New Castle News

Closer Look

January 29, 2014

Unemployment change cut off benefits for thousands

HARRISBURG — Millions of dollars in road and bridge projects are jamming the state’s construction calendar, but a trade group warns there may not be enough workers unless the Legislature corrects an unemployment reform passed in 2012.

The reform cracked down on workers who make all their money in a few months, then collect unemployment during the rest of the year.

Under the new law, workers earning more than 49.5 percent of their annual income during one three-month period are ineligible for unemployment. The previous cap was 62 percent — a limit that few people ever reached.

The change eliminated benefits for 41,000 workers, said Sara Goulet, a spokeswoman for the Pennsylvania Department of Labor and Industry.

Most of those affected didn’t realize it until they tried to collect unemployment this winter, even though the law took effect last year, said Jason Wagner, director of governmental relations for the Associated Pennsylvania Constructors, a trade group for engineers and road builders.

Now contractors wonder if those workers — whose overtime last summer put them over the threshold — will be forced to find other jobs and won’t be around when construction season starts.

“There is a big concern about retaining employees,” said Wagner, especially as the transportation bill signed last fall pours $220 million into road and bridge projects for 2014. In five years, annual spending on roads and bridges is expected to be $1.5 billion, according to the state department of transportation.

A fix to the unemployment benefit problem is headed to the Senate Labor and Industry Committee. The proposal would provide relief for workers made ineligible for unemployment because of their overtime, said Sen. John Gordner, R-Columbia County, who was prime sponsor of the original reform legislation.

That remedy will affect 2,000 to 3,000 workers and cost the unemployment pool $25 million to $30 million per year, Gordner said.

The 2012 reforms were meant to put the state’s unemployment system on stronger footing, he noted. Before the law, Pennsylvania paid the second-highest amount of benefits of any state because of its “relaxed” eligibility rules, he said. The state’s unemployment trust fund was insolvent and owed more than $3 billion to the federal unemployment trust fund, he said.

“The unemployment compensation system was set up originally to cover workers as a bridge in between different jobs,” he said. “It was never intended to be a cyclical program for seasonal workers to tap into each and every year.”

Reform had been discussed since 2007, he said, but the system’s problems weren’t resolved until 2012. With the new rules, he said, the trust fund is expected to be solvent again by 2019.

Goulet said changes preventing seasonal workers from collecting the benefits were intended to make the system fairer. “Teachers don’t collect unemployment in the summer,” Goulet noted.

But the rule devastates the road industry, in which workers log long hours throughout the summer to meet PennDOT deadlines, Wagner said. Without a solution, those workers will drift to other jobs or perhaps refuse to put in the overtime necessary to meet deadlines during the summer.

Frank Telesz, business manager of IBEW Local 712, which represents members in Beaver, Lawrence, Mercer and Crawford counties, noted that workers hope to never be laid off.

Those forced to cope with the new unemployment rule could start tallying how much they’re earning during the summer, to avoid tripping the limit later in the year.

“People are smart enough that they are going to calculate how much they can make,” Telesz said.

In addition to road workers, others affected by the change include those who work on maintenance crews and are summoned to work in power plants or factories during shutdowns. Those emergency jobs can mean running up huge amounts of overtime to get the plants back online, Telesz said.

In one union local, 240 of 450 members were ruled ineligible for unemployment because of the change.

“It’s the most bizarre thing they’ve ever done,” said Frank Sirianni, president of the Pennsylvania Building and Trades Council.


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