GOP Introduces JOBS Act

May 10, 2011

House and Senate Republicans introduced the Jobs, Opportunity, Benefits and Services Act of 2011 (JOBS Act, S. 904/H.R. 1745) last week, which would provide states with greater flexibility in how they choose to spend currently-dedicated temporary Federal unemployment insurance funds. Under current law, states are to receive $31 billion in federal funds for the remainder of 2011 to be spent on unemployment benefits that stretch up to 99 weeks in some states.

According to a recent survey from the National Association of State Workforce Agencies, many states are turning to tax increases in an effort to bolster state funds and pay the interest on government loans taken out to weather the recession and high-unemployment. Approximately 35 states expect their unemployment tax revenue to increase this year by about 16.5 percent, with most expecting the source to be higher taxes. Additionally, over 30 states have accumulated nearly $50 billion in loans from the federal government to finance their unemployment insurance benefit programs.

Under the JOBS Act, states could use the $31 billion in remaining funds for 2011 from the federal government to continue paying current federal unemployment benefits or the state could pass laws to use the funds to keep unemployment taxes down, pay interest or principal on federal unemployment loans, or promote job creation and hiring through the use of re-employment services, including wage subsidies.

The bill also includes reforms that would strengthen job search requirements by requiring certain individuals engage in education and training to improve their chances of finding work. Additionally, it allows states to test innovative strategies to help the unemployed find work. The proposal would also allow states to apply for waivers from the Department of Labor to use unemployment insurance funds for something else as long as it is employment related.

Democrats worry that the legislation will allow some states to strip the long-term unemployed of guaranteed benefits. Republicans assert that since the recession started in 2007, states have paid record unemployment benefits. To pay for those benefits, they argue, state unemployment taxes have already risen by 44 percent.

House Ways and Means Committee Chairman Dave Camp (R-Mich.) and House Ways and Means Human Resources Subcommittee Chairman Geoff Davis (R-Ky.) introduced the JOBS Act. The House Ways and Means Committee is slated to mark-up the legislation May 11.

Senate Finance Committee Ranking Member Orrin Hatch (R-Utah) has introduced companion legislation in the Senate; however, there is no indication that the Democrat-controlled Senate has any interest in acting on the bill.

Continue to watch NSBA’s Web site for further details as staff reviews the legislation and the changes expected at this week’s mark-up.