By Marie-Frances Rivera and Phineas Baxandall, Massachusetts Budget and Policy Center
March 5, 2021
Since March 2020, Massachusetts workers have faced a dark winter. At the recession’s deepest point, employment had fallen by nearly a quarter. As COVID-19 infection rates increased and a pandemic-induced recession began, our Unemployment Insurance (UI) system stabilized our economy. Over 2020, $20.5 billion in state and federal unemployment payments flowed into the Massachusetts economy, providing critical support to over a million individuals and their families, including many Black, Latinx and low-income workers who were hit hardest by job loss.
While this federal/state program is indispensable for keeping individual workers and the general economy from ruin, as currently designed it is in peril and leaves too many workers out. The surge in pandemic unemployment exposed major shortcomings in our UI system. For example, for too many years, lawmakers have refused to allow automatic safeguards to go into effect that increase payroll contributions to the state UI fund when its balance falls too low. Putting off such adjustments has made Massachusetts’ UI fund insolvent and forced us to borrow from the federal UI fund an amount expected to exceed $2 billion by the end of 2021. Each year that we put off raising contribution levels puts us deeper in the red, and employers will be required to start paying interest on the debt. The state and federal government can fix these problems.
Fortunately, federal enhancements to unemployment assistance have played a strong role in preventing an economic tailspin and protecting workers against losses of employment income unprecedented since the Great Depression. Our federal government paid for $600 weekly additions to UI benefits (that lapsed and then became $400 weekly), and funded new benefits for independent contractors, gig workers and many others who wouldn’t normally qualify.
Only the federal government has the financial ability to keep UI strong until this crisis is over. So it must keep enhanced COVID unemployment benefits flowing until the economy stabilizes—rather than setting them to expire at some arbitrary date, when unemployment could still be high. When these emergency programs eventually do wrap up, we should not return to a world in which the workers who have received these supports would again be excluded from them. Gig workers especially need to be brought into a broader UI system.
Similarly, the system must provide UI benefits to workers regardless of immigration status, especially as payments have already been made into the UI system on behalf of these workers. In Massachusetts an estimated $366 million in unemployment insurance contributions have been paid on behalf of approximately 113,000 undocumented workers over the past decade, but these workers are unable to collect a penny of benefits through either the traditional UI system or the Pandemic Unemployment Assistance (PUA) program.
Many of the problems in the Commonwealth’s UI system are of our own making, and we need to take action to fix them. Here are three reforms:
Greater equity goes hand in hand with a stronger, more resilient unemployment insurance system. The same could be said for our economy overall.