Louisiana legislators rejected a proposal on Monday that would have increased the maximum benefit for jobless workers by $100 per week. In turning away the measure by Rep. Royce Duplessis, members of the House Labor Committee cited concerns about the state’s bankrupt unemployment insurance trust fund. Moments earlier, the same committee voted to repeal a “solvency tax” on businesses that would have generated $53 million next year to replenish the unemployment trust fund. Neither Gov. John Bel Edwards nor members of the Legislature have laid out a plan for replenishing the fund, and Louisiana is now borrowing from the federal government at 0% interest through the end of the year to pay out state unemployment claims. Unemployment insurance is one of the most effective ways to lift an economy that’s in a recession, yet Louisiana’s average weekly benefit of $180 is the lowest in the country when measured as a percentage of wages. Nola.com | The Baton Rouge Advocate’s Sam Karlin reports:
Rep. Royce Duplessis, D-New Orleans, conceded the legislation would increase the burn rate of the state’s unemployment trust fund. But he argued the state should send the money to workers while it’s borrowing from the feds at no interest through the end of the year and relatively low interest after that. “We have to continue to push back against this false choice … That if you support workers, you’re somehow against business,” Duplessis said at the rally outside the Capitol.
Louisiana isn’t an outlier, as states across the country grapple with an historic wave of layoffs. Tim Henderson, reporting for Pew’s Stateline, outlines how jobless claims are straining states’ finances:
Unemployment insurance trust funds are paid for by business taxes and pay out benefits to laid-off workers. If the funds start to run out of money, state and federal law trigger tax increases to replenish the accounts. “It is a big deal for states and businesses,” said Shelby Kerns, executive director of the National Association of State Budget Officers. “States generally do not want to increase taxes on businesses in an economic downturn, and borrowing only pushes those increases to the future, which can make the economic recovery more difficult.” Twenty states have asked for federal loans to tide them over, ranging from California to Texas, according to U.S. Treasury Department records.
More on the constitutional amendments
The constitutional amendments that Louisiana voters will see on the Nov. 3 ballot include a plan to allow even more generous tax breaks for industrial manufacturing corporations. Louisiana already grants lucrative incentives to manufacturers through the Industrial Tax Exemption Program, which exempts 80% of property taxes for up to 10 years. Amendment 5 would allow corporations to negotiate special deals with local governments, called PILOT agreements, where they pay some money up front in exchange for long-term tax breaks. The Nola.com | Baton Rouge Advocate editorial board disapproves.
Corporate interests would be delighted to trade cash upfront to shed long-term obligations like property taxes, and local politicians will be easy marks for these deals. We believe the long-term commitment of property taxes for community services will serve Louisiana better. Louisiana is a heavy spender in property tax breaks for large companies through industrial tax exemptions; there is no need to add another layer of “incentives,” if those actually are driving business location decisions, which may be doubted.
An analysis of the amendments by the Council for a Better Louisiana is here, and the Public Affairs Research Council of Louisiana’s report is here. LBP will release its analysis of this year’s amendments later this week.
Pandemic adds to plight of low-income college students
Low-income college students – already at a disadvantage before the coronavirus pandemic – are now having to navigate the financial hardships of a recession and the challenges of online learning. For many, like Michelle Macario, it’s too much. The New York Times’ Dan Levin documents the obstacles that these students face and the long-term effects this pandemic could have on education attainment for people of modest means.
For students who do drop out, there is little chance they will return. Just 13 percent of college dropouts re-enroll in courses, according to a report released last year. “Once you stop going,” Ms. Parham said, “it’s much more difficult to start back up again.” Black and Latino students have been hit particularly hard. EAB, an educational research firm based in Washington, found that students of color had submitted a free application for federal student aid at far lower rates in 2020 than in previous years. The firm’s researchers also found that far more low-income students, particularly students of color, had committed to colleges but not shown up compared with last year.
What happened to all the unions?
Serious shortcoming in current law and anti-union behavior from employers has led to wage suppression and a smaller percentage of workers forming unions, according to a new report from the Economic Policy Institute. Authors Lawrence Mishel, Lynn Rhinehart and Lane Windham explain the erosion of private-sector unions by examining data on union elections and workers’ ability to achieve an initial collective bargaining agreement.
Labor law has not kept pace with workers’ interests and needs and provides a classic example of “policy drift,” the failure to update the law to reflect changing external circumstances, with the result that and the outcomes of the policy start to shift. Labor law’s support for workers’ ability to pursue union organizing and collective bargaining has declined over many decades, and efforts to remedy this drift have been blocked by a minority of senators despite majority support in both houses of Congress and presidential support for reform.
Number of the Day
26.1% – America’s “true” unemployment rate, measured as the percentage of adults who want to work but cannot find a full-time job that pays a living wage. (Source: Ludwig Institute for Shared Economic Prosperity via Axios)