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HB4 will cost the state $13 million to take unemployment assistance away from jobless Kentuckians

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Via press release from KCEP


House Bill 4, a complex plan to severely cut the number of available weeks of unemployment insurance and make it harder to keep benefits, would cost the state $13 million to implement according to a new letter from the Kentucky Labor Cabinet. The bill is on the agenda for tomorrow's Senate Standing Committee on Economic Development, Tourism, and Labor meeting (11 a.m. in annex room 125).

“Not only will HB 4 cut current unemployment insurance benefits in half, it’s also going to cost taxpayers millions of dollars in added costs at the same time,” said Bill Londrigan, president of the Kentucky State-AFL-CIO. “Talk about a double-whammy – and more reason to oppose HB 4.”

This projected cost includes a one-time increase of $7 million for technology upgrades and an ongoing $6 million increase for an additional 60 staff across two departments. In the letter, the Labor Cabinet Secretary also explained that the substantial technology upgrades needed to implement HB 4 would also likely delay the creation of Kentucky’s first unemployment insurance technology overhaul in over 50 years – leaving Kentucky with the same system that caused created so many problems for claimants in 2020 and 2021 for even longer.

“If the last two years have taught us anything, it’s that unemployment insurance is already incredibly complicated and hard to get in Kentucky. This letter shows us just how much worse it will be if HB 4 passes,” said Dustin Pugel, senior policy analyst at the Kentucky Center for Economic Policy. “Even if it cost us nothing, we shouldn’t be pulling the rug out from under laid-off Kentuckians who are getting help while looking for a job. We certainly shouldn’t spend $13 million on it.”

Background on HB 4

  • By indexing the number of weeks claimants can receive unemployment insurance benefits to the average state’s unemployment rate from a time frame in the previous calendar year, HB 4 would fail to provide maximum benefits in a downturn, and would punish communities and individuals facing barriers to getting a new job quickly.
  • If HB 4 had been in effect during 2020, in the worst part of the COVID downturn, workers would have received 12 instead of 26 weeks of benefits. Fewer benefits means longer, deeper, and more painful recessions.
  • HB 4 will especially harm Black Kentuckians and people living in rural communities, for whom the unemployment rate is much higher than the state average.
  • Under HB 4, UI claimants who do not take a job offer that pays as little as 54% of their previous job will lose benefits.
  • In addition to creating new high costs for the Labor Cabinet, new work search paperwork requirements will create more opportunity for user errors, glitches, or missed deadlines, leading people to lose assistance when they need it most.

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Written by Dustin Pugel, Senior Policy Analyst for the KY Center for Economic Policy.

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