The Boundaries of Unemployment

From the Wall Street Journal  * JUNE 23, 2009

Fred Wright and Tyrone Gatson live about 55 miles apart and worked
as technicians for poultry producer Pilgrim's Pride Corp. until they
were laid off last month.

But Mr. Wright, who lives and worked in Arkansas, is eligible for
nearly twice as much in unemployment benefits as Mr. Gatson, who lives
in Louisiana and worked at a different Pilgrim's Pride plant in that
state, just over the border from Mr. Wright. Under Arkansas's more
generous system, Mr. Wright can get $431 in weekly benefits, compared
to Mr. Gatson's $284. He is also eligible to receive benefits for three
more months than Mr. Gatson.

Photos: Uneven Benefits

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Dave Anderson for The Wall Street Journal

Kenneth
Jones (left) and Robert Fenceroy had worked as machine operators at the
same paper mill in Bastrop, La., but because they filed for
unemployment at different times, they are eligible for different weekly
payments.

The
differences highlight the inequities of the U.S. unemployment-insurance
system, a complex patchwork of government programs guided by Washington
but administered principally by the states.

Economists say jobless benefits soften the blow of recessions by
offering laid-off workers money for necessities like food and housing
while they seek new jobs. The programs also prop up consumer spending,
reducing the spread of layoffs in hard-hit areas. As the recession
drags on, more Americans are relying on unemployment checks -- 6.7
million in the week ended June 6 -- than at any time since the
Department of Labor began collecting the data in 1967.

Unemployment benefits are financed by state and federal taxes on
employers; in general, employers pay higher taxes as more of their
former workers tap benefits. States set most of the rules based on
their own fiscal and policy choices, creating a maze of regulations to
determine who qualifies for jobless benefits, how much money they get,
and for how long.

Some students of the system say the inconsistencies weaken the
safety net and allow many women, low-wage earners and part-timers to
slip through. "Too many states are very stingy about paying out
adequate unemployment benefits," says Maurice Emsellem, policy
co-director at the National Employment Law Project, a research and
employee-advocacy group. "Sometimes there's no rhyme or reason to it."

Interactive Map

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See unemployment benefits state by state.

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For
instance, laid-off workers in Mississippi typically receive no more
than $230 a week, while those in Massachusetts with 13 or more
dependents can get up to $942 a week. (A total of 14 states increase
benefits to claimants with dependents.) Connecticut calculates benefits
for construction workers using a different, more generous formula than
for other workers. North Dakotans can work part-time and earn as much
as 60% of their weekly benefits without sacrificing a dime. But every
dollar a New Yorker earns while drawing an unemployment check is
subtracted from his or her benefits.

The maximum duration is based on state unemployment rates and state
law. Unemployed workers in 17 states and the District of Columbia are
eligible for up to 79 weeks of benefits, more than a year and a half.
But those in six states can get no more than 46 weeks. Laid-off workers
in Mississippi and Alabama are eligible for 59 weeks, and could get
another 20 weeks, but their laws use a more-restrictive
unemployment-rate formula. Spokesmen for the state agencies that
oversee the programs say the formulas can be changed only by state
lawmakers.

Thirty-three states cover people who leave work for certain
compelling family reasons, and 15 offer extra benefits to those who
enroll in job training. Another federal program offers up to two years
of benefits to manufacturing and farm workers who lose jobs to foreign
competition.

People in the same state, and even neighbors, can be treated
differently, because benefits are awarded by the state where they
worked, not where they live.

Consider Johnny Hill, another former Pilgrim's Pride technician laid
off in May. Mr. Hill lives in Louisiana, like Mr. Gatson, but he worked
with Mr. Wright at the Pilgrim's Pride plant in El Dorado, Ark., about
20 miles from his home. Mr. Hill, who made around $1,000 weekly at
Pilgrim's Pride, gets Arkansas's bigger benefits -- $431 a week for up
to 72 weeks. The 53-year-old technician, who worked at the El Dorado
plant for 36 years, hopes to find a job near his home. "If there are no
jobs out there, I guess I'll go ahead and retire," he says.

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Dave Anderson for The Wall Street Journal

Mr.
Jones, a Baptist minister who lives in Louisiana, less than 20 miles
from Arkansas, says, 'It's unfair that we don't get as much as the
other state.'

Mr.
Gatson, who worked in Farmerville, La., earned more than Mr. Hill when
both were working, but he gets smaller unemployment checks. The
35-year-old father of three, whose wife lost her job about two years
ago, says he hopes he can "stay above water" on $284 a week. He is
looking for a job but says "there's none out there." Mr. Gatson hopes
to be hired by Foster Farms, which acquired the Farmerville plant last
month, after Pilgrim's Pride entered bankruptcy-court protection in
December. Foster Farms plans to rehire many of its former workers.

As for Mr. Wright, he says he is supplementing his unemployment
benefits with savings accumulated while frequently working overtime
during 15 years at the El Dorado plant. His family is cutting back on
extras like dining out. He is hoping to find a job nearby to avoid
moving before his daughter graduates from high school in two years. The
savings "can't last forever," he says.

Louisiana, like many other states, tries to keep unemployment taxes
low to attract businesses, and jobs, to the state. But the lower taxes
pay for smaller benefits. The regime was reinforced in the 1980s, when
Louisiana's unemployment insurance trust fund went bankrupt and the
state borrowed money from the federal government to replenish it, says
Curt Eysink, a spokesman for the Louisiana Workforce Commission. The
state then enacted a law that links tax rates and benefit payments to
the size of the trust fund.

In July, Arkansas will raise its maximum weekly payment to $441. The
maximum payment is set at two-thirds the state's average weekly wage
and rises nearly every year. The maximum weekly benefit payment isn't
tied to the size of the state's trust fund.

In January, Louisiana increased the maximum weekly payment to $284
from $258 to account for projected growth in its trust fund. That
helped Robert Fenceroy, who lost his job as a machine operator in
January when International Paper Co. closed its Bastrop, La., mill.
(The federal economic-stimulus law, enacted in February, then raised
weekly payments for all eligible workers by $25.)

But Louisiana's increase didn't benefit people who filed for
benefits before January, such as Mr. Fenceroy's friend and former
co-worker, Kenneth Jones. He initially filed for unemployment when he
was laid off for three weeks in November, before the plant closed. The
November claim determines his eligibility for benefits. Moreover, state
officials have since reclaimed one week of Mr. Jones's November
benefits on a technicality. He filed for bankruptcy last week. Mr.
Jones, an ordained Baptist minister who lives less than 20 miles south
of the Arkansas border, says "it's unfair that we don't get as much as
the other state." He adds, "It's just hard to understand."

Mr. Fenceroy agrees. "Why should it be any different in Louisiana?"
he says. Jobless benefits "ought to be universal. If you're unemployed,
you're unemployed."

The federal government and some employee-advocacy groups are pushing
states to modernize and harmonize their unemployment-insurance
programs. The economic-stimulus law includes $7 billion for states to
make it easier for women, low-wage earners and part-time workers to
qualify for jobless benefits. So far, 34 states are receiving funding.
Louisiana Gov. Bobby Jindal turned down the $98 million incentive
available to his state. The changes, he argued, would increase taxes on
employers by allowing more former employees to qualify for benefits, at
a time when many businesses are struggling, says Mr. Eysink of the
Louisiana Workforce Commission.

Louisiana's benefits could be cut back for workers who apply next
year, if its trust fund is depleted, says David Fitzgerald, the state's
chief of benefits. "With increased benefits going out and the
unemployment rate continuing to rise," a drop is likely, he says.

Write to Cari Tuna at cari.tuna@wsj.com