Proration is an ugly word that has become all too familiar
By By Rep. Ronald Grantland, guest columnist
It is as tough an economy as it has ever been. You have to go back to the early 1980s to see unemployment rates like we have today. You have to go back to the 1930s to see such declines in the value of everything from stocks to houses. Alabamians are hurting, and we must be ready to help whenever we can.
Alabama’s unemployment rate, not seasonally adjusted, shot up to 10.6 percent last month. That’s the highest it’s been in more than 25 years. The spike in job losses is the steepest in memory, with the unemployment rate doubling in the span of one year. It is hard to believe that just last June unemployment hovered around 5 percent.
Unemployment shot up so fast that Alabama recently requested interest-free money from the federal government to support the state’s Unemployment Compensation Trust Fund. There is more money going out of the fund to pay for benefits than there is coming in through payroll taxes, and the fund now has a cash-flow problem according to administration officials.
Not since 1983 has the state needed to borrow federal funds to keep its unemployment program running. At that time, the state had to pay interest on that money. However, Congress set up as part of the overall economic stimulus plan, a federal interest-free fund to help states weather the terrible unemployment storm.
Sixteen other states have already had to request money from the fund, and other states will surely follow, as more and more people collect unemployment after losing a job. The good news is that unemployment across the country dropped slightly in June, and the rate of job losses has slowed significantly.
Unemployment benefits are not charity. It is stopgap help to people who have lost a job through no fault of their own. Unfortunately, those who are now having to apply for unemployment are finding out Alabama has some of the most meager unemployment benefits of any state.
There is a school of thought that believes there should be no unemployment insurance whatsoever, and that it hinders job growth because companies have to pay into the state unemployment fund. All of the money in Alabama’s Unemployment Compensation Trust Fund comes from businesses, and these folks contend that any tax on business limits the ability for them to generate jobs.
The fact is that Alabama right now has the lowest taxes for business of any state in the nation. We have done more than anybody to be a pro-business state, which has helped in recruiting new industries as well as growing our own.
If the job situation doesn’t turn around in the next months, unemployment assistance for thousands of hard-working Alabama families will run out. Thousands more families are applying for unemployment each month, and they are finding out it will be tough just to make ends meet. It is as tough an economy as it has ever been. We should do what we can to make sure families are not destroyed.