The CPD's Case for Unemployment Insurance Reform

Lockdowns and the coronavirus pandemic laid bare our inept and patchwork unemployment system. Iceland supported its citizens with 30 months of unemployment benefits while US workers barely received six months of benefits. Arelia Valdivia and Francisco Diez are here from the Center for Popular Democracy to explain why our current UI system desperately needs reform and how all workers, both employed and unemployed, can help fix it.

Some highlights from The CPD’s Case for Unemployment Insurance Reform:

01:21 – Meet the Center for Popular Democracy
08:37 – The Sad State of UI Benefits for US Workers
12:49 – An Employer’s Perspective on UI
15:25 – The FIX UI Campaign

The CPD’s FIX UI Campaign

Transcript

Narrator  0:02  

This is The World of Multiemployer Benefit Funds with Traci Dority-Shanklin. We believe in demystifying retirement solutions, upholding retiree dignity, and contributing to economic stability through union organizing, pension reform, and legislative activism. In short, we're devoted to busting myths about the labor movement. If you're interested in the enduring power of labor, well, you've landed in the right place. Experts and activists will share their insights and expertise and stories. Time is short, so let's get started.

Traci Shanklin  0:36  

I found out about today's guest and their organization, the Center for Popular Democracy when they were highlighted and quoted in an article from Bloomberg Businessweek called, "How Far Will Workers Go." The tagline for the article offers the perfect summary by stating, "Along with Great Resignation and Striketober, the unemployed are fighting for reform that could translate into lasting leverage." With the COVID-19 pandemic and worker shortages along with workers quitting their jobs in droves, forcing employers to get more creative to attract workers. I can see the synergies between their work and the labor movement. Perhaps this is the perfect storm for workers to energize a new workers' movement. 

Traci Shanklin  1:21  

My guests are here to talk about the work they're doing to mobilize that workforce to drive UI reform. I am pleased to welcome Francisco Diez and Arelia Valdivia from the Center for Popular Democracy. So, Arelia Valdivia worked as an organizing manager with the Workers Justice team at CPD. She works to grow the activist participation for workers' justice campaigns, develop engaged ladders for the members, and strengthen the Leadership Development Program. Prior to joining CPD, Arelia worked as a labor organizer for 13 years. Welcome, Arelia. 

Arelia Valdivia  2:00  

Hi, thank you for having me. 

Traci Shanklin  2:01  

Francisco Diez is the Worker Justice policy advocate at the Center for Popular Democracy. He works to amplify workers' voices and power within the workplace and improve workplace protections. He supports affiliate organizing for reform to unemployment insurance, Fair Work Week legislation, paid leave policies, and the fight against forced arbitration. Before his time at CPD, he was a researcher and a grassroots electoral organizer, so welcome to the podcast, Francisco.

Francisco Diez  2:35  

Thank you. Thank you for having me.

Traci Shanklin  2:37  

The article in Bloomberg that I cited earlier really talked about unemployment insurance and compared with unemployment benefits from other countries and before the Coronavirus pandemic, US unemployment insurance offered beneficiaries a pretty low number of 40% of their previous income. During the pandemic, the federal government boosted unemployment benefits with the first payment of $600 for the first week of unemployment, and then an additional $300 per week. However, millions of workers were excluded, such as temporary workers, part-time workers, gig workers, and independent contractors. In the US, UI benefits maxed out for workers just under six months compared to Iceland, which gives its citizens 30 months of unemployment benefits. So, you guys are here growing a movement that wants to change all of that and reform the UI benefit. So, what is the Center for Popular Democracy? And what are you guys doing right now to change this UI benefit?

Francisco Diez  3:47  

The Center for Popular Democracy is a network of community-based organizations that fight for justice, not just in the realm of the workplace, but also across multiple issues, such as immigration, racial justice, criminal justice reform, education justice, and we are a part of that team, a part of that organization that helps support a lot of these affiliate organizations to fight for improve workplace standards, improved laws, not just in unemployment insurance. But specifically, we got very involved in this because affiliate organizations came to us at the start of the pandemic, when we were bringing up, "Oh, are you -- did you want to fight for Fair Workweek? Or think about bringing a municipal or, or state level bill in support? And are your members interested in this?" 

