Employers hail jobless fix; labor not so confident
Sunday, June 15, 2003 9:41 AM PDT
By Pat Forgey and M.L. Madison
Printable version
E-mail this articleArea businesses have hailed changes to the state's unemployment compensation as a positive move that will keep Boeing's manufacturing operations anchored in Washington and attract more employers to the state. But labor unions worry that in tight times, cuts in benefits will harm people who are barely getting by.
Passed by the Legislature last week, Senate Bill 6097 revises the unemployment tax structure to match what businesses pay in taxes with what their laid-off workers receive in unemployment benefits. It bases benefits on all four quarters, instead of the current system, which uses the two quarters when workers earned the most money.
The changes have been met with mixed views locally. On the one hand, the area's business-development efforts may get a boost if the state is more competitive in attracting new investment. On the other hand, nearly 8,000 county workers got unemployment checks last year as the unemployment rate climbed towards 12 percent.
"For us to take a cut is utterly ridiculous," said Jeff Smith, business manager of the International Brotherhood of Electrical Workers Local 970 in Longview. "I have people right now that are losing homes, losing insurance, and would not be able to survive if there were cuts."
Boeing and other businesses large and small have argued that they have been subsidizing other industries and overpaying into the system.
Longview Fibre Co. spokesman Curt Copenhagen praised the reform of the state's unemployment system, and said it will mean substantial savings for the company that's one of Longview's main employers.
"Many of the large businesses, like Longview Fibre, have been overpaying on our unemployment insurance tax rate for decades," he said. "The system helps subsidize seasonal industries."
Weyerhaeuser Co.'s Frank Mendizabal agreed. It worked with the Association of Washington Businesses to push for the reforms and is happy with the outcome.
"This is something we think the state needed to do for a long time," he said.
Five out of six local legislators gave the bill their blessing, saying it was necessary to retain Boeing and other jobs in the state.
"We know that reform is going to help business, and if it makes them a little bit more profitable, it will preserve jobs and allow them to create jobs," said Rep. Ed Orcutt, R-Carrolls.
"A lot of folks are feeling like we need to do this," agreed Rep. Brian Hatfield, D-Raymond, hours before the House of Representatives passed the bill last week.
Unemployment insurance payments have been an important underpinning of Cowlitz County's economy and social safety net in the last year, as the hard-pressed county collected a disproportionate share of employment payments.
State Employment Security Department records show that 7,872 separate Cowlitz County residents collected unemployment during 2002. That brought more than $42.6 million into the county, which has the highest jobless rate in Western Washington.
Locally, the bill had the support of the Cowlitz Economic Development Council (CEDC) and major businesses.
"We support any effort to retain business in the state of Washington -- especially a business that has such a strong history and ties to the state, and pays exceptional wages," said CEDC president Ted Sprague. "Losing a leading industry makes other companies think, 'Why would I want to locate there?' We heard that from prospective clients when we lost the Boeing headquarters. Losing manufacturing would have a greater impact."
The bill will reduce benefits for almost all laid-off workers, but jobs that are considered seasonal -- among them migrant farm work, fishing and construction -- would take the biggest hit. According to the state's Employment Security Department, agricultural workers would lose 17 percent of their weekly unemployment check, and fishermen would lose nearly 25 percent. In contrast, aircraft workers would lose less than 4 percent of their benefits.
Labor leaders say they want to keep Boeing in Washington, but they argue that the new rules hit some trade workers, who are considered seasonal, particularly hard.
Smith, who is also the president of the Cowlitz/Wahkiakum Central Labor Council, questioned whether Boeing would indeed build the 7E7 aircraft in Washington because of the legislation.
"Is there any guarantee, by taking all these cuts, that Boeing will actually (build) here?" he asked. "We're taking a cut for what? For a maybe?"
Tom R. Harris, president of the Longview-Kelso Building Trades Council, said the effects would be "devastating" on local families.
"The reality is that it's an anti-worker vote," he said. "Whether that was the intent of the bill itself, I don't know. The intent, I think, was to satisfy Boeing. ... Believe me, I think it's important to keep Boeing here, but the question becomes, at what price?"
Antonio Ginatta, executive director of the state's Commission on Hispanic Affairs, said he worries that Latinos will be hit hard by the changes.
"It has a significantly disproportionate effect on low-wage and seasonal workers, a higher proportion of which are Latinos," he said of the legislation. "I am worried about these people. We're talking about people who are making minimum wage as it is. A cut of $50 a week is a lot of money for them."
Rep. Brian Blake, D-Aberdeen, was the only local legislator to vote against the bill. Blake said he voted for a compromise bill that would have spread the cuts evenly across all job sectors, and said he thought unemployment insurance needed reform. However, he said the Senate bill was "too tough" on his constituents.
"That bill didn't even have a hearing in the House," he said. "Certainly, we needed to look at unemployment insurance reform, and yes, it was important to the Boeing company. But the Boeing company doesn't build planes in my district, and I need to look out for the people in my district."
The move was generally welcomed by businesses, though, even from some that are considered seasonal.
Commercial fisherman Doug Fricke of Westport, Wash., reached by cell phone while trolling for kings six miles off Willapa Bay, said some in the fishing industry had taken advantage of system.
"We've had some abusive employees in the past," he acknowledged.
He called the legislative bill a compromise which would help everyone, by being more equal.
"It sounds like its going to be a fairer system, it's just not right for one industry to subsidize another," said Fricke.
Some in the fishing industry, he said, would work just long enough to collect unemployment, milking the system for the most amount of money with the least amount of work. Most in the industry don't approve of that, he said, and want unemployment available for the times when it is really needed.
The construction industry has sometimes been blamed for unfairly benefiting from the existing system, but Eric Hansen of the Lower Columbia Contractor's Association said the industry isn't as seasonal as some people think.
"We work in the rain, mud, snow and sunshine too," he said.
Contractors want and need to work year round, he said, and also want a fair and stable unemployment system for times when they can't work. The Legislative bill, which the Lower Columbia Contractors joined with the Building Industry Association of Washington to lobby for, would do that, he said.
"Most of our guys are pretty happy right now, it was a real victory for us," he said.
Greg Prestegard of Longview's Prestegard Construction warned that increasing costs to builders will make housing less affordable when costs get passed along to homebuyers. A fairer system would benefit everybody he said, but he's not ready to pronounce the new system a success. "We'd like to think so, but we'll have to wait and see."
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