Iowans on unemployment would lose benefits 10 weeks sooner under similar proposals the Iowa House and Senate passed Wednesday after hours of heated debate.
The legislation, which represents a major policy priority of Gov. Kim Reynolds, a Republican, also would require workers to take lower-paying jobs sooner or risk losing their benefits.
Republicans in the two chambers differ, however, on a specific detail of the legislation: whether Iowa also should add a one-week waiting period before unemployed workers can begin collecting benefits.
The House voted 58-37 to pass its version of the measure, House File 2355, with all Republicans in favor except Reps. Charlie McClintock, R-Alburnett, and Martin Graber, R-Fort Madison, who joined every Democrat in voting no. During debate, Republicans voted to eliminate the waiting period from the bill.
The Senate later in the evening voted 30-20 to add the waiting period back to the House bill, sending it back to the other chamber. All Republicans voted in favor except Sen. Zach Nunn, R-Bondurant, and Sen. Jeff Reichman, R-Montrose, who joined Democrats in opposition.
Both chambers must pass the same version of the bill before it goes to Reynolds for her signature.
During several hours of debate Wednesday, Democrats accused Republicans of attacking workers, while Republicans said they were modernizing the state’s unemployment system and ensuring the unemployment trust fund stays solvent.
“What we are proposing to do is refocus unemployment on reemployment, rather than just being a safety net,” said Rep. Mike Bousselot, R-Ankeny. “We are going to update the number of weeks to reflect the labor market employers and workers are facing.”
Iowa currently offers up to 26 weeks of unemployment benefits for laid-off workers. If the two chambers agree to a compromise and it becomes law, workers could receive a maximum of 16 weeks. That would place Iowa among the states that cut off benefits soonest. Most states offer up to 26 weeks of benefits, while only a half-dozen states offer 16 weeks or fewer.
“This bill that we have before us today is a middle finger to hardworking Iowans,” said Rep. Liz Bennett, D-Cedar Rapids.
Iowa workers laid off because of a factory closing would be eligible for 26 weeks of unemployment benefits, down from 39 weeks under current law.
The bill also would lower the threshold of what’s considered “suitable work” compared to the worker’s salary in a previous job. Under current law, Iowa workers are not required to accept a job offer for less pay until after their fifth week on unemployment. The bill would lower that to one week and continue ratcheting down the percentage of the employee’s wage that is considered suitable.
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“When we have more jobs available than we have people on unemployment, we need to take a look at a system that was put in place during a much, much different time in our history,” Reynolds told reporters last week.
Democrats and labor groups have said the benefits aren’t the problem, and that the proposal would hurt workers who lose their jobs through no fault of their own. Workers fired for cause are not eligible for unemployment.
“This is the governor’s proposal and the premise of this is that Iowa workers are lazy,” said Rep. Bruce Hunter, D-Des Moines. “We as Democrats could not disagree more with that statement.”
Iowa’s unemployment rate in January — the most recent month with data available — was at 3.7%. There were about 20,300 Iowans filing continued unemployment claims in the week ending March 12, according to Iowa Workforce Development data. Iowans received an average weekly benefit of about $344, replacing about 46% of the wages they earned in their prior job.
House, Senate Republicans disagree about one-week waiting period
The original legislation also included a one-week waiting period for Iowans to receive unemployment benefits, but House Republicans struck that requirement in an amendment. That Senate’s version, however, maintains the waiting period, meaning Republicans will need to resolve the two versions before they can send a final bill to Reynolds’ desk.
Bousselot said he removed the waiting period requirement after conversations with labor union members, who had strongly objected to its inclusion.
“In listening to folks that work at IBEW (International Brotherhood of Electrical Workers) and in the construction and carpentry trades, my amendment will strike the one-week waiting period that was proposed,” he said.
In the Senate, Republicans voted down an amendment proposed by Democrats that would have eliminated the waiting period from the bill. Senate Democrats said it hurts Iowans who need benefits right away.
Sen. Jason Schultz, R-Schleswig, said many states already have a one-week waiting period and that he believes the gap could encourage workers to return to work faster. He said the waiting period is “an important part of the overall picture” that he wants to keep as the Senate negotiates a final version the House.
“I’m probably going to stand pretty strong for that,” he said.
The wide-ranging legislative debate also touched on other efforts Reynolds has taken to address Iowa’s unemployment system. Last year, she withdrew Iowa early from three federally funded pandemic unemployment programs that gave Iowans an extra $300 per week. Democrats pointed to a Wall Street Journal analysis showing states that ended the benefits early added jobs at a slower rate than those that continued the benefits.
“The governor has already tried this same approach by cutting workforce benefits during COVID,” Hunter said. “It failed.”
How much money is in Iowa’s unemployment trust fund?
In January, the state also began requiring claimants to do more to try to get jobs and, in some cases, meet with the state’s career counselors every week. The state also used federal funding to hire additional career counselors as part of the changes. Reynolds had touted the changes as focusing on “rapid re-employment.”
Schultz said the proposal would strengthen the state’s unemployment trust fund, which is paid for through taxes on businesses. The tax rate increases as the size of the trust fund drops. Reynolds has already put hundreds of millions of dollars of federal COVID-19 relief money into the fund and Senate Democrats said it doesn’t need further shoring up.
Iowa’s unemployment trust fund had about $1.37 billion in it as of March 1, up from $1.2 billion before the pandemic started two years ago.
Reducing the maximum unemployment benefit by 10 weeks will reduce benefits paid from Iowa’s unemployment trust fund by approximately $69 million next fiscal year and $71 million the year after, the nonpartisan Legislative Services Agency estimated in a report this year. The one-week waiting period would decrease payments by more than $23 million in each of the next two fiscal years.
Due to a reduction in payments, the bill is expected to result in decreased taxes for employers, the agency said.
Cuts to unemployment are unpopular among most Iowans, a Des Moines Register/Mediacom Iowa Poll found this month. Fifty-three percent of Iowans oppose proposed cuts to benefits for laid-off workers, while 38% favor the plan.
The cuts are among several policy goals that Republicans have been working to finish before the session concludes.
Reynolds’ original unemployment proposal had previously been paired with caps on the amount of money plaintiffs can recover in medical malpractice lawsuits and suits over accidents involving commercial vehicles. But Republicans have struggled to pass those changes, and they were not included in the bill that passed Wednesday.
Last week, House Republicans failed in an attempt to pass a bill that would have banned businesses from requiring workers to take the COVID-19 vaccine and capped damages in commercial vehicle lawsuits. That bill would not have included the medical malpractice caps.
Reynolds said last week that she’s still working with lawmakers to look at different ways to get those proposals passed.
“I support tort reform. I’ve gone on record for doing that,” she said. “It helps with our recruitment and retainment process when we talk about trying to keep health care professionals in the state of Iowa, to make sure that we have a trucking industry that isn’t further constricted by high lawsuits.”
Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.
Ian Richardson covers the Iowa Statehouse for the Des Moines Register. Reach him at irichardson@registermedia.com, at 515-284-8254, or on Twitter at @DMRIanR.
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