Francisco Diez  4:39  

And the response we often got was, "Our members are unemployed, and we have no idea what to do." And so, our entire team had to form an expertise very quickly together with so much of the country when we saw unemployment rates that were reaching 16% or in many parts of the country. Fundamentally what we're interested in seeing is a fundamental reform to a UI system that does not adequately support workers and their dignity, and does not actually meet the needs of workers in the workplace and outside of the workplace. Part of that experience has been specifically organizing workers directly, in a way, not just by supporting our affiliate organizations, but also starting a project called and a campaign called "Unemployed Action," which directly organizes with over 16,000 workers around the country in different forms, to help them to empower them to fight for an improved unemployment system, as well as immediate unemployment relief during the worst of the pandemic earlier in the pandemic.

Traci Shanklin  5:42  

How did you guys come to this advocacy work? What brought you to the Center for Popular Democracy?

Arelia Valdivia  5:48  

I got involved in the labor movement, kind of as a product of seeing the labor that my parents did as immigrants in the US and the way that they were treated at work, and the impact that had in my life. And, I was a union organizer for 10 years. And, I came to the Center for Popular Democracy because I wanted to learn how to build outside of a set membership. You know, unions have an established membership of people who work within a certain workplace. But, the Center for Popular Democracy and our affiliate organizations build membership within communities around a relevant issue. And I wanted to really learn how to do a different type of organizing that is beyond just people united around their workplace. 

Arelia Valdivia  6:39  

And specifically, unemployed action really was something that was very exciting to me, because in the last year, my last year of the labor movement was the first year of the pandemic, which is 2020. And we spent the majority of our time that year helping our members navigate the unemployment system. As union staff, we were helping so many of our members. I worked for the hospitality union, so all of our members were laid off from one day to the next. And so, we spent a lot of time helping people navigate this impossible system. Even us, as people who read contracts regularly, had a hard time figuring out how to help our members apply. I had seen firsthand how broken the system was. And I was really excited to see that there was a campaign at the Center for Popular Democracy that was working to try to address not only how dysfunctional system was also, but also all of the people who get left out of the system. People who don't get benefits because they're undocumented, or because they were recently incarcerated, or simply because they weren't working enough hours. And so, it was really exciting to join a campaign who was like taking that on and really dreaming of a system that could support all workers in a time of crisis.

Francisco Diez  7:51  

I came to advocacy work because I had been primarily involved in a number of different types of campaigns on the grassroots and on the grassroots level with electoral campaigns. I had been an organizer with Bernie 2016. But later, I think as a grassroots organizer, I was involved in housing as well as labor campaigns and really realized the importance of building power with communities together with the labor movement. And when I went to grad school, that is the fundamental lesson that building power with people and people coming together to improve their workplaces, formally through the labor movement or through community organizations is the critical method through which we're going to change and have a more just economy. 

Traci Shanklin  8:37  

After the coronavirus pandemic and the lockdown, most people probably know more about unemployment than they ever had cared to know, but could you explain a little bit about the unemployment benefit and sort of set the stage for our listeners about where this current state of unemployment is for US workers?

Francisco Diez  8:58  

As you had mentioned, Traci, the average unemployment replacement rate is 40% of pre-layoff wages, which is already abysmally low. But it's even worse than that because the access to the benefits on average across the country immediately before the pandemic was 28%. So, just 28% of unemployed workers were able to receive benefits of any kind. And so, we know that that means that the expected benefit for an average unemployed worker is even smaller. One of the things that we strongly believe in is that all workers who are out of work who are looking for a good job fundamentally deserve a benefit that ensures a living income. And that's just not the case in almost any state in the United States today. 

Francisco Diez  9:41  

Also, during the pandemic, I think is worth mentioning that because of the FPUC, or this additional $600 and later $300. Workers got to see what it was like to be more fully supported that actually matched their pre-layoff income. In a lot of cases, it wasn't even it was much less than that. But, it was actually closer to being a living income than what they would have gotten otherwise without that federal intervention, so it really exposed the kind of brokenness of the system.

Arelia Valdivia  10:09  

One big issue with unemployment that Francisco has not yet laid out is that unemployment is administered by different individual states. And so, it results in a program where you have dramatically different unemployment systems from state-to-state really creates a problem where we have some states that have decent unemployment systems. I will not say that any state has a good unemployment system, but it really then relies on like, what is the political climate within each individual state as it comes to supporting workers and people of color. And so, we have some states that have dismal unemployment systems where people really get such low benefits that they can't live off of it, and it's for such a short period of time. And then we have states that have a more decent unemployment system, but it's not, in any way equal federally. And so, one of the things that was interesting about this extra FPUC money was that it was the first time that there was a federal amount that was being distributed equally across all of the different states and allowed for people to finally kind of get an amount that they could live off of, or that was close to their actual wage replacement, even though for many people was still not enough. 

