Secretary of Labor & Industry Stephen Schmerin, has announced increases in the maximum weekly benefits for new unemployment compensation (UC) beneficiaries and new workers’ compensation (WC) claimants, effective the first full week of January 2005.
“Pennsylvania’s workers have been hit hard by recent economic stresses, and these increases will provide needed assistance to those who deserve it,” Schmerin said.
Unemployment compensation payments, for workers who lose jobs through no fault of their own, are generally one half of a worker’s former salary up to a weekly maximum. The weekly UC maximum will increase from $461 a week to $478 a week for claimants qualifying after Jan. 1, 2005.
Workers’ comp benefits, for workers injured on the job, are
generally two-thirds of a worker’s pre-injury wages, up to a weekly maximum, which will increase $26, to $716 per week from $690 per week for workers injured on or after Jan. 1, 2005.
Schmerin also reminded the public that a series of legislatively mandated unemployment compensation solvency taxes will go into effect Jan. 1, which is projected to add $601 million to the UC Trust Fund, which supports UC benefit payments.
“These tax changes will allow the UC Trust Fund to stay solvent and
continue to pay benefits to laid-off workers,” Schmerin said. “Because of the 2001 recession and the resulting slow job recovery, the trust fund balance declined to $608 million at the end of 2004 from $3 billion in May 2001, necessitating a series of legislatively mandated tax changes to strengthen the fund’s financial stability.”
The solvency tax changes to begin in 2005 are:
— Continuation of a 7.2 percent employer surcharge on the employer’s basic UC rate – estimated contribution to the trust fund is $125 million.
— Increase from 0.4 percent to 0.6 percent in the employer additional tax levied on the first $8,000 of each employee’s wages – estimated contribution to the trust fund is $224 million.
— Continuation of a .09 percent employee tax (90 cents on every $1,000 of employee wages) – estimated contribution to the trust fund is $193 million; and
— Reduction by 2.3 percent of UC benefits (average check will be
reduced by $7) for laid-off workers receiving UC benefits – reducing
benefit payments for 2005 by $59 million. Trade Adjustment Assistance (TAA) benefits that go to manufacturing workers who lose
jobs due to foreign competition will also be reduced by 2.3 percent
beginning Jan. 1, 2005.
These changes were automatically triggered by a 1988 UC law that lists specific steps to bring more money into the UC Trust Fund when the fund balance drops below a certain level.
The 1988 law was enacted in response to the Trust Fund going broke in the mid-80s when the Commonwealth had to borrow almost $3 billion from the federal government to pay ongoing UC benefits.
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