Georgia's payout period for unemployment benefits will soon be among the two shortest in the nation.
A worker who loses a job after July, thanks to new state legislation to reduce hundreds of millions of dollars in debt to the federal government, will draw 14 to 20 weeks of checks, down from 26 weeks. The new sliding scale is based on the state unemployment rate. The lower the rate, the fewer the weeks of payments.
More than 190,000 Georgians stand to lose anywhere from $260 to $1,820 in benefits, the nonprofit Georgia Budget and Policy Institute estimates.
Supporters of the changes say businesses are sharing the pain; the law also raises unemployment taxes paid by employers, though Georgia's tax rate remains lower than the national average. They praise legislators for taking a tough and necessary stand for fiscal responsibility.
Legislators had to act because Georgia drained its unemployment trust fund. It gave unemployment tax holidays to businesses in the early 2000s, and then the recession hit, doubling the number of recipients. To keep sending out the average weekly $260 check, Georgia borrowed $761 million from the federal government, which is demanding payment.
The shared pain of cuts to benefits and increased contributions is expected to repay the loan, avoid federal charges and rebuild the state's unemployment trust fund to $1 billion in four years. Supporters and detractors agree the pain of paying the bill is shared but disagree over whether it is fairly shared.
"The General Assembly and lawmakers are making a bad situation worse with the laws they are making," said Viola Davis of Clarkston, an underemployed nurse and community volunteer.
Joe Thomas of DeKalb County, a 51-year-old information technology manager who was laid off Monday, agreed.
"The economy has been bad enough and people cannot find suitable work," Thomas said. "The lead time between positions takes a couple of months, and the whole interview process is extended because so many people are out there looking. The unemployment benefits are not a lot of dollars to begin with.
"I really get annoyed when politicians say we’re just sitting on unemployment benefits and not working because it’s free money. ... To decrease benefits during tough times like this is not helpful to those of us in need.”
A special federal program was implemented to continue paying benefits after state benefits run out, but those are scheduled to end in December.
In Georgia, 56,096 people were getting state benefits in March, and 99,815 were getting federal payments.
Gerry Harkins, the owner of parking deck builder Hybrid Concrete Structures of Stockbridge, thinks the plan provides a good balance. Putting more costs on the employers could hurt businesses as well as those hoping to get jobs, he said. He estimates his unemployment insurance taxes will rise $250 per employee per year. That makes it harder for him to try to right his business in the hard-hit construction sector.
"You are putting a bigger burden on productivity and profitability," Harkins said, "and if you can't make a profit, you can't hire a new employee."
Georgia is not alone. Thirty states borrowed money to keep unemployment checks flowing during the recession. In September, the federal government will start charging $21 a year per employee, which will climb in succeeding years until the loans are repaid.
George Wentworth, the senior staff attorney with the New York-based National Employment Law Project, said six states have passed legislation cutting weeks of eligibility, with Georgia and Florida cutting the most. Others have reduced check amounts, tightened eligibility or raised payments by employers in various combinations.
Businesses pay unemployment taxes based on a limited amount of income -- in Georgia that is the first $8,500 a worker earns. The new law bumps that up to $9,500, the first increase in 21 years but still $3,000 below the national average. The amount paid per worker also depends on a complex formula that includes such data as how many people the company has laid off in the past. Also, state laws created a system where about 40 percent of Georgia businesses pay the minimum of $3 per employee per year.
Adding to the problem, the state in 2000 granted unemployment tax holidays to businesses because the trust fund had more than $1 billion in it. That lasted until 2003. Then when the recession struck, it emptied the trust fund, with unemployment payments peaking at $1.72 billion in 2009.
"Georgia is really an example of a state that has underfinanced its employment insurance program horribly," Wentworth said.
"Now, Georgia is trying to restore its trust fund to solvency on the backs of unemployed workers," he said. "The fact is that Georgia is one of the stingiest states in terms of benefits it pays out."
Sen. Fran Millar, R-Dunwoody, took on the task of trying to bail out the state with help from Gov. Nathan Deal's staff. The new structure repays the loan and restores the trust fund to $1 billion permanently, he said.
"If I had not [written the legislation, House Bill 347], we would be sitting here with $900 million in debt and no way to pay it back," Millar said.
"And to me, this is mutual pain, OK?" Millar said, defending the benefit cuts and increased payments.
Millar said he tried to raise the wage base above $9,500 but could not get enough support to pass that. There are still tweaks that need to be made, such as increasing the minimum amounts that some employers pay. Like many fellow Republicans who supported the bill, Millar believes putting too much strain on businesses too quickly would prevent them from hiring new employees.
He estimates the law puts about 70 percent of the costs of the program on employers, if you include the increasing federal penalties that businesses would have to pay.
Others disagree with his analysis.
The Georgia Budget and Policy Institute, using state Department of Labor numbers, estimates the changes will reduce benefits by $160 million next year and that increased taxes on employer's will cost $105 million.
A regional comparison of unemployment benefits*
Av.benefits paid during unemployment Taxable wage base** Tax rate on wages
Alabama $3,066 $8,000 .86%
Tennessee $3,598 $9,000 .83%
Georgia $3,604 $8,500*** .55%
South Carolina $3,648 $12,000 .84%
Florida $4,202 $8,500 .65 %
North Carolina $4,752 $19,700 .87%
U.S. average $5,144 $12,450 .88%
Sources: U.S. Department of Labor 2011, Georgia Budget and Policy Institute
**The wages on which each state collects unemployment insurance payments
*** Figure to increase to $9,500 in 2013
Unemployment in Ga.*
State average 9.3 percent
Five highest county unemployment rates
Five lowest county unemployment rates
Metro unemployment rates
*Georgia Department of Labor, February 2012
Unemployment recipients, payouts
Year Recipients average weekly check Ga. unemployment payouts in millions
2011 336,284 $260 $935.5
2010 388,941 $264 $1,165.6
2009 505,078 $274 $1,725.0
2008 357,954 $264 $950.4
2007 258,735 $255 $604.2
2006 243,287 $248 $541.2
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