Report: Alabamians receiving fewer weeks of unemployment compensation

Report: Alabamians receiving fewer weeks of unemployment compensation

By MARY SELL, Alabama Daily News

Recently out of work Alabamians are receiving unemployment benefits for shorter amounts of time than those in several other Southern states, a recent report says.  Even in midst of the pandemic Alabama’s unemployed received fewer weeks of support.

The Florida-based think tank Foundation of Government Accountability recently praised Alabama’s weathering of the pandemic as it related to unemployment compensation and attributed it to the state’s 2019 law that shortened the number of weeks people can receive the benefits. The foundation advocates more states adopt the unemployment “indexing” — tying the weeks the benefit is available to the state’s unemployment rate. 

“By September 2020, fewer than two in five unemployed Alabamians were receiving unemployment benefits—compared to nearly 75 percent of unemployed Tennesseans, and more than 100 percent of unemployed residents of Mississippi and Louisiana,” the report said.

Those states don’t index. Florida and South Carolina do. And Kentucky this year passed an indexing law.

Prior to the pandemic and despite a low unemployment rate, a larger share of unemployed Alabamians were claiming unemployment benefits than in any other state in the region, the report said.

The 2019 law that went into effect Jan. 1 2020, just months before the pandemic began,  took unemployment benefits from a possible 26 weeks to a variable 14 to 20 weeks. When unemployment is at or below 6.5%, people receive 14 weeks of benefits. If unemployment is above 6.5 percent, an additional week is added for each .5 percent increase in the rate with a maximum of 20 weeks of benefits.

The third quarter 2021 average was 8.9 weeks, less time than the new law allows. By comparison, it was 13.2 weeks in the second quarter of 2019.

Those who enroll in a state-approved training program can also receive five extra weeks of compensation.

While the unemployment rate spiked to nearly 14% in April 2020, by September of that year it had dropped to 6.7%.  Nearly 25% of Alabama’s workforce found themselves at least temporarily out of work early in the pandemic, Alabama Labor Secretary Fitzgerald Washington told Alabama Daily News.

More recently, Alabamians are spending less time receiving benefits than those in Louisiana, Tennessee and Mississippi, according to the FGA.

Washington attributes the rapid removal from unemployment rolls to the state’s strong economy.

“Our economy is really moving in the right direction from where we were two years ago,” Washington said. “There are a lot of available jobs out there and our charge is to connect job seekers to employers.”

The state’s unemployment rate is now at 2.9%, tied for a pre-pandemic low.

About 65,000 Alabamians are reported as unemployed, meaning they are searching for work. Meanwhile, there are nearly two jobs being advertised for each available worker, Washington said.

“I’ve never seen that before,” Washington said.

He said Labor is working to get those “previously disconnected” from employment opportunities into jobs. That includes veterans, the previously incarcerated and people with disabilities.

“Our focus is to make sure we highlight those (groups) to employers,” Washington said.

Sen. Arthur Orr, R-Decatur, sponsored the 2019 law and said the goal was to get people back to work sooner, or get them in a job training program. 

The law also raised the maximum weekly benefit by $10 to $275. Weekly benefits now range from $45 to $275.

“(Unemployment benefits are) meant to be a short-term safety net, not a long-term hammock,” Orr said. 

This year, Orr successfully sponsored a law change to require those receiving unemployment benefits to apply to at least three jobs per week. The new requirement goes into effect Jan. 1, 2023. His original bill called for five searches per week.

“(Three) is an improvement, but we need to continue to monitor it and possibly change it in a year or two,” Orr said.

Alabama’s Unemployment Compensation Trust Fund, that pool of money funded through a tax on employers and from which the recently unemployeds’ weekly benefits, was nearly emptied in 2020 when pandemic-related job losses spiked.

The result was an increased unemployment tax on businesses and state leaders prioritizing $465.5 million in federal relief money into the trust fund. 

Earlier this month, the trust fund’s total was $726 million, close to a pre-pandemic high of $738 million.

Though the tax on employers was decreased this year, businesses are paying slightly more than they were pre-pandemic, according to Labor.