TERRE HAUTE — The vicious cycle of Indiana’s unemployment quagmire is spiraling through nine-digits of debt, and state officials agree drastic changes are needed.
“If any one bill has the potential to send us into special session, it’s the unemployment bill,” state Rep. Bruce Borders, R-Jasonville, said in the Vigo County Public Library on Saturday morning at the final Legislative Crackerbarrel of 2009.
According to Borders, the state’s unemployment fund took in about $13.75 million this January. But it spent about $173.6 million that same month, and it was more than $132 million in the hole to begin with.
As of February, Indiana owed the federal government $361.4 million, and climbing, for loans sustaining the unemployment checks of its residents.
By comparison, Michigan owed the federal government $1.168 billion and Ohio owed about $184.4 million by the same date, according to information provided by Borders.
Indiana’s unemployment fund began heading south in 2000 when taxes were lowered and benefits increased, he said, adding, “If we don’t do something, the federal government will.”
Representatives of labor and others in the audience argued vehemently that they need their unemployment checks, but all agreed that spending $174 million a month while taking in $14 million can’t last.
Borders noted that currently, 90 percent of unemployment claims come from the construction and manufacturing sectors, a point which has generated heated discussion throughout the state on the definition of “seasonal” labor and whether or not cyclical industries should get unemployment checks on a seemingly regular basis.
Retired construction worker Leonard Akers of Vermillion County said he worked in the industry for 39 years and opposes the label “seasonal” for his occupation.
“I was out there on a lot of subzero days,” he told legislators in attendance. “It’s not an issue of the season. It’s an issue of whether they have work for you or not.”
Akers said construction workers are “the least respected” of any in Indiana, and claimed to have abandoned Indiana’s unemployment system at various points, instead opting to draw unemployment from Massachusetts, which had a higher payout.
Akers ran out of speaking time before he was able to explain how he as an Indiana resident could obtain unemployment money from Massachusetts, but he did say the allowance for that had been revoked some time in the past.
Borders said after the meeting he was unaware of how an Indiana worker could have drawn unemployment from Massachusetts, but said Indiana is third in the nation for the amount of unemployment paid out relative to the amount taken in by tax revenue.
State Rep. Vern Riley, D-Riley and state Sen. Tim Skinner, D-Terre Haute, said those numbers are misleading. The actual unemployment check’s maximum is $390, which ranks about 27th in the nation. But Indiana employers pay less into unemployment than their counterparts in other states.
Borders warned against trying to right-side the unemployment fund solely on the back of the employers. “If you tax the hiring of people, you’ll get less hiring,” he said.
In 26 years of self-employment, Borders said he’s never laid a worker off, even though some years his company’s net profit was as little as $300. Hiking his overheard could result in layoffs and less employment, he said.
State Sen. John Waterman, R-Shelburn, noted that at present, employers foot the bill for 100 percent of the unemployment fund, and that might have to change at some juncture.
“Fraud, waste and abuse” are also words included in some of the various legislation aimed at solving the problem.
Skinner noted that the amount of abuse might be in the hundreds of millions, but said no one is certain yet.
Abuse covers a wide range of practices such as individuals failing to report income earned while on unemployment, dodging job offers and companies allowing employees to file during plant shut-downs, according to information provided on the bills under discussion.
The issue is far from over and Borders said after the meeting, “We can’t make up a nine-year problem in two years.”
Brian Boyce can be reached at 812-231-4253 or brian.boyce@tribstar.com
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