Keep Fund to Aid Jobless Solvent
It is fortunate the unemployment rate in Ohio is relatively low. Otherwise, the day when it is expected the state’s Unemployment Compensation Trust Fund could go belly-up would be nearer than it is.
Ohio’s economy in general is doing relatively well these days, with unemployment at 4.7 percent. But many Buckeye State residents remember all too well the “Great Recession.” At its greatest depth in 2009-10, nearly 650,000 Ohioans could not find work.
Anything like that within the next few years could spell disaster for the state’s unemployment compensation program, which is dramatically underfunded. Even without a recession, the program may be insolvent by 2021. That is just three years.
Should the fund crash and burn, jobless Ohioans could find even the minimal aid provided by the program unavailable.
Though the state received — and had to repay — federal assistance to keep unemployment compensation checks coming during the recession, there is no guarantee that could happen again. The possibility is especially slim if Ohio officials allow their fund to go belly-up during a time of relative prosperity throughout the nation.
Like other states, Ohio funds its compensation program through contributions by employers. At the current rate, they simply have not been adequate to keep the system in good shape financially.
As so often is the case in such situations, many say the answer is simply to increase employer contributions dramatically. That would be short-sighted. Every dollar Ohio companies pay into the unemployment compensation fund is a dollar they cannot put in employees’ paychecks. It is a dollar that reduces the firms’ competitiveness.
The low contribution rate, in fact, is one reason the state’s economy has rebounded well from the recession.
Ohio legislators are aware of the problem, but have been slow to address it. That is something they simply must do. Every effort needs to be made to ensure a “fix” does not affect business competitiveness adversely — but in the end, something has to be done. The sooner decisions are made, the better.