Iowans would see unemployment benefits cut by 10 weeks under bill headed to Kim Reynolds
Iowans may soon be cut off from receiving unemployment benefits 10 weeks earlier under legislation heading to Gov. Kim Reynolds' desk.
The bill, House File 2355, would also require workers to take lower-paying jobs sooner or risk losing their benefits.
House and Senate Republicans gave final passage to the proposal Tuesday after being embroiled in negotiations for weeks on a major sticking point in the bill that would have added a one-week waiting period before unemployed workers could begin collecting benefits.
House Republicans had refused to add the waiting period, which the Senate and Reynolds had pushed for. The Senate relented on Tuesday, passing the House's version of the bill with no waiting period.
The bill still represents a “tremendous win for the workforce in Iowa,” said Sen. Jason Schultz, R-Schleswig, the bill’s floor manager in the Senate. He said as the session began drawing to a close, the Senate decided to compromise rather than prolong the debate.
“You don’t always get everything you want, and we just decided that we would let the House have this one,” he said.
Republicans have said the unemployment changes will help encourage Iowans to return to work sooner and would help ensure the state's unemployment trust fund stays solvent. But Democrats have accused Republicans of attacking workers who have lost their jobs.
Senate Minority Leader Zach Wahls, D-Coralville, called the bill "another slap in the face to Iowa workers."
"It means hundreds of millions of dollars being basically taken out of the checking accounts of hardworking Iowans who have been laid off through no fault of their own and handed over to big corporations," he said.
The unemployment bill was among several pieces of legislation — including the state budget — that remained unresolved as the session has stretched more than a week into overtime, largely due to an impasse on Reynolds' education proposal.
But that list grew shorter Tuesday after lawmakers approved the unemployment bill, voted to loosen some regulations on child care facilities and passed a bill requiring most Iowa gas stations to offer gasoline with higher blends of ethanol.
What changes to unemployment did Iowa lawmakers approve?
Under the bill, Iowa would drop from offering up to 26 weeks of unemployment benefits for laid-off workers to a maximum of 16 weeks. That would place Iowa among the states that cut off benefits the earliest. Most states offer up to 26 weeks of benefits, while only a half-dozen states offer 16 weeks or fewer.
The Senate passed the bill Tuesday with a 30-14 vote. All Republicans voted for it, and all Democrats voted against it. If Reynolds signs the bill, it would go into effect July 1.
Iowa workers laid off because of a factory closing would be eligible for 26 weeks of unemployment benefits, down from 39 weeks under current law.
The bill also would lower the threshold of what's considered "suitable work" compared to the worker's salary in a previous job. Under current law, Iowa workers are not required to accept a job offer for less pay until after their fifth week on unemployment. The bill would lower that to one week and continue ratcheting down the percentage of the employee's wage that is considered suitable.
Bill would decrease payouts from Iowa's unemployment trust fund, could lower business taxes
Reducing the maximum unemployment benefit by 10 weeks will reduce benefits paid from Iowa’s unemployment trust fund by approximately $69 million next fiscal year and $71 million the year after, the nonpartisan Legislative Services Agency estimated in a report this year. The bill is expected to result in decreased taxes for employers, the agency said.
Schultz said he hopes this bill would lower Iowa's unemployment tax to the lowest rate, which he said he believes would allow businesses to hire more people and offer higher wages.
Iowa's unemployment trust fund is paid for through taxes on businesses. The tax rate increases as the size of the trust fund drops. Reynolds has already put hundreds of millions of dollars of federal COVID-19 relief money into the fund, and Senate Democrats said it doesn't need further shoring up.
Reynolds proposed the bill earlier this year, saying in her Condition of the State Address that she believes government unemployment benefits have discouraged people from working, and "the safety net has become a hammock."
Democrats and labor groups have said the benefits aren't the problem, and that the proposal would hurt workers who lose their jobs. Workers fired for cause are not eligible for unemployment.
A Des Moines Register/Mediacom Iowa Poll released in March found a majority of Iowans opposed cuts to unemployment insurance. Fifty-three percent of Iowans opposed them, while 38% favored them. However, the cuts were popular among Republicans, with 60% in support.
House Minority Leader Jennifer Konfrst, D-Windsor Heights, said the bill is unpopular among Iowans and will prompt workers to leave the state.
"Instead of working to fix Iowa's workforce shortage crisis, Republican lawmakers passed a bill negotiated behind closed doors with special interests to take away earned unemployment from Iowans who lost a job through no fault of their own," she said in a statement.
Rep. Mike Bousselot, R-Ankeny, said he removed the waiting period requirement from the House version of the bill after conversations with labor union members, who had strongly objected to its inclusion.
"The people who are going to face the cost of a one-week waiting period were going to be our building trades," Bousselot said. "And so the House decided to just stick with what we passed the first time."
Before the bill's passage Tuesday, Reynolds had told reporters that she supported the waiting period because Iowa is among a few states that don't have it. She said people would still receive the check at the end.
"I just think we need to do everything we can to encourage people to stay in the workforce and to stay in the game, and so we're going to look at everything we can to really bolster that," she said.
Governor Kim Reynolds' other workforce-related bill passes
The House and Senate have agreed on a version of one of Reynolds' other workforce priorities, a wide-ranging bill that would support a number of workforce-related programs.
Among the provisions of the bill, Senate File 2383, are requirements for schools to report work-based learning participation among their students, an expansion of loan repayment programs for certain health care workers and a number of reduced fees for veterans.
Lawmakers altered the bill from Reynolds' original proposal, including removing a portion that would have established statewide building code standards and prohibit local cities from adopting building codes of their own.
Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at email@example.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.