Obama Unveils Unemployment Insurance Expansion

Date: January 18, 2016

Plan Would Mandate States Provide Wage Insurance To Unemployed, Underemployed

During his latest weekly address, President Obama proposed an expansion of the current system for unemployment insurance. The AP reported that Obama “says [the changes] would offer more security to the jobless and encourage experienced workers to rejoin the workforce, even if it means taking a pay cut.” According to the AP, Obama’s plan “would require states to provide wage insurance to workers who lose their jobs and find new employment at lower pay.” This insurance “would replace half of the lost income, up to $10,000 over two years,” and would be provided for “workers who were with their prior employer for three years and make less than $50,000 in their new job.” Additionally, the proposal would mandate that states provide unemployment insurance “to many part-time and low-income workers” and that it be provided for at least 26 weeks. According to the White House, “nine states fall short of this benchmark.” Currently, workers with experience see about a 10% pay cut when they lose their jobs, while workers with at least 20 years’ experience “see an average 25 percent pay cut, according to the White House.” The Hill “Briefing Room” blog quoted Obama as saying, “If a hardworking American loses her job, regardless of what state she lives in, we should make sure she can get unemployment insurance and some help to retrain for her next job.” The President described his proposal as “a way to give families some stability and encourage folks to rejoin the workforce – because we shouldn’t just be talking about unemployment; we should be talking about reemployment.”

What Happens Next

The Washington Post reported that this plan will be included as part of President Obama’s budget for fiscal year 2017, set to be released on Feb. 9, according to Office of Management and Budget director Shaun Donovan.

What This Means For Small Businesses

Small businesses want to find and train the right workers for the jobs, and many have trouble finding skilled workers to perform work. However, mandating state handouts to the unemployed and underemployed could do more harm than good for businesses. Someone has to pick up the tab for expensive new government policies, and small businesses would almost certainly bear the brunt of costs for such new regulations.

Additional Reading

Reuters also reported on the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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