Francisco Diez  11:28  

No, I think that's the fundamental flaw, the lack of any sort of even federal standard, let alone a federal system, as was originally envisioned by the folks who had first put together the unemployment system but has not been reformed to really establish those federal standards that are necessary to have a more equitable system across the states.

Traci Shanklin  11:46  

Is this getting the attention of the federal government? I mean, is there talks on the table to develop a federal system? Are we still going to go forward with this broken system, state by state?

Francisco Diez  11:57  

I think there -- and what's been encouraging is that certain senators and certain representatives have taken up unemployment, increasingly, including Senator Michael Bennet, from Colorado, Senator Sherrod Brown from Ohio, and Senator Ron Wyden, especially from Oregon, who is chairman of the Senate Finance Committee. And he actually introduced a bill in -- right in I want to say, September or October, the Unemployment Insurance Investment Act, which aim to kind of start setting up some of these federal standards on just even something as basic as a benefit length or benefit duration, which is actually as low as 12 weeks in some states. And even though the most states have it at about 26, to at least set up standards, where everyone -- every single state is set up to reach 26.

Traci Shanklin  12:49  

I used to run a small business, and I obviously paid unemployment taxes, but it always seemed a little convoluted to me and I was not clear. Because you're you know, as an employee, or you're paying into it per worker. And so, on the other side, and I know that if an unemployment claim gets filed, based on an employee that you had, then it ups your rate by some, you know, marginal amount, but you do see it in, you know, in the rate and how you're charged as an employer for UI.

Arelia Valdivia  13:25  

I actually think that the confusion is part of the problem is that it's not, it's convoluted, not just to you, but to everybody. And it's, it is really actually, I think, much more complicated than it sometimes needs to be and it leaves people often very confused when figuring out how do they qualify for unemployment benefits; when they're denied, figuring out why they were denied for unemployment benefits because it's not really clear system. If Francisco lays it out very easily, but that's because Francisco spent a lot of time analyzing how unemployment works and really learning about it. But, we spent a very long time just teaching our own members about it, because people really have no idea how the unemployment system works. And I think it's important for people to learn about it so that they can begin to understand what are the flaws in it, and how do we make it a better system.

Francisco Diez  14:20  

Just to add on to what you were mentioning, Traci, really briefly, what you're describing is what's called, "experience rating," which is a really important feature of this system, but a very flawed one the way it's currently set up. Because you do see that tax increase on the side of employers and it creates an incentive on the part of employers to really care a lot about whether or not their rates go up. And also, in the case of large employers and certain employers, it tends to also create an incentive for employers to try and challenge when claimants try to apply for benefits. And so, the connection is instead with whether or not they receive benefits as to whether or not a worker is laid off with was the original intention was to try and create an incentive for employers not to lay-off workers a during an emergency especially. 

Traci Shanklin  15:08  

Do unemployment benefits follow workers to another state? So, for example, if someone gets laid off in from their job in one state and then moves? Because I know COVID has certainly spurred a moving movement if you will. 

Francisco Diez  15:25  

They do not. And that's again, one of the issues with the lack of a federal system. We have been fighting for what we've called a Fix UI platform. We've been, you know, demanding, you know, a federal standards approach, as we've mentioned already, but also making it really user-friendly. And many workers were just fundamentally dissatisfied and righteously furious with was the -- was the inadequate administration of the system. And that's not to say anything of the incredible public servants and various workers who stepped up to try and help with the distribution of benefits, but really the outdated system on a very basic access level that just did not exist. And so, you know, we really strongly believe that, that these systems need to be overhauled, replaced consistently invested in and administrations need to be invested in significantly so that there are more workers who are working on UI caseloads to help distribute those benefits. 

Francisco Diez  16:24  

But also, you know, workers really fundamentally need benefits that they can actually survive on. Our members have been fighting for and worked with us to develop a platform that really supports benefits that automatically extend and increase during the time -- during times of crisis, but also, at a very basic level, replace a lot more of their earnings. And one particular thing that we've been fighting for is, you know, we want to see at least an 85% replacement rate for earnings of low wage workers so that they get a lot closer to a living wage, or living income, and really, you know, fundamentally making unemployment available to everyone looking for work. So, that includes 1099 workers, immigrant workers, low-income workers, job seekers who don't have a work history, because they were, you know, full-time students, unpaid caregivers, incarcerated, and people who quit for good reasons. You know, people who are standing up for their rights or leaving abusive workplaces deserve to have unemployment insurance. If you're going on strike, you deserve to have unemployment insurance. That's a strong thing that we believe in. And when workers are forced to put their families first, they deserve to have that income.

