Noncompetitive unemployment insurance could be a negative effect on Kentucky’s bottom line

Kentucky Education and Workforce Development Cabinet Deputy Secretary Brad Montell says their office is looking into the ways Kentucky lags behind other states when it comes to unemployment insurance and how the state can become more competitive.

Montell says the cabinet has researched Kentucky’s unemployment insurance compared to other states including topics like how much we pay out, average time we pay those benefits, and tax rates for Kentucky employers compared to employers in other states.

The research shows Kentucky pays out a maximum weekly benefit of $448, which is among the highest benefit payout of the states that surround and compete with Kentucky. The only states around Kentucky paying more are Ohio and Illinois. States pay out lower than Kentucky per week as a maximum are Tennessee at $275 and Indiana at $390.

“We look at that and ask the question, are we remaining competitive?” Montell said.

Another area of expressed concern for unemployment insurance is the average duration payment. “In fact, Kentucky is one of the longest duration paying states in the country,” Montell said. Comparing average payment duration for unemployment insurance, Illinois pays 17.1 weeks, Kentucky pays 17 weeks, whereas Tennessee pays 12.6 weeks.

After evaluating these numbers Montell explained the bigger picture: “We have to ask ourselves, what are we doing that creates that longer payment period. Unemployment insurance is a very important safety net for our employees who, for no reason, no fault of their own, find themselves unemployed. At the same time, we need to make sure that we’re not creating any sort of incentive to keep folks on unemployment insurance longer than they need to be. The reason it’s there is to get them through to the next job, and we want to connect them with that next job, that good job, that well-paying job, as quickly as possible.”

Montell stated the Workforce Cabinet is in the early stages of the unemployment insurance issue right now. Montell’s preliminary thought is the solution will require a combination of improved practices, internal policies and processes, and legislation to connect individuals with meaningful work sooner.

When asked about the impact on a state’s business community with a noncompetitive unemployment insurance plan Montell said, “It can really be a disincentive for employers to come here in the first place if they’re looking for a new home and they’re comparing several states, the unemployment insurance is certainly one that they will look at. In that area, we just want to make sure, not that we’re treating our employees unfairly or punitively at all. But that at the same time, that we’re competitive, so we can say to employers looking at Kentucky, ‘Check us out’; I think you’ll find that we’re very fair and competitive in what we’re doing in the area of unemployment insurance.”

The main focus for Kentucky, according to Montell, is for our unemployment insurance to be fair for employers and employees. Stay tuned for more developments on Kentucky’s unemployment insurance.

Watch the interview segment with Workforce Cabinet Deputy Secretary Brad Montell here:

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