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The White House Jan. 16 unveiled details about ambitious proposals to provide wage insurance for laid-off workers and expand existing jobless benefits, but the initiatives remain unlikely to get off the starting block during President Barack Obama's final year in office.

The proposed wage insurance program would offer up to $10,000 in benefits for workers who are laid off and later take another job that pays less than their previous position. The Obama administration also said it wants to expand the unemployment insurance system to cover part-time and intermittent workers, newer labor market entrants and those who leave work for “compelling family reasons.”

“It's a way to give families some stability and encourage folks to rejoin the workforce,” Obama said of the wage insurance program during a Jan. 16 radio address. “Because we shouldn't just be talking about unemployment, we should be talking about reemployment.”

The initiatives are already getting the cold shoulder from Republicans in Congress, who have resisted similar programs based on funding concerns, and are already being met with skepticism from at least one workers' rights group. The White House and congressional Democrats are nevertheless likely to continue to push these and other labor-focused proposals in the run-up to the November elections.

“We have serious concerns that this policy undermines economic growth and opportunity for jobless Americans,” Emily Schillinger, the communications director for the House Ways and Means Committee Republicans, told Bloomberg BNA via e-mail Jan. 19. “We believe there are much more effective ways to help more Americans get back to work through the Committee's pro-growth agenda.”

Pay Insurance a Tough Sell

The Obama administration has been touting wage insurance protections for a number of years, but had previously limited proposals—including a similar program in place for workers impacted by trade-related foreign competition—to older workers in new careers.

Under the terms of the new plan, wage insurance benefits would be available to all workers making less that $50,000 and who were employed for at least three years before being laid off. Benefits would be available to cover half of the wages lost by taking a new job, up to the $10,000 mark.

The program could be a tough sell in Congress, where Republicans in 2014 blocked legislation to renew the federal emergency unemployment compensation program in part over the funding issue (84 DLR A-13, 5/1/14). The administration said the president will outline how he intends to pay for the new program and the unemployment insurance expansion in his annual budget request, which is scheduled to be released Feb. 9.

Even some workers' rights organizations aren't sold on the proposal. Judy Conti, the National Employment Law Project's federal advocacy coordinator, told Bloomberg BNA Jan. 19 that wage insurance is a “dangerous proposition” because it could wind up subsidizing employers that pay less and stifling workers' earning capacity by trapping them in lower-wage jobs.

“The next job that you're going to have is very much dependent on the job that you have now,” Conti said. “So we don't want people taking a permanent step down, just because we make it easy for them to do so.”
Conti said NELP is “willing to have a conversation” about wage insurance, if the program is narrowly tailored and is part of a larger effort to reform the existing unemployment insurance system. She called the UI program one of the best tools for fighting against a recession.

More Weeks Sought for UI Programs

Meanwhile, the White House also said it will push to expand the UI program by broadening the range of workers eligible for benefits. The proposal would also require states to provide at least 26 weeks of UI coverage to eligible workers and give them incentives to provide training, subsidized employment and relocation assistance to jobless workers.

Federal law sets the guidelines for state unemployment insurance programs, which are largely funded by a tax on employers. The benefits programs are designed to assist workers who lose their jobs through no fault of their own.

“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,” Obama said during the radio address. The administration also said it's imperative to firm up the system during the current economic upswing so that adequate protections are in place in the event that business activity wanes and the job market tightens.

A total of nine states currently offer fewer than 26 weeks of UI coverage. That includes North Carolina, which at 13 weeks offers the shortest maximum period of UI benefits in the nation.

“President Obama should not reproach states such as North Carolina that had to make tough decisions to ensure their unemployment insurance programs were financially sound for future generations of workers and taxpayers,” Rep. Virginia Foxx (R-N.C.) told Bloomberg BNA via e-mail Jan. 19. “Nor should he attempt to impose additional federal mandates on all states.”

The proposal also would make the federal EUC program permanent so that it automatically provides up to an extra 52 weeks of benefits for unemployed workers in states where there are “rapid job-losses or high unemployment.” That would eliminate the need for Congress to reauthorize the EUC program intermittently during economic downturns.

More than 7 million workers received at least some unemployment benefits last year, according to the White House.