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The Department of Labor recently finalized regulations to allow states to offer unemployment insurance to parents who require time off from work for the crucial task of caring for their newborn and newly adopted children. The new rules not only jibe with the purpose of the unemployment insurance program, but will have far-reaching benefits for the nation’s work force and families. Momentum and interest in the regulations are growing. Even though no state has yet enacted a law to allow new parents to collect unemployment insurance while on leave, interest in this and other financing mechanisms remains high. At least five states are currently studying the costs and benefits of providing family leave benefits. In a number of additional states, legislators and advocates are actively preparing to move legislation next year. Opponents of the regulations, meanwhile, charge that the regulations are misguided and unlawful. Those opponents filed suit in federal district court in Washington, D.C., seeking to prohibit implementation of the regulations. The plaintiffs are wrong. A little history helps to show why. Created in the 1930s, the unemployment insurance system originally was designed as a safety net to ensure income support for Americans temporarily not working. It allowed the employees and their families to remain attached to the labor force, thus staving off a desperate spiral into poverty. The framers of the system structured it as a federal-state partnership. As part of that partnership, the federal government establishes uniform minimum benefits across the country, while leaving states free to offer more generous coverage. Every state now has unemployment insurance, funded almost exclusively through employer payroll taxes. Over the years, states have used their considerable latitude both to set insurance benefits and to increase or reduce the taxes that employers pay. The Labor Department’s new regulations are consistent with both the history and purpose of unemployment insurance law. All states provide benefits to people who fit the traditional criteria – employees involuntarily laid off but willing to return to work immediately. But many states have found it worthwhile to expand the group of potential beneficiaries. For instance, seven states offer unemployment insurance to those whose employers have temporarily laid them off, but will recall them, though they are not available to work for other employers during the interim. In one-third of the states, employees who must leave their jobs for an urgent and compelling reason — such as a spouse getting relocated or the inability to find child care – still receive unemployment benefits, even though they were not laid off. In some states, people enrolled in approved job training programs receive benefits, even though they can turn down work while in training. And employees on jury duty may collect insurance benefits in several states. Yet just as employees in these other situations receive benefits in order to further the important goal of job security, it makes sense to grant those same benefits to new parents who need to take time for their children. And just as employees in these other categories generally return to their employers following their leave, the same holds true for parents who take time to tend to their children. According to the bipartisan Commission on Leave, established by Congress in 1993, 84 percent of employees who take family leave return to their jobs. Opponents of the new family leave rule claim that it has no place in the unemployment insurance scheme because it provides benefits to those who are not “able and available” to work elsewhere. Yet the same holds true for these other well-established groups of beneficiaries. But the new family leave regulations are not only permissible – they are also beneficial. They provide states with a mechanism for updating the system to meet the needs of today’s working families. The labor force has changed over the past several decades, and the unemployment insurance system must change with it. In the 1930s, most workers were male; today, women make up nearly half the work force. In the 1930s, most women stayed home and were available to care for children and other family members; today, dual-earner couples are 41 percent of the working population and are the largest group of families in the work force. Meanwhile, high-quality infant care remains expensive and scarce. The Labor Department’s regulations address these changes, making the system more responsive to the challenges facing today’s working families. Given these shifting demographics, the new family leave rule will lead to a more satisfied, stable, and productive work force. Those who return to work quickly often say that they could have focused on their job responsibilities more effectively if they could have taken more leave. This makes good, common sense. Consider the situation of one Maryland mother, whose financial situation forced her to return to work, still on pain medication and sore from her Caesarean delivery. Who can doubt that she would have been more productive upon her return to work, if only she had been able to take more time at home first? Opponents of the new regulations have predicted that it will lead to the downfall of the unemployment insurance system nationwide. However, because state compliance with the new regulations is voluntary, only those states with trust funds for unemployment insurance that are healthy enough to sustain it will offer the new benefits. INSURANCE THREAT The real threat to trust funds comes not from increasing unemployment benefits, but from reducing available funds through tax give-backs to employers. In the past five years, at least 11 states have sharply cut the unemployment taxes that fund the insurance program. Legislation to lower taxes is pending in many more. Ironically, some of the same business groups that oppose the new family-leave coverage are calling for cuts that would deplete the insurance trust funds — and benefit their own bottom lines. Massachusetts business interests, for example, oppose the new regulations for fiscal reasons, but have lobbied for tax cuts larger than the cost of the new benefits. Establishing the parental leave benefits in Massachusetts will cost about $32 million to $43 million per year, a tiny fraction of the trust fund’s $1.9 billion balance. In fact, many states are well positioned to expand unemployment insurance benefits to new parents. State trust fund reserves increased 85 percent overall from the end of the last recession in 1992 through 1998. And more than 30 states have reserves that exceed solvency guidelines specifically designed to measure the ability to withstand a severe recession. Opponents also argue that the government used a “back-door” maneuver by issuing the new rule by means of regulations interpreting existing law, rather than by passing new legislation in Congress. However, in issuing the regulations, the Labor Department is doing exactly what Congress charged it with doing — interpreting the unemployment insurance laws in an entirely reasonable manner. Even more curious, opponents of the new regulations argue that they violate the Family and Medical Leave Act’s requirement that employers provide only unpaid leave. But that law makes clear that its provisions provide a floor, not a ceiling, for family and medical leave benefits. State unemployment insurance laws, enacted pursuant to the new Labor Department regulation, therefore would be completely consistent with the spirit and express language of the Family and Medical Leave Act. Finally, it is important to note that the new regulations constitute good family policy. Accommodating family needs by making parental leave more affordable is an important investment in the future of the country — and its work force. Research shows that parental involvement is crucial to help babies develop physically, emotionally, and intellectually, and that children benefit from early parental attention long after infancy. No wonder most Americans — 79 percent, according to a 1998 national poll — support giving states the chance to extend unemployment or temporary disability insurance to workers on unpaid family leave. Given the strength of our economy and our unemployment system, there is no reason why so many working women and men must still “choose” between their families and financial crisis. Donna Lenhoff and Elana Tyrangiel are general counsel and policy counsel, respectively, for the National Partnership for Women & Families, a nonprofit, nonpartisan organization that promotes fairness in the workplace, quality health care, and policies that help women and men meet the dual demands of work and family.

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