Md. tightens rules on collecting unemployment

CRACKDOWN ON JOBLESS AID

January 02, 1993|By Kim Clark | Kim Clark,Staff Writer

In a move billed alternately as a necessary money-saver and as a wasteful hassle-maker, the state government next week will make it more difficult for people who quit their jobs or are fired to collect unemployment benefits.

State officials say the new rules will save the troubled state unemployment insurance fund about $11 million a year -- a claim disputed by jobless Marylanders and employers.

But there is little doubt that the change will affect thousands of Marylanders who might otherwise have been eligible for unemployment payments.

The new rules were adopted early last year as part of a legislative package designed to replenish the state's dwindling unemployment insurance fund, said Charles Middlebrooks, assistant secretary of the Department of Economic and Employment Development.

As the fund's reserves dropped to less than $100 million early this year, from a prerecession level of $450 million, Maryland employers and labor representatives agreed on a compromise to raise employers' taxes and tighten eligibility requirements for people who either quit their jobs without good cause or are fired for gross misconduct.

It has always been more difficult for people who contributed to their own unemployment to collect unemployment benefits than for people who lost their jobs through no fault of their own. But the new rules make it even tougher.

Previously, workers who quit without cause or were fired for gross misconduct had to earn about $1,800 at a new job to requalify for unemployment benefits, in case they lost the new job.

Those workers who were laid off, quit for good reason or were fired for reasons such as a personality conflict were required only to work for four months and earn a minimum of about $900 to qualify for the lowest level of benefits.

Under the new rules, those who quit their jobs would have to earn about $2,700 at a new job, and those who were fired for gross misconduct would have to earn about $3,600 to qualify for benefits, in case they lost the new job.

And if a worker was fired for criminal activities, such as theft or assault, the new rules call for even harsher terms. None of the previous job's earnings will be counted when the state determines his or her level of unemployment benefits in the future. This new rule could reduce or eliminate workers' payments, because the state's Unemployment Insurance Commission establishes payouts based on a worker's earnings over the previous year.

But the moves are not designed simply to save money. Mr. Middlebrooks said the state supported the changes to encourage workers to stick with their jobs in difficult economic times.

"You might ask why anybody would leave a job under today's circumstances," when unemployment remains high, he said. "But there is a lot of voluntary leaving."

Statistics show that one in 12 Marylanders who filed unemployment claims last year -- 30,000 out of 350,000 claimants -- were disqualified because they quit their jobs without cause.

And the number of quitters has been rising in the past five years. In 1989, only about 25,000 people were denied unemployment insurance because they quit their jobs.

"We want to encourage people to be careful when they leave a job," Mr. Middlebrooks said. "They should try to exhaust all remedies with their employer before quitting. Don't leave the first time something goes wrong."

But Maryland employers and job-seekers, as well as some unemployment researchers, said they were skeptical of the state's claims that the change would save money and encourage workers to keep their jobs.

Wayne Vroman, an economist for the Urban Institute who specializes in unemployment research, said Maryland's new rules are part of a trend toward tightening eligibility for unemployment payments.

In the 1981-1982 recession, nearly three-quarters of the unemployed were able to collect unemployment benefits. In the most recent recession, only about one-third of the unemployed were eligible, he said.

Because unemployment insurance was designed for people who are jobless through no fault of their own, Mr. Vroman said, he supports penalties for those responsible for losing their jobs.

But he said he thought the state's previous penalties were appropriate. The changes will hurt needy people, while employers' savings "will be trivial," he said.

Even if a person quit or was fired, Mr. Vroman said, he or she ought not to be penalized too harshly.

"The labor market is changing. . . . If people make a good-faith

effort to find another job," they ought to be able to collect some pay, he said.

Employers, who are supposed to benefit from reduced costs, are also dubious of the state's savings claim.

Will the state's tougher qualification rules save employers money?

"I kind of doubt it," said Kathleen van denBulk, unemployment compensation manager for the Towson office Automatic Data Processing Inc.

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