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Local union worried about effects of shortening unemployment benefits

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CEDAR RAPIDS, Iowa (KWWL) - The Iowa Senate passed one of the Republican party's main priorities for this session Tuesday; a "modernizing" of unemployment benefits aimed at getting people back to work.

The bill, now headed to Gov. Reynolds' desk, shortens the maximum amount of time someone can be on unemployment from 26 to 16 weeks, it allows Iowa Workforce Development to compel people to apply for lower-paying jobs while they are unemployed, and it gives more definitions to what "misconduct" can disqualify a person for benefits.

Junior Luensman, business manager for the International Brotherhood of Electrical Workers Local 405, says he and the union are against this bill.

"It could be very impactful in a negative way to every worker," Luensman said.

Luensman says construction workers often have to go on unemployment during the winter or between jobs. While it doesn't usually last longer than 16 weeks for union members, he says it has happened before and the benefits have been much-needed.

"It has happened. In the early 2000s, during rough economic times, there wasn't much construction, and it wasn't uncommon for our workers to be on unemployment long enough that they lost their benefits," Luensman said, referring to the current cap of 26 weeks.

There were 28,000 unemployment claims after the 16 week mark in Iowa in 2019, according to the nonpartisan Legislative Services Agency. That accounted for 33% of all claims.

The LSA did not look at 2020 or 2021 in its analysis of this bill, because it said the onset of the pandemic inflated the numbers so much that it was not a good basis for future policy decisions.

Luensman said at the moment, the union is extremely busy and in some cases is not able to fill all the jobs that contractors ask for.

Republicans say the demand for workers and amount of open positions right now makes this policy a good idea.

“While I believe a one week waiting period is important, the broader unemployment reform in HF 2355 advances key polices to return Iowans to work faster. With tens of thousands of more job openings than Iowans on unemployment, this bill is a common sense reform to address the workforce shortage across the state," Republican Sen. Jason Schultz said, chair of the Senate Commerce Committee.

“I’ve worked tirelessly to find ways to reinvigorate our workforce and make it more attractive for recruitment and retention of workers. With more than 85,000 job openings in our state, we cannot afford to leave any employable Iowans on the sidelines," Governor Kim Reynolds said.

Reynolds said in her Condition of the State address in January that the "safety net of unemployment has become a hammock" for people.

"I don't think construction workers use it as a hammock," Luensman said. "They use it to help them get through slow times from one project to the next one. A lot of times, these projects are delayed due to weather."

Luensman says just because the labor market is good right now, doesn't mean it will stay that way. And he is worried about how this policy could hamstring people if the economy takes a downturn and businesses do less hiring.

Unemployment benefits are paid out of a fund called the Unemployment Insurance Trust Fund or "UI Trust Fund". Businesses across the state contribute to that fund based on a five-year average of their benefit payments, and an average of their annual taxable payroll.

The LSA says reducing the maximum allowable benefits from 26 to 16 weeks will save the UI Trust Fund on average about $70 million per year over the next two years.

However, it says it may take years for businesses to contribute less to the program, because that is determined based on a formula that also includes average wages in the state, and the available balance of the UI Trust Fund.