COMMENTARY

June 12, 2003

Contact: Marsha Richards, Communications Director
(360) 956-3482

State’s anti-business climate begins to thaw

Lawmakers were understandably relieved to go home yesterday after marathon hours spent negotiating for reforms in the state’s unemployment insurance (UI) system. While the newly approved reforms aren’t a silver bullet, they are certainly an important and long-awaited first step toward resolving Washington’s anti-business climate, and we commend the legislators who supported the measures.

In sum, lawmakers reduced unemployment benefits to more closely match reasonable national standards, and improved the rate structure to ensure that contributions from workers and employers better match the benefits they actually receive. Both are crucial and necessary reforms.

Now that the ball is rolling, we hope legislators will quickly take the next step and crack down on fraud and overpayments in the unemployment system. The Department of Labor reports that 10.9 percent of all unemployment insurance claims are overpayments. In other words, people who have no business collecting benefits are fraudulently doing it anyway. In spite of these facts, our state still does not have an aggressive plan for ensuring the fraud stops and recovering the improper payments. This should change.

Thinking long-term, legislators should start moving toward a system of portable, employee-owned accounts that would allow workers to take full advantage of the dollars removed from their paychecks for unemployment insurance. (Chile has done this successfully.) This will require federal law changes, but just as welfare reform began in the states, reform of unemployment insurance will, too.

The militant opposition from labor unions to the new unemployment reforms exposes labor officials who are more interested in gaining control for themselves than for the laborers they claim to represent. Officials of the Washington State Labor Council did all they could to defeat the proposal, despite strong support for it from one of their largest affiliate groups.

Even with the new reforms, Washington’s unemployment benefits will still be more than twice as high as those offered by most other states. Yet it took a decade of increasingly desperate warnings from business, a couple of special sessions, and an ultimatum from Boeing to get here. Is it any wonder businesses are skeptical about the state’s ability to provide a competitive and healthy business environment?

Changing this skeptical mindset will require bold and decisive leadership. This leadership should be forward-thinking, not the obstructionist flavor displayed by Speaker Frank Chopp and Representative Steve Conway, who are beholden to labor officials at the expense of workers.

Legislators should also remember that the companies and organizations they see in Olympia fighting for and against unemployment insurance reforms are those who can afford to send a full-time representative to the capitol. The faces they may not see are the owners and employees of the mom-and-pop market around the corner, or the dry-cleaning company with three employees. Whether Boeing leaves or stays, these small businesses will still need a healthy and competitive environment.

If legislators make meaningful unemployment insurance reforms a top priority, they will empower workers and successfully improve the business climate. Is there any good reason why they shouldn’t?

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org