Traci Shanklin  17:33  

It sounds like there could be a pretty massive economic crisis in America if we don't deal with this unemployment issue. Because you have an awful lot of people that are already living at the poverty level or below. I guess I'm seeing this as a massive potential red flag in our economic health. 

Francisco Diez  17:58  

We have to think about the economy fundamentally as exactly the way that you're framing it, which is that workers aren't doing well, the economy isn't doing well. And in a deep way, you know, with stagnating wages for nearly 50 years, the economy hasn't been doing well. And it's been facing crises of underemployment, as well as unemployment where, you know, workers have been forced to work part-time for low wages. And we've been seeing, you know, de-unionization throughout most of the economy, and the unemployment system is not up to the kinds of standards necessary to really empower workers currently, the way that they need to be empowered in the way that the economy needs to be empowered by really supporting workers in their fights for improved wages, improved conditions, and for fundamentally a better workplace and a better life.

Traci Shanklin  18:48  

Has the Biden administration put forward any legislation or executive orders aimed at UI? 

Francisco Diez  18:55  

There have been some that have kind of increased access to certain key parts of the UI system, have made it easier to get, for example, what are called overpayment waivers. These are waivers in cases where workers were overpaid due to some type of clerical error, which sometimes happened because there were so many unemployed and still happened today even with lower levels of unemployment, where the administration or a state's UI administration accidentally, for whatever reason, miscalculates their benefit amount, over-pays the beneficiary, and then the beneficiary uses it, but not realizing that they had been overpaid, and then are asked by the UI agency to then pay it back. When they were putting together the American Jobs plan and the American Families plan, the Biden administration had formally announced the need for reforming the unemployment system. And I think the Biden administration is still interested in unemployment insurance reform. Now whether or not that's a priority, whether they're going to prioritize reforming the system as opposed to the other urgent and important issues that it is -- that the administration is trying to address right now is still up in the air. This is a critical way in which workers can be empowered, especially for a presidency that claims to be the most pro-labor in American history. I think this is one great way in which they can try and step up.

Traci Shanklin  20:20  

The political pundits’ prediction of the upcoming midterm election, with a lot of them predicting Republicans recapturing the House and the Senate. Do you think that the UI reform will stay on the table federally? 

Francisco Diez  20:39  

I think it will be very difficult if Republicans were to take -- to take the House and or the Senate. Our understanding is that there are certainly Republicans who are willing to consider necessary reforms to the system that we might agree with, that workers might agree with. And I think that there might be some opportunities for bipartisan reform. But how expansive that is, is going to be great would be significantly limited, and certainly not necessarily move all completely in the direction that workers have demanded and workers have consistently needed in this country ever since this unemployment system was originally set up.

Traci Shanklin  21:20  

Amazing. You have been listening to The World of Multiemployer Benefit Funds. Since I'm running a little low on time, I'm going to pause our conversation with Francisco Diez and Arelia Valdivia from the Center for Popular Democracy. If you'd like to get involved with unemployment insurance reform, please click on the FIX-UI hyperlink in our show notes. Francisco and Arelia will return on the next episode and share their thoughts and insights into the Great Resignation and what's driving worker unrest. You won't want to miss it. 

Traci Shanklin  21:56  

If you've enjoyed today's podcast, please consider supporting us with a voluntary contribution at www.patreon.com/multiemployerfunds. That's www.patreon.com/multiemployerfunds. Or you can subscribe to us and leave us a five-star review on your favorite podcast platform. We are available on Apple Podcasts, Spotify, Google Podcast, and many other podcast platforms. And of course, you can always find us on our website at www.multiemployerfunds.com. That's www.multiemployerfunds.com. Here, you can find our entire podcast library and join our newsletter. Thanks again for joining the conversation where listeners connect with leading experts throughout the multiemployer world. Be part of the change.

Narrator  22:56  

And that's it for this week's episode of The World of Multiemployer Benefit Funds. We'd love to have your support. You can show your support by sharing episodes, making comments, or heading over to www.patreon.com/multiemployerfunds for other partnership opportunities. Thank you for joining us, and we look forward to the next time.

Disclaimer  23:19  

Sisu Partners LLC hosts The World of Multiemployer Benefit Funds podcast which contains content and discussions that have been prepared for informational and educational purposes only. No listeners should assume that any discussion on this podcast serves as the receipt of, or substitute for personalized advice from an investment professional as the information provided on the podcast is not intended to be investment, legal, or tax advice. The company is not an SEC-registered investment advisor and does not solicit clients or raise capital for money managers. Sisu Partners offer securities through XT Capital Partners, LLC