Arizona’s unemployment insurance program is more focused on paying benefits than putting people to work, a study commissioned by the Goldwater Institute states.
The study, titled "Reforming Unemployment Insurance to Increase Employment," was conducted by William Conerly, an economic consultant and a senior fellow at the National Center for Policy Analysis. He discussed his findings at a recent forum.
"The state needs to make a commitment to putting people to work," Conerly said. "It is now committed to getting the checks out and there’s no money left over (for reemployment programs)."
Despite efforts this year to increase Arizona’s maximum, weekly unemployment insurance benefit, Conerly said an increase is not needed to make the program more effective. The maximum, weekly benefit is now $205, the lowest in the nation. Efforts in the Arizona Legislature to increase the maximum, weekly benefit failed this year.
Children’s Action Alliance, which is pushing for an increase in the maximum benefit, disagrees with Conerly’s stance.
"The big problems here that we have are very low recipiency, not enough people are getting unemployment insurance, and that the benefits are very low," said Elizabeth Hudgins, alliance spokeswoman. "While it’s important to look at a range of things, we really need to work on addressing these two problems."
The average length of Arizonans receiving unemployment insurance is higher than the national average, despite having an unemployment rate below the national average, Conerly said. Also, people who receive unemployment insurance tend to stay unemployed longer than those who are not, while many recipients are able to find jobs just before their benefits expire, he said.
During the second quarter of this year, Arizona’s average duration of insured unemployment was 17.2 weeks, higher than the national average, Conerly said.
"Duration tends to be higher in states with higher unemployment, so it’s surprising that Arizona’s duration is higher than the national average," he said. "Also, duration tends to be longer in states where benefits are higher, yet Arizona’s is lower than the national average."
The Arizona Department of Economic Security encourages telephone and internet claims, preventing face-to-face interaction with department employees, Conerly said. This limits personal encouragement and advice, and reminders that searching for work is required to continue receiving benefits, he said.
DES administers state and federal unemployment insurance benefits.
Another problem in Arizona, Conerly said, is overpayment of benefits. He pointed to an audit by the U.S. Department of Labor that showed $60 million of the $357 million in unemployment insurance paid last year was estimated to be overpayments.
Joe Edwards, program specialist with DES, said the overpayment amount was much lower than $60 million.
Some of the primary reasons for overpayment include Arizonans receiving benefits after finding work, after being deemed ineligible, and despite not conducting a valid job search, Conerly said.
Several federal and state initiatives could make the program more effective and efficient, he said. The Bush Administration’s "New Balance" proposal, which consolidates administrative and benefits funds into one account, would allow states to make better choices about the size of administration compared to the amount paid out in benefits, Conerly said.
Also, the federal government should consider granting waivers to states to experiment with individual accounts for unemployment insurance, he said. Chile already has expanded its individual accounts for Social Security to include unemployment insurance, he said.