Just over a decade ago, when the Great Recession hit and millions of workers lost their jobs, out-of-work Floridians could count on modest help from the state’s unemployment insurance system: Up to $7,150 over 26 weeks.
But the thousands of workers suddenly losing their jobs right now amid the coronavirus pandemic can expect far less help from the state: No more than $3,300 over 12 weeks.
The thinner state safety net is the result of changes made in 2011 under former Republican Gov. Rick Scott in response to lobbying from some of the state’s biggest businesses, who wanted to cut the taxes they were paying to finance jobless benefits. Those changes further weakened what national experts say was already an exceptionally poor state unemployment program for workers.
Florida, for example, caps benefits payments at $275 per week — a ceiling that hasn’t been raised in 22 years.
“We’re starting off this crisis with the worst unemployment system in the country,” said state Sen. Jose Javier Rodriguez, D-Miami.
Florida is about to face a historic test as the state’s tourism-dependent economy has slammed to a halt amid a global effort to slow the spread of COVID-19, the disease caused by the new coronavirus.
The U.S. Department of Labor said Thursday that nationwide unemployment claims soared 33 percent last week from the week before. It’s going to get much worse: The U.S. tourism industry alone could eliminate 4.6 million jobs — nearly one-third of its workforce — by the end of April.
“I feel as if next week we’re going to have a tsunami of unemployment insurance applications,” said Eileen Higgins, a county commissioner in Miami-Dade County.
Unemployment insurance in Florida was not very generous even before the 2007-08 financial collapse. The $275 cap on weekly payments is the sixth-lowest amount among the 53 states and U.S. territories that run unemployment insurance systems.
What’s more, Florida uses an old formula to determine who is eligible for unemployment insurance that can exclude some part-time and seasonal workers. More than two-thirds of states around the country have switched to a new formula that better encompasses those kinds of workers, according to the Congressional Research Service.
The old formula that Florida still uses exclude people who tend to be minimum wage workers with intermittent work histories, and they typically represent between 3 percent and 5 percent of all unemployed workers in a state, said Wayne Vroman, a labor economist and unemployment insurance expert at the Urban Institute.
But even with restrictions limiting payments to some unemployed Floridians and excluding others entirely, Florida quickly burned through its unemployment insurance fund during the Great Recession and the slow recovery that followed.
That left Scott, who was elected governor in 2010, and the Florida Legislature with a choice: They could make businesses pay the taxes necessary to replenish the fund or they could further cut benefits and eligibility.
They chose to cut.
“There’s two ways to fix the problem,” Holger Ciupalo, a budget adviser to Scott, told lawmakers during an early hearing on the issue. “One of them is to require additional taxes to be paid by employers. This governor does not believe in increased taxation. So he’d like to focus on controlling the outflow of benefits.”
With lobbyists for groups like the Florida Chamber of Commerce, Associated Industries of Florida and the Florida Retail Federation encouraging them, Scott and lawmakers passed a law in 2011 that dramatically cut the length of time out-of-work Floridians could receive unemployment insurance.
Laid-off workers used to get up to 26 weeks. But that has been replaced with a sliding scale in which the number of weeks depends on the state’s unemployment rate.
That scale starts at 12 weeks — the shortest duration in the country — when Florida’s unemployment rate is below 5 percent. Florida’s unemployment rate was 2.8 percent in January.
The number of weeks Florida will pay climbs incrementally from there, capping out at 23 weeks once the unemployment rate rises above 10.5 percent.
But there is a catch: That scale only slides once a year — and it doesn’t happen until late in the year. That means Florida’s 12-week limit is likely to remain in place until at least October, no matter how rapidly unemployment rises in the meantime.
That lag is “hugely significant,” Vroman said. “People are falling into the system right now and they’ll be done before June 30. A lot of people will run through their benefits.”
The cuts could be magnified further once extended unemployment benefits paid for by the federal government kick in. That’s because the federal government links the duration of extended unemployment benefits to the duration of each state’s program.
So Florida’s 2011 cuts could wind up costing out-of-work Floridians as much as $11,606 in lost federal unemployment payments, according to an April 2015 analysis by the U.S. Government Accountability Office.
Cutting weeks wasn’t the only change Scott and lawmakers made in 2011. They also ordered all applications to be done online rather than over the phone or in person, imposed additional eligibility restrictions, and mandated that anyone receiving payments had to meet with five prospective employers each week in order to stay in the program.
And they made it easier for businesses to get former employees disqualified from unemployment insurance. That was something business groups lobbied especially hard for, because the amount a company pays in unemployment insurance taxes is determined partly by how many of its former workers qualify for benefits.
Today, only 11 percent of unemployed Floridians are receiving unemployment insurance, according to the most recent data from the federal Labor Department. That’s the sixth-lowest recipient rate in the nation.
And 49.5 percent of those who qualify for unemployment use up all of their benefits before they are able to find another job, the federal data show. That’s the second-highest exhaustion rate in the country — ahead of only the U.S. Virgin Islands.
“That’s not really insurance,” said Chris O’Leary, a senior economist at the W.E. Upjohn Institute for Employment Research in Michigan.
Florida’s unemployment insurance system works very well for one group, though: Businesses.
Businesses in Florida now pay an average annual unemployment insurance tax of $50 per employee, according to the Labor Department. That’s by far the lowest in the country — and less than one-fifth of the national average ($277 per employee).
A spokeswoman for Scott, who now serves in the United States Senate, defended the 2011 changes. “Florida’s unemployment insurance program is funded at record levels thanks to then-Gov. Scott’s reforms, meaning more Florida families can receive the help they need,” Scott spokeswoman Sarah Schwirian said.
The business groups who lobbied for the 2011 changes also say they have worked out well for Florida.
“It was smart policy then and it is now,” said Edie Ousley, a spokeswoman for the Florida Chamber of Commerce, whose donors include Walt Disney World, Publix and AutoNation. “The unemployment system works well for people who want to work and kudos to our leaders for supplementing it in our global time of need.”
Worker advocates are now pleading with Scott’s successor, Republican Gov. Ron DeSantis, to make changes as the economic devastation caused by coronavirus rapidly escalates. They want DeSantis to take emergency actions to raise benefit payments, expand eligibility and remove obstacles and delays, among other immediate measures.
DeSantis said Thursday evening that he has ordered the state agency that runs the state’s unemployment insurance program to “cut through all the red tape” and waive restrictions on the program, such as the requirement that people contact at least five potential employers a week. The governor did not say whether he would attempt to raise benefit limits.
“We can’t just have people totally thrown out with nowhere to go,” DeSantis said. “So that’s going to be a big concern of mine.”
Advocates say that, without more help, many Floridians are facing a near-existential threat after years of just barely scraping pay on low wages and paltry benefits. The same is true nationally: A Federal Reserve study last year found that nearly 40 percent of Americans would need to borrow money or simply could not pay if they were hit with an unexpected $400 expense.
“There is no way a worker can pay their rent or feed their family on these kinds of benefits,” said Wendi Walsh, an officer with UNITE HERE Local 355, a South Florida union that represents nearly 6,000 workers in airports, hotels and casinos.
“I cannot emphasize enough the devastation that is happening to our workers,” Walsh said. “We are at virtually 100 percent unemployment in our industry. Entire workplaces have completely shuttered.”
jgarcia@orlandosentinel.com
grorher@orlandosentinel.com
