Fewer than one in five unemployed Ohioans receive unemployment benefits, and the share of jobless residents receiving compensation has fallen to historic lows, according to federal labor data and a recent report from Policy Matters Ohio.
The state nationally ranks near the bottom for its share of jobless workers receiving state benefits, according to the most recent labor department data. Across the country, recipiency rates — the ratio of unemployed receiving benefits to all unemployed — of unemployment compensation are tumbling to record lows.
Ohio’s economy continues to struggle to create new jobs, and it is disappointing that few jobless residents receive crucial financial support that helps keep people in the labor market searching for work, said Zach Schiller, research director for Policy Matters Ohio, a liberal-leaning research organization.
“People who have worked and who are attempting to find work should have a safety net, and this safety net has some very large holes in it when only 20 percent of the unemployed are receiving benefits,” Schiller said.
Schiller said too few Ohioans receive benefits already, so it is imperative that Congress votes to extend federal benefits to the long-term unemployed.
But other research groups contend that the federal program was meant to be temporary, and extending it again would be harmful to the deficit and the economy while also providing jobless workers with incentives to delay finding work.
In the third quarter of 2013, Ohio on average had about 411,800 unemployed workers, about 72,600 of whom (18 percent) received state unemployment benefits, according to the U.S. Department of Labor.
In the previous 12-month period that ended on Sept. 30, about 22 percent of unemployed workers in Ohio received benefits, which meant the state’s recipiency rate ranked 47th in the nation, the data show. The rankings also include Puerto Rico and Washington, D.C.
The share of unemployed Ohioans receiving state benefits has fallen to the lowest level since at least 1983, according to Policy Matters Ohio. Ohio for the last 30 years has lagged the nation in its recipiency rate.
Jobless residents do not collect unemployment for a variety of reasons, said Benjamin Johnson, spokesman for the Ohio Department of Job and Family Services.
Some workers are laid off but they did not work long enough to qualify for benefits, he said.
Some workers exhaust all available unemployment compensation, while others may have only recently entered the labor force or rejoined it after a hiatus.
Others were fired for just cause, which make them ineligible. Workers are also ineligible if they received a severance package from their previous employers.
But Ohio also has fairly stringent earning requirements to qualify for benefits, said Schiller, with Policy Matters Ohio.
Jobless Ohioans are only eligible for benefits if they earn 27.5 percent of the average weekly wage, or $233 per week. They also must work at least 20 weeks in covered employment.
Schiller said that means Ohioans who work a minimum-wage job for 29 hours per week for decades will not qualify for compensation if they are laid off.
“The share of unemployed people getting unemployment compensation is shockingly low,” he said. “Most people would think, ‘Gee, you’re unemployed, you’re getting unemployment compensation’ — well, no, and that share has lagged behind the rest of the country.”
The formulas states use to determine eligibility vary widely, so it is difficult to make comparisons, experts said.
But last year, North Carolina and Washington were the only states that required higher minimum earnings during the base year of employment than Ohio, according to Policy Matters.
Schiller said unemployment compensation provides jobless workers with a lifeline that keeps them from falling into poverty as they look for work.
“You need some resources to be able to conduct a job search,” he said. “If you can’t pay the mortgage or car payments, it will be harder for you to get to job interview or get to the place where you want to work.”
Unemployment benefits also keep jobless residents looking for work, because the program has work-search requirements, said Heidi Shierholz, a labor economist with the Economic Policy Institute in Washington, D.C.
“There is a strong incentive to continue looking, and that’s good for the economy weirdly enough because it increases the share of the long-term unemployed who will ultimately find work,” she said.
Debate if jobless still search for work
Benefits also keep people afloat as they search for jobs that match their skills and experience, which was the original intent of the program, she said.
Schiller and Shierholz said it is critical that Congress reauthorize the Emergency Unemployment Compensation program, which would increase how long jobless Ohioans can receive benefits to 63 weeks from 26 weeks.
Legislation that would renew the program cleared a hurdle in the U.S. Senate on Tuesday when six Senate Republicans joined with Democrats to vote to allow the measure to move ahead a floor debate.
The program, which was created in mid-2008, expired on Dec. 28, and about 52,000 unemployed Ohioans, including 6,700 in this region, lost their benefits after that date.
“Cutting (benefits) off right now is unprecedented by historical standards,” Shierholz said. “We have an extremely weak labor market with very weak job opportunities.”
But unemployed people who have benefits to fall back on will delay making tough economic choices, such as whether they need to accept jobs below their skill levels or pay expectations, said Greg Lawson, policy analyst with the conservative-leaning Buckeye Institute.
Studies have shown that generous jobless benefits reduce the incentive for unemployed residents to find work quickly, and big gaps in work history means workers’ skills can erode and their attractiveness to employers lessens, he said.
“The longer you shield people from that, the more damage you can do to them long-term,” Lawson said. “It’s always been intended to be a safety net and not a safety hammock.”
Lawson said he does not believe the Republican-controlled House will approve another program extension. He said taxpayers cannot foot the bill of extended benefits forever.
Sen. Rob Portman, R-Ohio, voted for the extension bill to proceed to a debate.
In a statement, Portman said he wants the Senate to agree to pay for an extension of the program while also improving the program so that it better connects the unemployed with available jobs.
“Not paying for the extension adds to the nation’s historic debt, causing more uncertainty for the economy and making it harder to create jobs,” he said.