Unemployment benefits were first created back in the 1930s in response to the Great Depression. The temporary assistance program was a way to ensure families—who were left jobless, penniless and homeless from the complete collapse of the American economy—could afford to survive until the country recovered.

The unemployment system of today is far different. It’s rampant with abuse, extremely costly, and is now poised to seriously hinder business growth in our state. Currently, unemployment is funded by a tax surcharge levied against employers. Missouri distributes the benefits. When funds fall short, however, the state relies on loans from the federal government.  

In the wake of 2008, most states, including Missouri, were forced to “borrow” money from the federal government to continue providing benefits to the unemployed. These federal loans must be repaid by states within a certain time frame, with interest. Right now, our state owes Washington an estimated $300 million.

To pay back those funds, Missouri employers will soon face higher unemployment insurance surcharges, possibly doubling what they currently pay. Needless to say, this is an incredible burden on employers, especially as we try to encourage job creation.

It’s imperative we find a solution to this problem. We’ve worked tirelessly over the last five years to breathe new life into our economy. This issue could seriously impact those efforts. We want business owners to spend money on creating new jobs, not paying back debt the federal government strong-armed states into accepting.

This week in the Senate Government Accountability and Fiscal Oversight Committee, we considered legislation that offers a possible solution. Senate Bill 673 would lower the amount of time citizens can receive benefits based on the unemployment rate. As the rate falls, the length of benefits is reduced. This would relieve some of the financial pressure currently facing the program.

More importantly, the legislation changes how we can pay back the federal government. Under the bill, the Board of Unemployment Fund Financing could issue bonds to pay back federal unemployment advances when the total debt exceeds $300 million. Because of our state’s AAA credit rating, the interest rates on bonds is far lower than the interest rate on the debt we owe the federal government.

Bonds would allow us to pay back the unemployment advances much more quickly, and at a far lower interest rate. This would save our state millions. It would also save employers hundreds of thousands of dollars in unemployment insurance surcharges. That money can then be used for expansion and growth.

Senate Bill 673 offers a promising solution to a serious problem. Whether or not it is the right one remains to be seen, but I’m hopeful my colleagues in the Senate will give the legislation serious consideration. This is one of the most important issues facing business owners this year. If we can’t find a way to offer them some sort of relief, our economy is going to be hard hit. The gains we’ve made over the last few years could easily slip away. We can’t allow that to happen.

If you have any questions or comments about this or any other matter regarding your state government, please feel free to contact me at (573) 751-1503; you are also welcome to e-mail me at jay.wasson@senate.mo.gov.