Tougher jobless rules have cost few their benefits in TN

8:31 AM, Jan 11, 2013   |    comments
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Duane Marsteller, The Tennessean

New, tougher work search requirements haven't resulted in many jobless Tennesseans being kicked off unemployment yet, state figures show.

Fewer than 800 people have lost their benefits because they did not look for work or provided no evidence that they did so as required, according to figures from the Tennessee Department of Labor and Workforce Development.

That's just 6 percent of the more than 13,000 verification checks the agency has done in the past three months.

Supporters are calling the effort an early success despite the low violation rate, citing state estimates that it has saved taxpayers at least $185,000 so far.

"They're changing their behavior because of the law, and that's a good thing," said Jim Brown, Tennessee director of the National Federation of Independent Business. "We're making progress."

It and other business groups pushed for the work search rule and other jobless-aid restrictions last year, saying changes were needed to improve accountability and combat fraud and abuse. Tennessee legislators and Gov. Bill Haslam agreed, enacting several measures that tightened eligibility criteria.

Among them is mandating those who receive unemployment benefits must contact at least three prospective employers every week and provide detailed information about those contacts. The state then makes random verification checks, with the goal of performing 1,000 weekly.

The rule took effect Sept. 1 but the state didn't begin checking until Oct. 1 to give recipients time to learn about the new requirements, said Jeff Hentschel, the state labor department's spokesman.

Tennessee had done 13,458 checks through last week, with more than 78 percent deemed to be compliant, according to data the state provided to the Tennessean. Of the remaining 22 percent who did not comply, some had found a job, had entered a job training program or were exempt from the requirement (such as being on a temporary layoff).

Only a small number were in violation: The state has suspended benefit payments to just 791 people for not meeting the requirement. Based on the state's average benefit payment of $235 a week, that equals $185,885 in unpaid benefits.

The actual savings, though, is unknown. The state isn't separately tracking how much it's spending on the verification checks, and some who lose benefits are restored later - with the recipient's eligibility period extended correspondingly.

"They're usually back the next week to get squared up," said Dustin Swayne, administrator of the state labor agency's workforce services division.
On par with peers

Swayne said the noncompliance and benefits-suspension rates are on par with the state's expectations and past results. They also mirror those of other states with similar minimum work search requirements, an expert said.

"That's fairly comparable to what we've seen in several other states," said Doug Holmes, president of UWC Strategic Services on Unemployment & Workers' Compensation, a business trade association based in Washington, D.C.

"Twenty to 30 percent (noncompliance rate) is not unusual, and 6 percent (benefits suspension rate) is probably a little higher than usual," he said.

All states mandate some form of work search, he said. But several - including Arizona, Florida and Texas - have beefed up their requirements in recent years as part of a broader push to restrict jobless aid that stemmed from the recession's fallout.

States typically collect unemployment taxes from employers and use that money to pay benefits. But prolonged high unemployment left many taking in less than they paid out, forcing Tennessee and more than other 30 states to borrow from the federal government to pay benefits.

Texas is regarded as a leader in the work search effort, Holmes said. Among other things, it requires the unemployed to keep logs of their job searches and turn them over to the state upon request.

About 80 percent comply, with 99.4 percent of those submitted logs found to be acceptable, said Mark Lavergne, a spokesman for the Texas Workforce Commission.

A critic said Tennessee's 6 percent benefits cutoff rate shows the effort has been marginally effective, at best.

"No taxpayer out there wants anybody milking the system, but at what expense should you go to and bulldog over the rights of those who are trying to follow the rules just to catch the few who aren't?" said Gary Moore, president of the Tennessee AFL-CIO Labor Council and a former state representative who opposed the work-search proposal last year.

Supporters counter that catching violators isn't the intent.

"The whole idea is to try to change the culture out there so that the word gets out and you'll get a higher degree of compliance," said Christopher O'Leary, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has studied the issue. "On that count, one could argue that it's been pretty effective."

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