Legislation that could reduce Tennessee’s unemployment time frame but increase payments $50 a week started moving Wednesday in the state Senate, despite complaints it would put families in dire straits.
Sen. Jon Lundberg, who took over the bill from Sen. Art Swann, passed an amended SB1042 through the Republican-dominated Senate Commerce and Labor Committee on a 7-1 vote. Swann, who previously said he disagreed with cutting the time frame, passed.
The legislation would reduce the time for unemployment benefits to a minimum of 12 weeks when the jobless rate is 5.5%. Each time the unemployment rate climbs a half percent the time frame would increase one week up to 9% at 20 weeks.
Under current law, unemployed Tennesseans can draw a maximum benefit of $275 weekly for up to 26 weeks. But Lundberg’s bill would increase the benefit by a maximum of $50 a week and a minimum of $25 a week, meaning a person could draw up to $325 a week. Initially, the bill would have added only $5 a week for people out of work.d
“It will help people because it puts more money in their pocket right up front,” he said, pointing out people out of work could draw $200 more a month.
Lundberg said a study shows people who are unemployed for 26 weeks don’t plan to return to work and that the typical Tennessean is out of work for a little longer than 12 weeks anyway.
Republican senators told several anecdotes, mainly about restaurants owners having trouble finding people to work. Lundberg said he knew of an upper East Tennessee company that had 15 job interviews scheduled but nobody showed up.
If it becomes law, the bill would not take effect until December 2023 because the Department of Labor and Workforce Development’s computer system is unable to handle the change, senators said. Otherwise, most noted they want it to start much sooner.
In addition to encouraging people to return to work, the legislation is designed to keep Tennessee’s Unemployment Insurance Trust Fund solvent, sponsors say. The fund dipped dramatically in 2020 when the unemployment rate jumped to more than 15% in the height of the pandemic when non-essential businesses were forced to shut down.
Tennessee used nearly $1 billion from the federal CARES Act to shore up the trust fund and keep businesses from having to pay higher unemployment rates, and it had a balance of $1.1 billion in January.
The move is expected to save the fund about $14 million the first year and $24 million in subsequent years, but it also comes with an up-front cost of $250,000 the first year to pay for slightly higher benefits.
State Sen. Raumesh Akbari, a Memphis Democrat who serves on the Commerce Committee, criticized the measure, saying it will hurt families still emerging from the COVID-19 pandemic. She pointed out people can’t raise a family on the state benefit, which is one of the lowest in the nation.
“Since the beginning of the year, 172,000 Tennesseans have lost their jobs through no fault of their own. We should be strengthening jobless benefits,” she said. “Cutting unemployment in the middle of an economic recovery will only lead to more financial insecurity for families that cannot afford it.”
House Republican leaders, including Speaker Cameron Sexton, say they support the legislation in an effort to bring Tennesseans back to the job market. They say plenty of jobs are available in the $15 to $20 hourly range.
Democrats fear such a measure will jeopardize families when they reach their lowest point.
Consistently you've seen the Lee Administration's position toward unemployment is to stigmatize it, treat is as a handout as opposed to what it's designed to be . . . something to help families avoid catastrophe. – Rep. Mike Stewart, D-Nashville
State Rep. Mike Stewart, a Nashville Democrat, called the measure part of a “broad policy” by Tennessee Republicans to cut people from government relief.
“We’ve seen it with TANF. We’re seeing it with unemployment. We’re seeing it with the effective policy of the Lee Administration to make unemployment so hard to get that people essentially give up, which has been a policy, not just incompetence, as we initially suspected,” Stewart said.
The state has more than $730 million in its Temporary Assistance for Needy Families fund, and lawmakers are trying to figure out how to spend those money more effectively.
Stewart accused state leaders of putting “barriers” in the way of programs designed to help Tennessee families. He contended such a move fits with a “Herbert Hoover model” for economics based on low wages and desperate workers with little to no government aid.
“Consistently you’ve seen the Lee Administration’s position toward unemployment is to stigmatize it, treat it as a handout as opposed to what it’s designed to be … something to help families avoid catastrophe and, therefore, make better, sound decisions that are long-term decisions,” Stewart said.
He described the scenario of a laid-off nurse being forced to take a fast-food restaurant job because of the lack of time to find a job in the healthcare field.
Most states allow 26 weeks for unemployment benefits. In contrast, Georgia, Nevada, Hawaii and Kentucky all allow 16 or less, but their maximum weekly benefits are much higher than Tennessee’s. Georgia’s is $365, Nevada’s is $450, Hawaii’s is $648 and Kentucky’s is $552.
Only Arizona, Mississippi, Florida, Alabama, Missouri and Louisiana would have lower payments, even if Tennessee increases its max payment by $50 a week.
Tennessee’s unemployment rate reached 15.5% amid the shutdown when more than 355,000 filed claims. The state’s jobless rate is at 4.9%, according to this week’s Department of Labor report, with Tennessee paying 116,751 people more than $7.9 million and the federal government more than $63.1 million.