Pocono News Section

Unemployment in PA

Unemployment in PA - Wednesday, March 11, 2009 at 6:47PM EST

WILKES-BARRE -- Unemployment claims in the state are hitting record numbers and the funds in the compensation system are dipping dangerously low. Some officials estimate unemployment compensation could be one billion dollars in the red by the end of 2009.
Federal loans are being looked at as way to keep the system solvent, but the interest-free loans have to be paid by 2010. Will the loans mean there will not be an automatic tax increase? The Department of Labor and Industry will not eliminate the possibility of that happening in 2010. Department spokesman Troy Thompson has reportedly said the entire tax structure needs to be looked at to get the fund back into a position where it can sustain itself.

The thought of tax increases are not appealing to businesses and workers who pay the tax that funds unemployment compensation. The Chamber of Business and Industry says Pennsylvania has the 10th highest unemployment taxes in the country. The bi-partisan Tax Foundation ranks Pennsylvania second in the nation for punishing corporate taxes. Some companies claim they'll be inclined to close their doors and leave the state if taxes increase.

The Governor's office has indicated it's not likely to take money from elsewhere in the budget to assist the unemployment fund. Businesses and employees are resistant to tax hikes. The other options include reducing the benefits of "higher-end" wage earners who are laid off. Or to stop offering medical benefits to part-time employees who are now using the system. Are any of these options the right move?

WYOU Interactive discusses the issue with Sherry Tracewski from the Institute of Public Policy and Economic Development and Patrick Beatty of PA Department of Labor and Industry.