Iowa lawmakers cut length of time for unemployment benefits

This article was originally published by By James Q. Lynch and Erin Murphy, on The Gazette on Mar, 2022.

DES MOINES — Legislation that supporters say will “update and repurpose” state unemployment compensation to focus on finding jobs for out-of-work Iowans was approved by majority Republicans in the House and Senate on Wednesday.

The bill, as amended, would cut the length of time Iowans can receive unemployment insurance benefits during a year from 26 weeks — the same as 38 states — to 16, less than all but four states. In cases of a business closure, benefits would be reduced from 39 weeks to 26.

The House and Senate approved different versions. The Senate added a one-week waiting period before benefits would become available.

House File 2355 “would give a modern mission to Iowa Workforce Development and our unemployment system focusing on re-employment, new skills and new abilities so our workers can fill the modern jobs of today and tomorrow,” Rep. Mike Bousselot, R-Ankeny, said before the House approved the bill, 58-37, after more than four hours of debate.

The legislation updates a system from the 1930s when unemployment compensation was the sole safety net for out-of-work Iowans, he said.

That safety net has become too comfortable, according to Gov. Kim Reynolds. In her January Condition of the State speech, she told legislators, “Government has taken away the need or desire to work. The safety net has become a hammock.”

In response, the Republican majorities in the House and Senate approved changes Bousselot said would “refocus unemployment on re-employment rather than just being a safety net.”

Dems ‘could not disagree more’

Democrats “could not disagree more,” countered Rep. Bruce Hunter, D-Des Moines, who offered several amendments to raise the minimum wage from $7.25 an hour to $15 by 2026; prohibit employers asking or requiring job applicants to disclose their criminal history; reinstate Chapter 20 collective bargaining for public employees the Legislature cut in 2017; and increase or create tax credits for child care and housing.

“Make no mistake, we in the Democratic Party are going to end what, in my opinion, has been an attack on the workers of this state for the last 12 years,” Hunter said, referring to the time the GOP has controlled the House.

“We are going to treat workers not as an inconvenience if they’re unemployed, but as a valuable cog of this state, deserving of respect and deserving of all the assistance we can give them to find a job that will not only increase their wages, but increase the economy and the well-being of this state.”

Without amendments addressing access to affordable housing and child care, Democrats said, the bill does nothing to address Iowa’s worker shortage.

Iowa jobless rate low

There are, on average, 28,000 unemployment compensation claimants each month, Rep. Dave Jacoby, D-Coralville, said, but there are more than 50,000 job openings. Reducing benefits won’t change that, he said.

In the Senate, Democrats offered amendments to exempt short-term, seasonal workers from job search requirements if they are laid off but are returning to the same job or industry and exempts certain workers from requirement to take lower-paying jobs when their employment is interrupted by unforeseen circumstances or seasonal layoffs.

Democrats questioned the need for the changes, which they said disrespects Iowa workers. The unemployment trust fund has a balance of $1.4 billion, Rep. Kirsten Running-Marquardt, D-Cedar Rapids, said, and is one of the healthiest in the nation.

Iowa’s January unemployment rate was 3.7 percent, down from 4.4 percent a year earlier. Iowa Workforce Development reported about 62,700 Iowans were out of work, down 2,200 from December.

Waiting a week

The requirement that unemployed workers wait one week before becoming eligible for benefits is in 43 other states. Senate Democrats opposed the provision, as did Republican Sen. Zach Nunn, who likened it to a penalty on job-seekers.

“There is an immediate impact on working families here,” said Sen. Nate Boulton, D-Des Moines. “That missing week of benefits is immediately hurtful and impactful.”

Senate Democrats said the bill will result in a reduction of $10 million per year in benefits paid to unemployed Iowans.

“A billion dollars taken out of the pockets of Iowans, who have worked to earn those benefits, and put into the coffers of some of the wealthiest companies that do business in our state,” Boulton said.

The Senate passed the bill, 30-20, with only Republicans supporting and two Republicans — Nunn and Sen. Jeff Reichman, R-Montrose — joining Democrats in voting against it.

Because it was amended to include the one-week delay, the bill goes back to the House.

Lower-paying jobs

State benefits range from $823 a week in Massachusetts to $235 in Mississippi. Iowa’s rate of $481 a week is 58 percent of the Massachusetts rate and twice Mississippi’s.

HF 2355 also would change the requirements for taking a job that pays less than the unemployed Iowans’ previous job.

Under current law, a person on unemployment must take a job if offered based on their length of time on unemployment. The longer a person is on benefits, the lower wages they must accept. If they refuse a job offer that meets the income threshold, benefits stop. Now a person receiving unemployment benefits has six weeks before they must accept a lower paying job.

HF 2355 would shorten that time frame. After one week, a person on unemployment would have to accept a job offering 90 percent of previous wages. That would drop to 80 percent after three weeks, 75 percent after five until they would be required to take a job at 60 percent of their previous wage after eight weeks.

Under the current plan, after 18 weeks of unemployment, a person has to accept a job at 65 percent of their previous pay level.

Most people have found a job by 17 weeks, Bousselot said.

The bill also changes the definition of misconduct. Employees discharged for misconduct, as defined in administrative rules, are not eligible for unemployment benefits. While most of the definition is retained, the bill lists 16 specific acts as misconduct but does not limit misconduct to those acts.

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