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The senator says expansion is overdue for a benefits system caught in a 'time warp' from the 1930s.

PMG FILE PHOTO - Ron Wyden says it's time for a permanent, major overhaul of the U.S. unemployment system. U.S. Sen. Ron Wyden says the temporary expansion of unemployment benefits to more workers — a step he championed and became part of the $2 trillion federal response to the Covid-19 coronavirus pandemic — should be made permanent.

As the top Democrat on the Senate Finance Committee, which oversees the unemployment insurance system, Wyden negotiated not only a 13-week extension and a $600-per-week increase in benefits, he also secured expansion of benefits to self-employed, gig and part-time workers, freelancers and independent contractors.

Although some changes have been made since the most recent economic downturn more than a decade ago, the nation's unemployment insurance system dates back to the Great Depression of the 1930s. Wisconsin created the first state program in 1932, and the Social Security Act of 1935 encouraged states to do so. All did by 1937.

Back then, typical U.S. wage earners were the men in two-parent families — and benefits replaced only part of their lost wages until they could get other full-time jobs.

Wyden, in an interview with Pamplin Media Group, says economic realities are different more than 80 years later.

"The unemployment system created in the 1930s has been in a time warp. I insisted that all of them (new worker categories) be covered, plus the $600 per week and the four months of coverage," Wyden said. "I think this could be the foundation of a more comprehensive plan for unemployment insurance reform when we defeat this virus and we can go on to looking at policy in a more deliberate way."

Wyden's Oregon spokesman, Hank Stern, said afterward that Wyden's immediate focus is on ensuring that unemployment benefits get into the hands of laid-off workers, no matter their category. Colorado Sen. Michael Bennet, formerly a Democratic candidate for president, also has proposed changes.

Almost 17 million unemployment claims have been filed nationally in the past three weeks, and 300,000 claims in Oregon. The sheer volumes have tied up state employment agencies — states run the system under the guidance of the U.S. Department of Labor — and the backlogs of claims are frustrating laid-off workers. There are no estimates available on the number of workers newly eligible for benefits.

Oregon's unemployment trust fund has about $5 billion available, according to the Employment Department.

Change comes hard

The CARES (Coronavirus Aid, Relief and Economic Security) Act puts into effect some of the same proposals that Barack Obama offered in his final budget as president in January 2016, a year before Donald Trump succeeded him.

According to a statement then by Obama's top economic advisers: "With the economy in better shape today, it is a good time to prepare for future contingencies by making sure that unemployment insurance — one of our front-line defenses for workers who lose their jobs and a key automatic stabilizer for our broader economy — is more responsive to economic conditions."

But Republican congressional majorities took no action then.

According to an analysis by the National Employment Law Project, one of three groups that backed sweeping changes, only 30% of unemployed workers in Oregon actually drew benefits in 2016, slightly better than the national average of 27%.

"The workforce has changed and the nature of work has changed, but our system has not," said Janet Bauer, policy analyst for the Oregon Center on Public Policy, which advocates for low- and moderate-income people. "Fewer workers are covered by the regular program now and that number has been going down.

"We know about the problem. The CARES Act goes in the direction we need to be going so that workers who have jobs today have protection when they are out of work. It provides the template for how we can think about restructuring the core of this program."

Bauer said advocates of change will have to come up with alternatives to fund the program, which now levies a 6% tax on the first $7,000 of taxable wages of employees.

Even the temporary changes Wyden secured had to survive a showdown vote in the Senate — a fight that may foreshadow a future debate about whether the changes should be permanent.

Wyden thought he had an agreement with Treasury Secretary Steve Mnuchin, who negotiated for President Donald Trump, and Iowa Republican Charles Grassley, the Finance Committee chairman. But then majority Republicans forced a floor vote to eliminate the fast-track approach for the increased benefits. Their amendment failed on a 48-48 tie, when two Republicans sided with Democrats.

"Senators who did not participate in these long negotiations popped up on the Senate floor and said these people should not get their checks under the one approach that would get money to them fast," Wyden said. "These senators said it would encourage people to quit. I said: Are they kidding?

"Some of the same senators who voted against this approach are now claiming how wonderful it is."

Other changes made

Oregon did adopt some changes after the 2007-10 recession, such as a recalculation of the wage base for unemployment benefits and work-share programs. The latter allow the unemployment trust fund to be tapped for workers who are still employed, but whose hours have been reduced from the normal work week.

Bauer said other changes she advocated were part of the CARES Act and another federal aid plan. Among them: A requirement for someone to actively seek work is waived; people caring for a family member can receive benefits, as are quarantined workers. Charges are waived for employers, who normally pay more in unemployment taxes after their laid-off workers obtain benefits.

Unlike other states, however, Oregon did not do away with the one-week waiting period before a laid-off worker can start receiving benefits. The CARES Act does set aside $1 billion for states to modernize their claims systems, but a spokeswoman said the reprogramming hours the Oregon Employment Department would need to eliminate the "waiting week" could better be spent on processing claims.

"It is an antiquated policy that does not make this program responsive to the needs of workers," Bauer said.

Though the waiting week is included in the total that laid-off workers are eligible for benefits, she added, "it matters only for workers who have almost exhausted their eligibility. Many workers do not use the full 26-week period, so they do not get the benefit of the waiting week. But they need the cash now; they are desperate for it."

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Learn more

Link to Sen. Ron Wyden's summary of unemployment and other benefits in the CARES Act.

Link to Janet Bauer's issue brief on unemployment insurance for the Oregon Center on Public Policy.

Link to National Employment Law Project paper on coronavirus and unemployment.

Link to unemployment basics by the Center on Budget and Policy Priorities.

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