Let them eat cake!
Toolbox
By WARREN KITZMILLER - Published: October 11, 2009
Try telling that to the 250 workers at the Ethan Allen plant who recently lost their jobs or to the thousands of other unemployed Vermonters. People are losing their jobs in unprecedented numbers and are finding it increasingly difficult to find a new job.
The economic downturn is hitting all of us, but the plight of an ever-expanding number of Vermonters trying to survive on unemployment payments is very real. Think about how tight your family's budget can be if you have a job. Now imagine trying to pay all those bills on half or less of your normal wages. Sounds tough to me.
That's why I was so utterly shocked when State Auditor Tom Salmon proposed cutting unemployment assistance for Vermonters by nearly 30 percent. Salmon used Revolutionary War imagery in describing his ideas for balancing Vermont's Unemployment Insurance fund ("The red ink is coming!" Oct. 4), but his proposal more aptly echoes that old chestnut from the French Revolution – "Let them eat cake!"
Salmon's proposal to balance the unemployment insurance (UI) fund on the backs of unemployed Vermonters is as out of touch with reality as was Marie-Antoinette's callous statement to the poor in France. Salmon is joining forces with Gov. Jim Douglas in effectively saying I feel your pain, but we are giving you too much help.
Just this week, Gov. Douglas traveled to the Northeast Kingdom and appeared shoulder to shoulder with recently unemployed and seriously hurting Ethan Allen workers. He vowed to assist them, doing "everything we possibly can." Meanwhile, back home in Montpelier, Douglas is leading the charge to cut their benefits by millions of dollars annually.
There is no doubt that our UI program is in trouble, and we must chart a path to solvency. As we move forward, here are some key things to keep in mind:
The fundamental purpose of UI is "employment stabilization." It helps stabilize the economy during recessions as the benefit dollars spent by unemployed workers are poured right back into the economy.
As far back as 2003 there were warning signs that the fund was headed toward insolvency, yet the Douglas administration did nothing about it. Now the current emergency is far worse than it needed to be.
Vermont is not alone. As the job market remains weak in this recession, over 40 states will likely end up with insolvent UI funds.
Vermont's UI program is not overly generous. We are average in New England for what we pay out for total claims.
Vermont was the only state in the country to cut benefits this year when we froze the maximum benefit to unemployed workers in June; we are now one of only two states actively considering further cuts.
Vermont's unemployed workers return to work faster than in any other state.
Due to a failure to adjust for inflation, Vermont's employers have seen a 60% reduction in their UI taxes as a percentage of payroll over the past 25 years.
The impact of UI on the bottom line must be kept in perspective: UI charges represent only about $0.80 of every $100.00 of wages. They are dwarfed by other costs of doing business such as health care, retirement plans, insurance, etc.
This is not a time to overreact. The recession should not be an excuse to participate in a race to the bottom. It is wrong to ask unemployed Vermonters, who need this assistance more than ever, to bail out the fund.
It took us a long time to get into this predicament, and it will take some time to get out. We must work together to find a solution that upholds Vermont's values and gets us back on track.
Rep. Warren Kitzmiller of Montpelier is chairman of the House Committee on Commerce and Economic Development.
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