Florida should stop being cheap with unemployment benefits

This is the time to loosen the purse strings.
The number of first-time unemployment claims has exploded in Florida as businesses, like the gift shop at Bradenton's LECOM Park, home to Pittsburgh Pirates spring training baseball, have closed in response to the coronavirus pandemic. (AP Photo/Carlos Osorio)
The number of first-time unemployment claims has exploded in Florida as businesses, like the gift shop at Bradenton's LECOM Park, home to Pittsburgh Pirates spring training baseball, have closed in response to the coronavirus pandemic. (AP Photo/Carlos Osorio) [ CARLOS OSORIO | AP ]
Published Mar. 27, 2020

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Florida is tightfisted with unemployment benefits. The state provides laid-off workers with less money and fewer weeks than most other states. And only about one in nine unemployed workers get any relief at all.

The stinginess needs to end. Now.

Unemployment benefits are one of the best ways to get money to people who need it the most — restaurant workers, hotel employees and myriad others who are out of work or have had their hours drastically cut.

The benefits keep people from falling further into financial despair. Many don’t have large savings to tap. It’s also far from ideal for working-age adults to be dipping into retirement accounts. Newly laid-off workers need money to pay for groceries and rent. They need medicine and essential transportation.

The federal stimulus package will help, but how well Florida takes care of its out-of-work residents will play an important role in mitigating the financial damage and preparing the state for recovery.

The weekly checks act as much-needed shock absorbers for the overall economy. Laid-off workers don’t squirrel away the money into savings accounts. Studies show they spend nearly every cent, at a time when the economy needs as much spending as possible. The benefits provide a cushion. We still feel the bumps, but we avoid an even-worse blowout.

Florida pays a maximum of $275 a week, the same as 22 years ago. Many lower-wage workers get even less, bringing the average payout closer to $250 a week for a current maximum of 12 weeks.

Most other states pay much more — the national average is about $380 — and for longer, up to 26 weeks in most states. Florida also consistently ranks near the bottom in the number of people who apply for benefits compared to how many get them.

The cheap approach can work when jobs are plentiful. No one wants overly generous government payments to keep people from actively seeking work. But the layoffs in the past few weeks have been staggering. New claims for unemployment benefits released Thursday smashed the old record in Florida and the country. Many experts predict unemployment could spike above 10 percent — and stay there for a while.

After the Great Recession, there were six workers for every job opening in the country. The numbers will almost certainly be worse this time around, at least in the short term. Withholding benefits based on the notion that we’d rather give people a job than a handout is financial idiocy during a crisis like this. There aren’t any jobs to find.

Gov. Ron DeSantis has taken a couple of good steps. He waived rules that people had to register online and contact at least five possible employers each week. The state also hired another 100 staffers to help at the benefits call center.

That’s a start, but the state’s stinginess bites in other ways. Florida uses an antiquated formula for calculating benefits that excludes many minimum-wage workers who are employed on-and-off during the year. This is not the time to leave low-wage workers without a lifeline.

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When the federal government extends additional unemployment benefits, the amounts are often tied to what a state is already paying. In other words, workers in cheap states like Florida might not get as much help from the federal government.

The state also revises the number of weeks it will pay based on the unemployment rate. When the rate is below 5 percent, as it was in February, workers get up to 12 weeks. The maximum is 23 weeks, when the unemployment rate climbs above 10.5 percent. The calculation is made once a year, according to state statute, usually sometime in October or later. By that time, the unemployment rate may have been in double digits for multiple months.

Inflexibility is unacceptable when tens of thousands of Floridians are expected to be laid off every week. The state must act sooner. Michigan already raised its threshold from 20 to 26 weeks.

“Florida should go from 12 weeks to 26 weeks right now,” said Andrew Stettner, a senior fellow at the Century Foundation, a progressive-leaning public policy institute. “Waiting will cause unneeded pain to the state’s economy.”

Florida has about $4 billion in its unemployment trust fund. That’s a little more than what the state would need to get through a typical year-long recession, the minimum standard the U.S. Labor Department encourages states to meet. The state ranks in the middle of the pack, well behind leaders Vermont, Oregon and Wyoming, which all have more than twice what they need to get through a recession.

But even that is a little misleading. The calculations are based in part on how much states pay. Florida’s ultra-low $275 maximum inflates our standing when compared against states that pay more. Minnesota, for instance, ranked slightly lower than Florida, but it pays laid-off workers up to $740 a week. The extra influx of cash will help Minnesota’s economy. Florida’s miserly ways disguise how the state isn’t as prepared to fight a serious recession as the numbers may suggest.

Plus it’s worth remembering that Florida went into the last recession with a reasonably well-funded unemployment insurance trust fund. It ended up owing the federal government $1.8 billion and millions in interest payments.

Unemployment benefits are a potent tool in fighting a recession. Florida’s leaders should remember that. Time to let the money flow.

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