TESTIMONY IN SUPPORT OF HB 627:

Unemployment Insurance – Eligibility - Part-Time Work

TO: Hon. Dereck Davis, Chair, and members of the House Economic Matters Committee

FROM: Jason Perkins-Cohen, Executive Director

DATE: February 27, 2008

The Job Opportunities Task Force (JOTF) is an independent, nonprofit organization that develops and advocates policies and programs to increase the skills, job opportunities, and incomes of low-skill, low-wage workers and job seekers in Maryland. We support HB 627 as a way to strengthen the state’s unemployment insurance system—a critical safety net for workers forced to leave their jobs involuntarily. If enacted, this legislation will help part-time workers and their families meet basic needs as they transition into new jobs.

Under current law, Maryland requires all workers to seek full-time employment in order to receive unemployment insurance benefits. Many hardworking Marylanders are excluded from the unemployment insurance system because they are only available to work part-time. These workers can have their wages taxed for years, yet receive no benefit when they are laid off. This restriction is outdated, and was established in a time when many families relied on one full-time breadwinner.

Today, part-time workers make up an essential segment of the state labor force. As of 2003, about 15 percent of all workers in the state were part-time—a total of 438,000 Marylanders. Local businesses rely on these workers to meet their workforce needs.

Maryland’s unemployment insurance system has not adapted to this economic reality. The program is funded through a tax on wages, which applies to almost all workers regardless of whether they are full or part-time. Under Maryland’s part-time restriction, a worker could spend their entire career contributing to the system, and still be denied benefits.

Expanding unemployment insurance to part-time workers will provide a significant benefit to the state’s economy at a minimal cost. In 2000, the U.S. Department of Labor estimated that covering part-time workers would benefit 1,000 Marylanders per week at a cost of $4.4 million per year—just a 2% increase in total unemployment insurance payments.

The fiscal cost to provide coverage to part-time workers will not affect the State’s general fund. Maryland has a dedicated unemployment insurance trust fund into which all unemployment insurance payroll taxes are credited and from which all benefits are paid. The trust fund is healthy, with a balance of around $1 billion.

If the legislature enacts HB 627, Maryland will join 22 other states plus the District of Columbia and Puerto Rico in providing benefits to part-time workers. Providing benefits for part-time workers will increase the economic security of Maryland families. It will help ensure that hardworking families can meet their basic needs, such as housing, transportation, food, and healthcare, when dealing with the sudden hardship of job loss. We respectfully urge a favorable report of HB 627.