The "Social Security offset" in unemployment compensation for Utah seniors is set to expire in 2010, and battle lines are being drawn between employers and seniors as a result. Full story published September 7th, 2009 in the Salt Lake Tribune.
The Situation: During the past five years, working Utahns over age 65 laid off through no fault of their own have been able to collect some unemployment benefits in addition to their Social Security retirement checks. But Utah is one of only seven states that cuts unemployment benefits for those receiving Social Security retirement benefits. Right now, the Beehive State offsets jobless checks of seniors by only half their retirement cash. If the break is allowed to expire, those unemployment benefits will go back to being cut by the full Social Security payment. The law is set to expire halfway through 2010.
Seniors: Oppose any change. Many seniors are working past retirement age or have been forced to return to work after seeing their savings drained by the recession, in many cases through no fault of their own. The powerful group AARP Utah, which lobbies on behalf of about 220,000 Utahns over 50, takes the following position: "The fact that you have a Social Security benefit should not affect your ability to get a benefit you've earned through working", said Laura Polacheck, AARP Utah's associate director.
And they have a key legislative ally in District 47 Rep. Steve Mascaro (R-West Jordan), who posits that unemployment insurance is just as much a rightful benefit to those older workers as younger ones, regardless of whether they draw Social Security. "Is there something about turning 65 that says you are not entitled to the benefits you were when you were 40 years old or 50 years old?", Mascaro asked. "Not to my mind. I thought age discrimination was against the law in this country".
Employers: Support eliminating the Social Security offset. They fear that if it continues, they will be paying more in unemployment insurance. A complex state formula mandates that when the state's unemployment trust fund drops below certain thresholds, it triggers automatic hikes in employer-paid premiums. Because of an unprecedented spike in jobless claims, the trust fund is projected to dwindle from $640 million to $122 million during the next two years before recovering to $144 million (this graphic shows the maximum adequate balance to be just under $800 million, and the minimum adequate balance to be just under $600 million). In addition, long term projections show a significant increase in Utah's senior population. The number of over-65 Utahns still working, which has risen from 192,000 in 2000 to 247,000 today, is expected to swell to 389,000 in 10 years. So one can easily understand the concerns of Utah employers.
State legislators are preparing to address the issue when they convene in January 2010. However, the opening shots of the future battle were fired last month when members of a key state advisory council split 5-5 on the offset, and lobbyists for both sides are already working the Capitol.
The obvious solution to satisfy both sides is to eliminate the automatic premium increase triggers for employers. Great, except the state as a whole is facing a projected $700 million deficit, unless it wants to start draining the rainy day fund. Easier said than done. And Governor Gary Herbert does not want to raise taxes. But the failure to resolve this problem could discourage employers from hiring seniors, which in turn could pose a threat of age discrimination litigation.
This problem is simply too complex to be solved in a single blog post. But it's a good time to explode the popular myth of the "rich seniors". Many subscribe to the notion that all seniors are "rich". Not so. Not all seniors were CEOs. Many spent some of their intended nest eggs providing extra assistance to children or grandchildren; many adult children have moved back in with their aging parents because of adverse economic circumstances. Others picked careers or professions that never warranted "superstar" compensation. Some picked professions that became redundant either by automation, plant outsourcing, or illegal immigration. Still others picked investment strategies that, through no fault of their own, did not pan out. Are we to classify people as sluggards and slackers simply because they didn't get rich?
As our seniors live longer, the likelihood of their nest eggs becoming insufficient increases. This means many will need to work longer. We should avoid any public policy which would hinder the employability of seniors.