Missouri Does U-Turn on UI, Cutting Benefits

On the way to passing legislation to continue existing unemployment insurance (UI) benefits for a few more months, the Missouri legislature did a U-turn and ended up taking benefits away from workers — permanently.  This radical change, which Governor Nixon signed yesterday, will hurt the state economy now and in future recessions.

Until recently, unemployed Missouri workers could get up to 20 weeks of additional federally funded UI benefits if they couldn’t find a job after exhausting their 26 weeks of regular, state-funded benefits and 53 weeks of emergency federal benefits.  To continue offering these 20 weeks of benefits through the end of this year — at no cost to the state — Missouri only had to enact a minor technical adjustment to its existing UI law.

But a small group of state senators refused, filibustering the extension because they wanted to make a statement about the federal deficit.  The result?  The legislature approved a bill that makes the needed technical fix, but also immediately shortens regular state UI benefits for all future recipients by six weeks — making Missouri the only state to offer fewer than 26 weeks this year — and shortens federal UI benefits by up to 17 weeks (see table).  Citing the need for the short-term technical fix, Governor Nixon signed the bill into law yesterday.

As we explained when Michigan passed a similar law, permanently reducing the benefits available for unemployed workers is shortsighted and unnecessary.  It hurts workers and the state’s economy by taking income from people who would spend it on necessities, reducing consumer demand both in the near term and when unemployment rises in future recessions.

Missouri’s approach is even more extreme than Michigan’s, where the benefit cut won’t kick in until 2012 — by which time unemployment may be somewhat less severe than it is today.  In Missouri, a state with 9.4 percent unemployment, the benefit cut takes effect immediately.