UNEMPLOYMENT : Costs Make Reform of Insurance a Tough Sell

The lengthening lines of the jobless are increasing pressure for reform of unemployment insurance, a 55-year-old program that some see as one of the most frayed corners of the social safety net.

With the jobless rate rising to a four-year high of 6.5% in February, critics are calling for an overhaul of a program that now helps only 37% of the unemployed, down from 75% in 1975. Most discussion centers on extending benefits for those who have already exhausted the basic 26 weeks, a group that includes about 38,000 Californians.

“The time has come to stop playing budget games with the lives of American workers,” Rep. Sander M. Levin (D-Mich.) says.

The complication, of course, is that with about 9 million Americans without jobs, broadening the program would be expensive in a time of fiscal hardship. A measure proposed this month by Rep. Thomas J. Downey (D-N.Y.) and other liberal Democrats would provide $24 billion in expanded benefits over six years and pay for it with $27 billion in new taxes on employers.

BACKGROUND: States are the primary operators of the unemployment insurance program, imposing taxes on employers and deciding who is eligible to receive benefits and how much they will be paid. Last year, the average beneficiary received $154 a week for 13 weeks.

Each state must come up with the money to pay the first 26 weeks of basic benefits. As a supplement, state and federal governments chip in for 13 weeks of extended benefits when the “insured jobless rate”--the ratio of insured jobless to the worker population--exceeds 5%. But it takes a severe economic slump to raise the rate to that level.

FORCES: The Downey bill has labor’s strong support, including the AFL-CIO, the United Auto Workers and the American Federation of State, County and Municipal Employees. It would lengthen the period of extended benefits to 26 weeks from 13, limit states’ ability to deny claims and create a program to help the unemployed find jobs.

On the opposite side of the issue is the Bush Administration and business groups. In recent congressional testimony, Roberts T. Jones, an assistant labor secretary, said that the bill’s proposals “reflect an underlying assumption that the current program is somehow broken and in need of extensive repair. It is not broken.”

Opponents argue that unemployment insurance should not seek to subsidize people who are just joining the job market, are trying to re-enter it, have quit jobs or have been fired for misconduct.

OUTLOOK: Tough going is expected in Congress for any legislation that would substantially increase costs. And any change that would help enough workers would be costly: Adding 13 weeks of benefits would cost the federal government $5 billion annually.

Under the 1990 budget agreement, such a move would also require Congress to declare a temporary economic emergency, a step it might be unwilling to take. Yet pressure for assistance to the jobless is likely to rise if high unemployment continues. The Bush Administration estimates an unemployment rate of 6.7% for this fiscal year and 6.6% for 1992.