Senate Democrats Propose Sweeping Reform of Unemployment System

Two Senate Democrats on Wednesday introduced legislation to overhaul the nation’s unemployment insurance system after the coronavirus exposed flaws in the existing structure.

The sweeping proposal sponsored by Sens. Ron Wyden of Oregon and Michael Bennet of Colorado aims to raise base benefits, create a permanent benefit for self-employed and gig workers, minimize differences between state programs and tie extended benefits to the unemployment rate.

The draft bill, titled the Unemployment Insurance Modernization Act, would require all states to offer at least 26 weeks of benefits and replace 75% of a worker’s typical wages up to a set maximum.

“The COVID-19 pandemic has made it overwhelmingly clear that our nation’s unemployment insurance system is inadequate and unreliable for workers when they lose a job,” said Bennet. “Unemployment programs are critical to helping workers stay afloat during difficult times — but too many workers still struggle to access their benefits in our patchwork of outdated state systems. And too many receive no protection at all when they lose a job — including many low-wage workers, workers of color, returning caregivers, and self-employed workers. This proposal will protect workers by strengthening and expanding benefits, modernize UI infrastructure with needed technology investments, and prepare us for the future by tying benefits to economic conditions.”

Why it matters: “Wyden and Bennet maintain they have an opportunity to advance their reforms as part of Democrats’ broader rethinking of the country’s safety net programs,” writes The Washington Post’s Tony Romm. “President Biden is set to unveil a multi-trillion-dollar proposal in the coming weeks that aims to provide new aid to workers, parents and children facing financial hardship. Wyden and Bennet said they have already encouraged Biden to overhaul unemployment insurance as part of that package, which has been dubbed the American Families Plan.”

More than 18 million people collected unemployment benefits in the week ending March 20, according to the Labor Department.

Read more at The Washington Post or CNBC.