florida's unemployment benefits trust fund is in decent shape. Let's make it even better.

Florida is paying out less in unemployment benefits than it has in decades.
Florida is paying out less in unemployment benefits than it has in decades.
Published Apr. 11, 2019

Look for measures of Florida's bubbling economy and you'll quickly find a 3.5 percent unemployment rate and another 25,000 jobs created in February. Wages have started to rise, and the population continues to grow.

Here's another less-noticed benchmark: Florida is paying less in unemployment benefits than it has in decades. Fewer people are losing their jobs, so fewer need the weekly government check.

In the final three months of 2018, the state ponied up just over $80 million in benefits, according to the U.S. Bureau of Labor Statistics. Adjusted for inflation, the last time the number was so low, Richard Nixon was president. Even in raw numbers, the state hasn't paid so little since the first quarter of 1989.

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Sustained economic growth has also helped the state replenish its unemployment trust fund, pillaged by the Great Recession. The state has built up $3.9 billion to pay laid off workers as they look for new jobs. That's slightly more than enough to cover benefits for a year-long recession, the minimum standard the U.S. Labor Department encourages states to meet.

Florida's solvency score puts it about mid-pack among the states, ahead of bottom-dwellers California, Massachusetts and Texas but well behind leaders Vermont, Oregon and Wyoming.

All this optimism comes with a caveat. Florida remains notoriously cheap when it comes to unemployment benefits, a fact that can bite us when the economy turns sour.

The nation's unemployment insurance program was created in the 1930s, as the country dug out from the Great Depression. Each state sets the amount of benefits and how much employers pay into the fund. It's proven time and again to be an effective recession-fighting weapon.

Giving recently laid-off workers a weekly check helps them pay for essentials including food, rent and gas as they look for new jobs. That, in turn, injects spending into the economy at a time when it's most critical.

Think of it as good shocks on a car — we still feel the bumps, but we're saved from a complete blowout.

Florida only pays laid off workers up to $275 a week, significantly less than the national average of about $440. The number of weeks workers can receive benefits is tied to the unemployment rate. Currently, the maximum is 12 weeks, less than most states. It would rise to 23 weeks, if the unemployment rate hit 10.5 percent.

The state also has made it difficult to qualify. The result: less than one in nine of Florida's jobless workers collect benefits, according to information from the U.S. Department of Labor. Only North Carolina made it harder. The national average was more than one in four. In New Jersey, it was more than half.

Florida's solvency score wouldn't be nearly as solid if the state paid closer to the national average and made the benefits more accessible.

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YOUR MONEY: Florida is second most expensive for car insurance.

The stingy approach works with today's hearty economy and low unemployment. Lose a job in this market and it likely won't take more than 12 weeks to find another. It even allows Florida's employers to pay one of the lowest per-worker unemployment tax rates in the country. Nothing wrong with that, per se.

But when hard times come, Florida may need to pay laid off workers more, and for longer. If it doesn't, those same businesses, the ones paying the ultra-low rates, could get hurt as sales dry up and the recession worsens.

Building up the fund now means not having to raise taxes on businesses during a recession, right at the time when a tax increase would hurt the most. It also means the state won't have to rely on the federal government to help bail it out, as it did during the last downturn.

Florida went into the Great Recession with more than $2 billion in its unemployment insurance trust fund. It came out owing the federal government $1.8 billion and millions in interest payments. Next time the feds, already facing $1 trillion annual deficits, might not be so generous. They might leave the states to fight more of the battle on their own.

State officials say they don't like paying people not to work. It promotes laziness and abuse, they say, like it's easy to live off of $275 a week. They prefer to create jobs, not handouts. Who wouldn't?

But during a downturn, it's hard to create jobs. After the Great Recession, there were six workers for every job opening in the country, and even more in Florida. People were willing to work, but there weren't any jobs. No one, not even the most condescending politicians, could create enough to go around.

That's exactly when we need robust unemployment benefits to kick in. The money keeps individuals afloat and creates a virtuous spending cycle, which helps businesses survive.

Unemployment insurance isn't just for the unemployed. It's a bulwark against hard times for everyone. It's best to remember that now, when times are good.

Contact Graham Brink at Follow @GrahamBrink.