March 15, 2006

CONTACT: Kevin McCormick 202-637-3465

WASHINGTON, D.C., March 15, 2006 – UWC President Eric J. Oxfeld released the following statement:

"The new GAO study on who receives unemployment compensation is an eye opener for all who are concerned about maintaining a cost-effective safety net for jobless workers. Business strongly supports unemployment insurance as a program providing temporary benefits for workers with a strong attachment to work, when they lose their jobs because their employer does not have work.

"The GAO study shows that unemployment insurance still works as intended, because 9 out of 10 workers who lose their jobs are eligible for benefits. But the study also confirms what employers already knew, that some claimants have figured out how to "game" the system or have little incentive to seek work. This problem is especially prevalent when the claimant lives in a household with other wage earners.

"Despite demonstrated shortcomings in state unemployment systems, benefit design and administration are better handled by the states rather than the federal government. But the states need to do a much better job of enforcing work search requirements, preventing fraud and abuse and promoting more rapid re-employment. Other GAO studies show that nearly $1 out $10 dollars in unenemployment benefits are improper payments."

"The federal government also has many shortcomings in performing its duties under the unemployment program. Funding for the state workforce agencies which administer the program is a federal obligation. Yet for far too long, Congress has overtaxed employers under the Federal Unemployment Tax Act (FUTA), while underfunding the workforce agencies. As a result, many states focus on prompt payment but lack resources to encourage prompt return to work.

"Congress should immediately discontinue the totally unnecessary FUTA surtax. It should also take a serious look at providing increased administrative funding to states which demonstrate faster return to work and fewer abuses by workers and employers. More emphasis should also be placed on experience rating to distribute the state unemployment tax burden more equitbly among employers. Experience rating motivates businesses to be good employers. And it provides direct financial rewards to employers who manage their workforce to prevent lay-offs and participate in protests against improper claims.

"UWC applauds Human Resources Subcommittee Chairman Wally Herger for his leadership in encouraging federal and state officials to recognize that the unemployment insurance program is not just an "entitlement" to benefits, it is equally important as the bridge to suitable new jobs. We will be actively reviewing the GAO statistics and findings to determine where public policy needs to be reshaped to ensure that the nation continues to have a cost-effective safety net for workers who lose their jobs.

-UWC-