Legislation to increase and impose new UI benefits will discourage workers from returning to work
Vermont Business Magazine Business organizations, representing more than 200,000 workers, have made their position clear with members of the Vermont Senate, that they oppose S10 because adding $50 million in unemployment insurance costs is unaffordable and will delay Vermont’s progress toward economic recovery. Governor Scott has benchmarked July 2021 as a time when we can look toward fully reopening our economy and S10 will push Vermont further away from that benchmark.
The governor said today that he recognizes the issue and anticipates new job search requirements will be developed in the next few months. He said the state should be "back to normal" by the Fourth of July. But he also added that right now there are still some 35,000 Vermonters out of work. Because of the pandemic, the work situations of many Vermonters have changed. For instance, they may have children at home, he said. He did not weigh in specifically on S10.
The past year saw Vermont’s business community navigate unprecedented economic hardship, while also ensuring the business services Vermonters depend on continued as seamlessly as possible. Vermont communities rely on local businesses for everything from keeping our homes heated in the winter, to maintaining the viability of rural, tourism-dependent towns.
The approach of widespread vaccine availability has provided businesses and customers with some hope that normalcy is imminent. Businesses are eager to move back to full operations, and customers are excited for a future where the closures and reduced hours that characterized 2020 are only a memory.
For employers, one of the most vital components to a successful economic restart is the ability to safely rehire furloughed workers and hire new employees. Sufficient workforce availability is essential to transitioning out of months of reduced operations. Even before the pandemic, Vermont’s workforce was not sized appropriately to satisfy demand for the plethora of unfilled positions offering high wages and reliable benefits.
The pandemic exacerbated this problem, and the Vermont Senate is currently considering a proposal that has the potential to further degrade workforce capacity and delay economic recovery. S.10 is a proposal that, if allowed to become law, will result in large portions of Vermont’s workforce earning significantly more money collecting unemployment than they would by returning to work.
Struggling businesses are concerned by efforts in the Vermont Senate to advance an incentive for Vermonters to remain on unemployment, rather than safely return to work. The Senate’s proposal would increase Vermont’s unemployment benefit by more than 20%. This proposed boost would be in addition to the American Rescue Plan benefit recently passed into law which, among other financial support for the unemployed and dependents, includes payments on top of state UI benefits that, combined with S.10, effectively pay more than returning to work for someone making up to $24.00 an hour, while also not taxing the first $10,200 of unemployment income.
The composite of increases under S.10 in addition to the new federal benefits will naturally cause many to think twice before electing to rejoin the workforce. Beyond adding to the hardships facing so many individual Vermont small businesses, there is no question that broadly disincentivizing return to work will slow overall economic recovery and prolong the challenging circumstances Vermonters have patiently dealt with over the last year.
Employers recognize the importance of ensuring that workers depending on unemployment are provided with adequate benefits, but providing greater than 100% wage replacement puts our state at risk of creating a self-imposed barrier to the recovery we all so desperately need to achieve over the coming weeks and months.
Associated General Contractors of Vermont
Associated Industries of Vermont
Barre Granite Association
Central Vermont Chamber of Commerce
Lake Champlain Chamber
National Federation of Independent Business
Vermont Association of Broadcasters
Vermont Chamber of Commerce
Vermont Forest Products Association
Vermont Groundwater Association
Vermont Retail & Grocers Association
Vermont Retail Lumber Dealers
Vermont Ski Areas Association
Vermont Traditions Coalition
Vermont Truck & Bus Association
Vermont Vehicle and Automotive Distributors Association
Source: MONTPELIER (March 23, 2021) – Vermont Retail & Grocers Association