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Tennessee lawmakers cap unemployment benefits at as low as 12 weeks, lowest nationwide

May 5, 2021 – The Tennessean by: Yue Stella Yu – In the dwindling hours of this year’s legislative session, Tennessee lawmakers reached consensus on a deal to overhaul the state’s unemployment benefit system. The bill, which cleared the Senate 26-7 and the House 71-19 on Wednesday afternoon,  caps the maximum payout period at as low as 12 weeks — the lowest in the nation. It also would boost the weekly benefits for all eligible Tennesseans by as much as $50. 

The House originally proposed a $25 increase, but ultimately matched the Senate proposal, which was approved by lawmakers Wednesday. The bill will now head to Gov. Bill Lee’s desk for his signature. The bill would tie the maximum payout period to the state’s unemployment rate. The benefits would be extended as the rate rises and eventually would be capped at 20 weeks if the rate balloons beyond 9%. The changes will take effect in December 2023.

Tennessee has one of the lowest amounts of weekly unemployment benefits among all states. Currently, each Tennessean can claim up to 26 weeks of benefits. But under the bill, Tennesseans mostly likely will see their benefits capped at 13 or 14 weeks based on historical unemployment rates.

Proponents tout the measure as an effort to restructure Tennessee’s unemployment benefit system and replenish the state’s unemployment trust fund, which has remained for years below the federally recommended level. “It’s a math equation when you boil down to it,” said Rep. Kevin Vaughan, R-Collierville, who carried the legislation in the House. “How do we increase the dollars in the fund?”

Top Republican lawmakers have argued 26 weeks of unemployment benefits is too much. The extended benefits, they said, have discouraged people from rejoining the workforce, although the theory has been disputed by several studies

Democratic lawmakers opposed the measure, arguing the bill would cut the overall benefits to Tennesseans in need. The bill would save the state up to $24 million a year in payouts. 

“It’s morally wrong for us to reduce the benefits. These are working-class people. America was built on the back of working-class people,” said Sen. Brenda Gilmore, D-Nashville. “I do know what it is like to need something and to be without. And when these individuals receive the unemployment (benefits), they are paying daycare fees; they are keeping food on their tables; they are paying rent and mortgages.”

Supportive legislators argue the bill is a good way to infuse more money into the state’s unemployment trust fund. The fund level has remained below the federally recommended level since 2014, according to Department of Labor statistics. Sen. Bo Watson, R-Hixson, said the state managed to maintain a “healthy balance” in the fund this year because of federal aid during the pandemic. “We cannot and should not rely on the federal government to sustain our trust fund,” he said.

Senate Minority Leader Jeff Yarbro, D-Nashville, agreed the state needs enough money in the fund balance. But he said cutting the maximum payout period is not the right way to replenish that account. “Our unemployment system isn’t designed for recessions,” he said Wednesday. “What we are doing in this bill is we are trying to avoid any possibility of any tax increase, and we are just doing it on the backs of beneficiaries.”

In support of the legislation, Republican lawmakers cite hardship for businesses trying to hire workers to the extended benefits. “You go around any county in the state right now, and you see ‘help wanted’ signs everywhere,” said Sen. Mike Bell, R-Riceville. “They are looking for warm bodies. They are looking for people who can pass the drug test and just show up to work.”

Vaughan echoed Bell’s argument. “We’ve seen more supplemental federal dollars pouring into the system,” he said Tuesday. “It’s also becoming … a workforce supply chain issue. We have people that are not being able to find laborers.” Vaughan added Tuesday lawmakers intend to hold an “unemployment workshop” in the summer to discuss further changes to the unemployment system. 

Rep. Jason Zachary, R-Knoxville, referred to the number of job openings in Tennessee to argue the extended benefits have discouraged people from seeking work. As of Wednesday, more than 255,000 jobs are available, state data shows. “We are not Washington. We cannot print money,” he said. “We have to ensure the solvency of these programs, to ensure those that fall on hard times are able to gain access to unemployment (benefits).”

But Democratic lawmakers opposed the measure, arguing the overall reduction in unemployment benefits would fail to meet Tennesseans’ soaring needs during a pandemic. “We are cutting unemployment (benefits) in half after a million people in this state have relied on this system in the last year,” Yarbro said. “That’s not people who are lazy; that’s one out of every three workers.”

Rep. Larry Miller, D-Memphis, said Tuesday the $25 raise in weekly benefits is not enough to keep up with inflation. Currently, unemployed Tennesseans are eligible for up to $275 per week — a level set two decades ago, he said. “I think about what I could spend $25 on,” he said. “Not much of anything.”

Rep. John Ray Clemmons, D-Nashville, called the $275 weekly benefits “embarrassing.” That calculates to an hourly wage of roughly $6.88, he said, which is below the state’s minimum wage of $7.25.

Clemmons called his Republican colleagues’ position a “false narrative.” “For us to sit here and claim that people are sitting at home instead of working in the state of Tennessee because they are getting more money from unemployment is absurd,” he said. “There are real problems facing Tennessee families. And if you try to shift the blame to working families in Tennessee, that is a dangerous game you are playing.”



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